Calculating Canadian Withholding Tax

Calculating Canadian Payroll Withholding Tax

To ensure AccountEdge calculates the correct Canadian withholding tax, confirm you have correctly set up the employee card, in the Card File. Under the Payroll Details tab:

• Verify the correct Tax Table is selected in the Personal Details section.
• In the Wages section, verify Pay Basis, Annual Salary/Hourly Rate, Pay Frequency, Hours per Pay Period, and Wages Expense Account are set correctly. Also, verify the appropriate wage categories are selected in the wages box.
• In the Taxes section, verify Federal TD-1 is selected, and the correct value is indicated in the Net Claim box. This value represents the Total Claim Amount from the employee's Federal TD1 form. Typically, $10,527 is the initial claim amount. (AccountEdge does not use Claim Codes.) Also verify the appropriate tax categories are selected for a particular employee.
• Verify the Provincial TD-1 button is selected. Verify the that the correct value is entered in the Net Claim box. This value represents the Total Claim Amount from the employee's Provincial TD1 form.

Information about TD1 Claim Codes and amounts are available on the Canada Revenue Agency web site.
TD1 documentation and forms are available in English TD1
TD1 documentation and forms are available in French TD1

There is an online payroll withholding tax calculator available at http://www.cra-arc.gc.ca/esrvc-srvce/tx/bsnss/pdoc-eng.html. Note: The online calculator defaults to a Claim Code of 1 ($10,527), which may not be correct for a particular employee.