Required materials step 1

• Lessons: Starting to work
  • Teacher overview (with answers and resource links) – Starting to work
• TD1 (Personal Tax Credits Return) forms
• Quiz: Starting to work
  • Teacher overview (with answers) – Quiz: Starting to work
• Video - The one about your pay stub
• Video - The one about the TD1 form, part 1
• Video - The one about the TD1 form, part 2
• Common tax terms
• Optional equipment:
  • Computer
  • Projector
  • Printer

Warm-up exercises step 2

First exercise

Step 1: Explain to students that whether they are starting their first job or have been working for many years, the basic parts of starting a new job do not change.

Step 2: Ask students if they have already worked for an employer or a company rather than odd jobs such as babysitting. For those that answer yes, ask what they remember about being hired, related to getting paid.

Second exercise

Step 1: Inform students that one of the most common taxes we pay in Canada is income tax. For most individuals, their employer takes this directly off their pay. This is known as a payroll deduction.

Step 2: Ask students if they know of any other amounts that are deducted from their pay.

Walk through the lessons step 3

Read through the lesson pages with the additional guidance provided below. Students can review material individually, in groups, or as a class.

Lesson A: Why you need a SIN or a tax number

Before starting the lesson

Advise students that all individuals in Canada require a SIN to work or to get benefits and services from the government. Depending on their residency status and their citizenship status, they may receive a permanent or a temporary SIN. An individual's SIN usually stays with them indefinitely.

After finishing the lesson

Stress to students the importance of keeping their SIN safe. Discuss the consequences of a compromised SIN, such as fraud or identity theft, and the long-term impacts this can have.

Lesson B: When to fill out a TD1, Personal Tax Credits Return

Before starting the lesson

Inform students that they will need to complete a TD1 form whenever they start a new job. As discussed previously, their employer will take income tax off their pay. Their answers on their TD1 form allow their employer to complete this calculation accurately based on their personal tax situation.

After finishing the lesson

Explain that, in Canada, individuals do their taxes to calculate the tax they owe on their income. They use information like their taxable income and the tax credits they’re entitled to. Their employer will, ideally, withhold enough tax to cover the taxes they owe on their income at the end of the year. This is why it’s important to complete the TD1 form accurately: to make sure that the correct amount of tax is withheld – no more, no less.

Lesson C: What is on your pay stub

Before starting the lesson

Discuss the concept of payroll with students. Explain that their employer will first calculate their pay based on the hours they work and their wage, and will then calculate what amounts to take off.

As previously mentioned, the most common deduction is income tax, which is calculated based on the employee’s income and the TD1 form they submit.

Their employer will also deduct other amounts, such as CPP/QPP contributions and EI premiums. These amounts are a pre-determined percentage of the employee’s income. Advise that their employer will make a matching contribution to these programs on their behalf.

After finishing the lesson

Ask students to look back at the notes they took during the warm up exercise about payroll deductions, and to compare them to what they learned in the video "The one about your pay stub". Ask them to share some of their ideas about why payroll deductions are important.

Inform them that:

• their contributions to social programs make these programs possible and help fund future payments they may receive from these programs
• they can also claim tax credits for these amounts when they do their taxes

Ask students what would happen if their employer did not take income tax off their pay, and what this might mean for individuals earning income through odd jobs that do not have tax automatically deducted, such as babysitting or mowing the lawn. Inform them that they would calculate the full amount of taxes they owe on their income when they do their taxes. This results in a large balance owing at once instead of paying it gradually over the course of the year.

Lesson D: What is on your T4

Before starting the lesson

Advise students that the T4 slip is one of the most common documents they will use when they do their taxes. It gives a history of their employment income and deductions for the entire year, similar to the year-to-date information found on their pay stub.

Bring it all together step 4

Direct students to complete the quiz to assess their understanding.

Discuss the connection between their employment earnings and the tax return.

When they do their taxes every year, they will:

• use their SIN to identify themselves with the CRA
• have the option of claiming the tax credits shown on the TD1 form on their tax return
• use their pay stubs to confirm the accuracy of their T4 slip
• use their T4 to report their earnings
• report the employment income they earned, as the taxes that they may owe are calculated using their income
• claim tax credits for certain payroll deductions, such as CPP/QPP contributions and EI premiums, to help lower the taxes they owe

Reconfirm that the information learned will be useful to students when they start to work in Canada; but, the same concepts will still apply when they do their taxes each year.