T4008-ON (E) Rev. 16

This guide uses plain language to explain the most common tax situations. If you need more help, contact your tax services office.

Note
You must look up amount in two tax deductions tables – a federal table and a provincial table.

This guide is a supplement to the guide T4032, Payroll Deductions Tables.

Table of contents

Section A

• What's new as of January 1, 2016
• Payroll Deductions Tables
• Payroll Deductions Online Calculator
• Let us notify you
• General information
• Claim codes
• Explanation of claim codes
  • Claim code 0
  • Claim codes 1 to 10
  • Indexing of claim codes amounts
  • Chart 1 – 2016 federal claim codes
  • Chart 2 – 2016 Ontario claim codes
• Employment income from all sources

What's new as of January 1, 2016

Payroll Deductions Tables

Payroll Deductions Online Calculator

For your 2016 payroll deductions, you can use our Payroll Deductions Online Calculator (PDOC). This online calculator makes it easier to calculate payroll deductions. PDOC is available at www.cra.gc.ca/pdoc.

Let us notify you

We provide an electronic service that can notify you immediately, free of charge, of any changes for payroll deductions.

To subscribe, visit our Web site at www.cra.gc.ca/lists and enter your business's email address for each mailing list that you want to join.

Special Notice

Payroll Deductions Tables (T4032)

Changes are coming in 2017. Effective with the January 1, 2017 edition, the Canada Revenue Agency will no longer publish the paper and CD versions of the Guide T4032, Payroll Deductions Tables.

The electronic versions of the Guides T4008 and T4032 will continue to be available on our website at www.cra.gc.ca/payroll.

General information

This guide is a supplement to the guide entitled Payroll Deductions Tables (T4032). See the Payroll Deductions Tables for your province or territory if you need more information about:

• what's new for January 1, 2016;
• how to calculate tax deductions when you cannot use the tables;
• how to deduct income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums; and
• the payroll deductions required for pay periods other than those included in this guide.

For information on deducting, remitting, and reporting payroll deductions, refer to the following employers' guides:

• T4001, Employers' Guide – Payroll Deductions and Remittances
• T4130, Employers' Guide – Taxable Benefits and Allowances
• RC4110, Employee or Self-employed?
• RC4120, Employers' Guide – Filing the T4 Slip and Summary
• RC4157, Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary

You can download and print a copy of the above noted guides. Our guides are available from our Web site at www.cra.gc.ca/payroll . You can also use the Payroll Deductions Online Calculator free of charge.

Claim codes

You may have to ask your employees or your pensioners to complete a federal and a provincial personal tax credits return using a federal Form TD1 and a provincial Form TD1.

The total personal amount an employee claims on a TD1 form will determine which claim code you use. For 2016, the claim amounts that correspond to the federal claim codes are not the same as the claim amounts that correspond to the provincial claim codes. See Chart 1 and Chart 2.

The claim codes and corresponding amounts do not appear on either the federal or the provincial TD1 form.

Explanation of claim codes

Claim code 0

This code represents no claim amount. If the federal claim code is “0” because the employee is a non-resident, the provincial claim code must also be “0.” This code may also be used if the employee indicated they have more than one employer or payer at the same time and have entered “0” on the front page of Form TD1 for 2016.

Claim codes 1 to 10

You match the total claim amount reported on your employee's or pensioner's TD1 forms with the appropriate claim codes. Then, you look up the tax for the employee's pay under the claim code in the federal and provincial tax tables for the pay period.

Indexing of claim codes amounts

Employment income from all sources

On the federal and provincial TD1 forms, under the heading "Income from other employers or payers," employees can indicate that their expected employment income from all sources will be less than their total claim amount. If an employee states that his or her total expected income will be less than the "Total claim amount" of the TD1 forms, do not deduct any federal or provincial tax.

However, as an employer, if you know that this statement is false, you must deduct federal and provincial tax from the salary. Deduct tax according to the claim code that applies to the "Total claim amount" of the TD1 forms.

It is a serious offence to knowingly accept a Form TD1 that contains false or deceptive statements. If you are not sure a statement is true, contact your tax services office for advice.