TD1 Form

Definition

The TD1 Personal Tax Credits Return is the form CRA requires every new employee (and every recipient of a pension, commission, or other taxable remuneration) to complete before the first pay is issued. The form tells the employer which non-refundable tax credits the employee expects to claim on their T1 so that income tax can be withheld using an accurate personal exemption. There is a federal TD1 and a companion provincial or territorial form (TD1BC, TD1ON, and so on).

Key rules

• Every employee must file both the federal TD1 and the provincial TD1 on the first day of work, or the first day a change in circumstance would affect withholding (Income Tax Regulations s.107).
• If no TD1 is filed, the employer is required to withhold tax using only the basic personal amount. The employee is not entitled to larger credits until a form is filed.
• A new TD1 is required within seven days whenever the employee's situation changes (marital status, eligible dependants, additional employment income, desire for additional withholding).
• When total claims on the federal TD1 exceed the basic personal amount, the employee must also complete the prescribed zones and the employer retains the form (it is not sent to CRA unless requested).
• An employee with multiple employers in the same year must tick "More than one employer or payer" on page 2 of the second employer's TD1, which forces withholding at the lowest bracket with no personal amounts.
• TD1X (commission employees) and TD1IN (status Indian, tax-exempt employment income on reserve) are variant forms addressed in the same guide.

Example

A new BC employee joins a corporation on July 1, 2026. The employee expects to claim:

• Basic personal amount (federal and BC)
• Spouse or common-law partner amount (non-working spouse)
• Canada caregiver amount for an infirm parent

1. The employee completes the 2026 federal TD1 and totals the three amounts on line 13.
2. The employee completes TD1BC with the BC basic personal amount and the BC caregiver claim.
3. The employer enters both totals into the payroll system, which uses T4127 formulas to calculate reduced withholding.

Mid-year, the parent passes away. The employee files a revised TD1 within seven days removing the caregiver amount, and withholding rises for the remainder of the year.

Common mistakes

• Accepting a verbal claim instead of a signed TD1. CRA expects a physical or electronic signature.
• Using the prior-year TD1 amounts after January 1. Basic personal amounts are indexed annually.
• Failing to tick the "more than one employer" box for employees with concurrent jobs, which under-withholds and creates T1 balances owing.
• Overclaiming because the employee thinks the form lowers tax "for free". The T1 trues up the liability, and under-withholding produces a large April balance.
• Discarding old TD1s after the employee leaves. Keep them for the retention period.

Related concepts

The TD1 feeds directly into income tax withholding. Combined with CPP and EI, it defines the employee's total source deductions, which the corporation remits through its payroll account (RP).