TD1 form: what Canadian employers need to know and how to complete it
Every employee on your payroll needs a TD1 form on file, and getting it right keeps your deductions accurate.
Written by Shaun Quarton—Accounting & Finance Content Writer and Growth Marketer. Read Shaun's full bio
Published Thursday 30 July 2026
Table of contents
Key takeaways
- The TD1, Personal Tax Credits Return, tells you how much federal and provincial tax to deduct from each employee's pay; every new hire must complete both a federal TD1 and a provincial or territorial TD1.
- For 2026, the federal basic personal amount is $16,452, up from $16,129 in 2025; employees earning above $181,440 may see that amount reduced.
- You don't send TD1 forms to the Canada Revenue Agency (CRA) unless specifically asked; instead, keep them on file for at least six years.
- Since January 2020, you're no longer required to hand out paper TD1 forms, but you still need to make sure every employee fills one out within seven days of starting or whenever their situation changes.
What is a TD1 form?
The TD1, officially called the Personal Tax Credits Return, is a form your employees fill out so you know how much income tax to deduct from their pay. It lists the personal tax credits each employee can claim, such as the basic personal amount, the age amount, or the disability tax credit.
As a small business owner running payroll, you rely on the TD1 to calculate the right withholding amount each pay period. Without it, you could over-deduct or under-deduct tax, both of which create problems for your employees at tax time.
Why the TD1 form matters for payroll
Accurate payroll deductions start with accurate TD1 information. When your employees claim the correct credits, you withhold the right amount of federal and provincial tax from each paycheque.
Getting this wrong can lead to unhappy employees who owe money at tax time or receive smaller refunds than expected. It can also create compliance headaches with the CRA if you consistently under-deduct.
The TD1 is straightforward. Once you understand the basics, collecting and filing these forms becomes a routine part of your payroll process.
Federal vs provincial TD1 forms
Every employee in Canada needs to complete two TD1 forms: one federal and one provincial or territorial. The federal TD1 determines how much federal income tax you deduct. The provincial or territorial version determines the provincial portion.
Both forms work the same way. Your employee lists their eligible tax credits, adds them up, and gives you a total claim amount. You then use that total to look up the correct withholding in the CRA's payroll deduction tables or through payroll software.
The federal form is the same across the country. Provincial and territorial forms vary because each jurisdiction sets its own basic personal amount and offers different credits.
Provincial and territorial TD1 forms
Each province and territory publishes its own version of the TD1. Here are the forms you may need to collect, depending on where your employees work.
In Western Canada, the forms are TD1AB (Alberta), TD1BC (British Columbia), TD1MB (Manitoba), and TD1SK (Saskatchewan). In Central Canada, you'll use TD1ON (Ontario). For Atlantic Canada, the forms are TD1NB (New Brunswick), TD1NL (Newfoundland and Labrador), TD1NS (Nova Scotia), and TD1PE (Prince Edward Island).
In the Northern territories, the forms are TD1NT (Northwest Territories), TD1NU (Nunavut), and TD1YT (Yukon).
Quebec uses a separate system. Employees working in Quebec complete the federal TD1 for federal tax and a provincial TP-1015.3-V form, called the Source Deductions Return, for Quebec provincial tax.
You can download all current versions from the CRA website. The forms are updated each year, so always grab the latest version when onboarding a new employee.
When do employers need to collect TD1 forms?
You need a completed TD1 on file for every person on your payroll. The most common trigger is hiring a new employee, but that's not the only time you'll collect these forms.
Here are the situations that require a new or updated TD1:
- A new employee starts working for you
- An existing employee's personal situation changes, such as getting married, having a child, or becoming eligible for the disability amount
- An employee wants to change the amount of additional tax deducted from their pay
- An employee starts or stops claiming certain credits
Since January 2020, you're no longer required to hand paper forms to your employees. However, you still need to let them know that the TD1 exists and that they should complete it. Many employers share a digital link to the CRA's forms page during onboarding.
Collect the completed forms within seven days of the event that triggers the update. Keep a record of the date you received each form.
Do employees need to fill out a new TD1 every year?
Employees don't have to submit a new TD1 every year if nothing has changed. The existing form on file stays valid until their personal situation changes or they want to update their claim amount.
That said, it's good practice to remind your team at the start of each year that they can update their TD1 if anything has changed. The CRA updates the basic personal amount annually, so an employee who wants to claim the current figure may choose to file a new form.
How to fill out the federal TD1 form
The federal TD1 form is two pages long. The first page is where your employee calculates their total claim amount. The second page covers additional tax deductions and the signature.
Walk your employees through the process if they have questions. The steps below cover each section of the 2026 federal TD1.
Personal information
Your employee starts by filling in their personal details at the top of the form. This section collects their full name, date of birth, address, and social insurance number (SIN).
They also enter your business name and address as the employer. Make sure this information matches what you've registered with the CRA.
Line 1: basic personal amount ($16,452 for 2026)
Line 1 is where every employee claims the basic personal amount. For 2026, the federal basic personal amount is $16,452. This is the amount of income that is tax-free at the federal level.
If your employee's net income is above $181,440, the basic personal amount starts to decrease. High earners should use the worksheet on the back of the form to calculate their reduced amount.
Most of your employees will simply enter $16,452 on line 1 and move on.
Lines 2 through 12: additional tax credits
Lines 2 through 12 cover additional personal tax credits your employee may be eligible to claim. Not every line applies to every employee; most people only fill in a few.
Age, pension, and education credits: Line 2 covers the age amount for employees 65 or older. Line 3 is the pension income amount for employees receiving eligible pension income. Line 4 is the tuition amount for employees paying fees at a qualifying educational institution.
Disability and spousal credits: Line 5 is the disability amount for employees with an approved Disability Tax Credit Certificate (Form T2201). Line 6 is the spouse or common-law partner amount for employees supporting a spouse or partner with low or no income.
Dependant and caregiver credits: Line 7 is the amount for an eligible dependant. Line 8 covers the caregiver amount for dependants with an impairment. Line 9 is the amount for infirm dependants age 18 or older. Line 12 is the Canada caregiver amount for an eligible dependant.
Transferred amounts: Line 10 covers amounts transferred from a dependant. Line 11 covers amounts transferred from a spouse or common-law partner.
Encourage your employees to only claim credits they're certain they qualify for. Overclaiming leads to under-deduction, which means a tax bill when they file their return.
Line 13: total claim amount
On line 13, your employee adds up all the amounts from lines 1 through 12. This total is their federal personal tax credit claim.
You use this total claim amount when calculating their federal tax deductions each pay period. The higher the claim amount, the less federal tax you withhold.
If an employee's total claim is equal to or less than the basic personal amount on line 1, they only need to fill out page 1.
Page 2: additional information and signature
Page 2 of the federal TD1 collects two extra pieces of information.
First, your employee can request that you deduct additional tax from each paycheque. This is helpful for employees who earn income from other sources and want to avoid owing tax at year end. They simply write the extra amount they'd like deducted per pay period.
Second, your employee signs and dates the form to confirm that the information is correct. An unsigned TD1 isn't valid, so make sure you get that signature before filing it away.
If your employee has more than one employer or payer, they should check the relevant box on page 2 and review the instructions for reporting income from multiple jobs.
How to fill out the Ontario TD1ON form
If your employees work in Ontario, they need to complete the TD1ON in addition to the federal TD1. The process is similar, but the amounts and credits reflect Ontario's provincial tax system.
Ontario updates its TD1ON each year. Make sure you're using the current version when onboarding new employees.
Ontario basic personal amount
For 2026, the Ontario basic personal amount is $12,989, up from $12,747 in 2025. This is the amount of income that's tax-free at the provincial level in Ontario.
Your employee enters this figure on line 1 of the TD1ON unless their income qualifies them for a different amount. The form includes a worksheet to help high-income earners calculate any reduction.
Ontario-specific tax credits
The Ontario TD1ON includes credits that are specific to the province. Some of these mirror the federal credits, while others are unique to Ontario.
Common Ontario credits include:
- Age amount, for employees 65 or older
- Pension income amount
- Disability amount
- Spouse or common-law partner amount
- Amount for an eligible dependant
- Caregiver and infirm dependant amounts
- Amounts transferred from a spouse, partner, or dependant
As with the federal form, your employee adds up all eligible amounts to get their total Ontario claim. You use this total to determine provincial tax deductions for each pay period.
What happens if an employee doesn't submit a TD1?
If an employee doesn't give you a completed TD1, you don't stop deducting tax. Instead, you calculate their deductions based on the basic personal amount only, with no additional credits.
This means the employee will have more tax withheld from each paycheque than they might otherwise expect. They'll get the difference back when they file their income tax return, but it can affect their cash flow throughout the year.
As an employer, your obligation is to let employees know they can fill out a TD1 and to make the form available. You can't force someone to complete it, but you should document that you've made the form accessible.
For brand-new hires who haven't submitted a TD1 by their first payday, use the basic personal amount as the default. Adjust their deductions once you receive their completed form.
How to handle TD1 forms for employees with multiple jobs
When an employee works more than one job, they need to be careful about how they fill out their TD1 forms. The key rule is that personal tax credits can only be claimed on one TD1.
Your employee should claim their full credits on the TD1 for the employer that pays them the most. For every other employer, they should check the box on page 2 that indicates they have more than one employer, and enter $0 as their total claim amount.
If an employee claims credits on multiple TD1 forms, they'll have too little tax withheld overall. This usually results in a balance owing when they file their annual return.
Here's what to tell employees who work multiple jobs:
- Claim your credits on one TD1 only, typically the one for your highest-paying job.
- Enter $0 on the TD1 for each additional employer.
- Consider requesting additional tax be deducted if you're concerned about owing money at tax time.
You can't verify whether an employee has other employers. By explaining the rules clearly during onboarding, you help them avoid surprises at year end.
Common TD1 mistakes and how to avoid them
Even a simple form like the TD1 can trip people up. Here are the most common errors and how to prevent them.
Claiming credits on multiple TD1 forms. Employees with more than one job sometimes claim the basic personal amount on every TD1 they fill out. Remind them to enter $0 for all employers except their primary one.
Using an outdated form. The CRA updates the TD1 each year to reflect new credit amounts. Always download the current year's version before onboarding a new employee.
Leaving the form unsigned. An unsigned TD1 isn't valid. Check each form when it's submitted to make sure the signature and date are filled in.
Overclaiming credits. Some employees claim credits they're not entitled to, often by mistake. Encourage them to read the instructions on the form carefully and only claim amounts they qualify for.
Forgetting the provincial form. Many employees submit the federal TD1 but forget the provincial or territorial version. Remind your team that both forms are required.
By catching these errors early, you save yourself from adjusting deductions later and help your employees stay on track with their tax obligations.
How long to keep TD1 forms on file
The CRA requires you to keep TD1 forms for six years from the end of the tax year they relate to. For example, a TD1 collected in 2026 should be kept until at least the end of 2032.
Store the forms in a secure location, whether that's a locked filing cabinet or a password-protected digital folder. TD1 forms contain sensitive personal information, including social insurance numbers, so treat them with the same care you'd give any confidential employee record.
You don't need to send TD1 forms to the CRA unless they specifically request them. Keep them on hand in case of an audit or review.
If an employee submits an updated TD1, keep both the old and new versions on file. The old form shows what credits were claimed during the earlier period, which can be helpful if the CRA asks about past deductions.
Simplify TD1 and payroll with Xero
Managing TD1 forms is just one part of running payroll for your team. Between collecting forms, calculating deductions, and staying on top of CRA deadlines, payroll can take up more time than you'd like.
Xero's payroll software helps you handle the numbers so you can focus on running your business. With automatic tax calculations, direct deposit, and built-in compliance features, you can run payroll accurately and on time, pay period after pay period.
Whether you're onboarding your first hire or your twentieth, Xero makes the process simpler. Get one month free to see how it works for your business.
FAQs on TD1 forms
Here are answers to common questions employers have about TD1 forms.
What is the basic personal amount on the TD1 for 2026?
The federal basic personal amount for 2026 is $16,452. Each province and territory also sets its own basic personal amount, which your employee claims on their provincial TD1 form.
Is the TD1 form the same as a T4?
No. The TD1 is a form your employee fills out to tell you which tax credits to apply when calculating payroll deductions. The T4 is a slip you issue to each employee after the tax year ends, summarizing their employment income and deductions for the year.
Do I send TD1 forms to the CRA?
You don't send TD1 forms to the CRA as part of your regular payroll reporting. Keep them on file for six years. The CRA may request to see them during an audit, but otherwise they stay with you.
Can an employee request additional tax be deducted?
Yes. On page 2 of the federal TD1, your employee can specify an extra dollar amount to be deducted from each paycheque. This is useful for employees who have additional income sources or who want to avoid a tax bill when they file their return.
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