*** Transcriber's Note: Please set your voice synthesizer to read most punctuation. When you encounter the caret sign at the end of a line, please enter the applicable information, if necessary. Areas outlined in colour are indicated by three plus sings at the beginning and at the end. Tables and Figures are set-up in a narrative format and are indicated by three back- slashes at the beginning and at the end. *** Canada Revenue Agency T4032-ON-4 (09) E (Cover) Payroll Deductions Tables Ontario Effective April 1, 2009 The CPP and EI tables for 2009 are not part of this file. However, they are available on our Web site. Note You must look up amount in two deductions tables - a federal table and a provincial table. For more information, see the section called "You have to deduct both federal and provincial income tax". PAGE A-1 What's new as of April 1, 2009 +++ The major changes made to this publication since the last edition are outlined. This publication reflects some income tax changes recently announced which, if enacted by the applicable legislature as proposed, would be effective April 1, 2009. We recommend that you use the new payroll deductions tables in this publication for withholding commencing with the first payroll in April 2009. On January 27, 2009, the Minister of Finance announced income tax measures affecting payroll deductions. The Minister proposed increasing basic personal amount, the spouse or common-law partner amount and the amount for eligible dependant from $10,100 to $10,375 effective April 1, 2009. The Minister also proposed increasing the top two lowest personal income thresholds from $38,832 to $41,200 and from $77,664 to $82,399 effective April 1, 2009. There are no changes to the Ontario tax for April 1, 2009. +++ Payroll Deductions Online Calculator For your 2009 payroll deductions, you can use our Payroll Deductions Online Calculator free of charge at www.cra.gc.ca/pdoc. By using the calculator, you will help us reduce the printing and mailing costs, and thus save public funds. Tables on Diskette (TOD) In keeping with our goal to be environmentally conscious and reduce paper waste, we are significantly reducing the volume of hard copy payroll products we produce each year. The April 1, 2009, edition of the Tables on Diskette will be published in limited quantities. Payroll Deductions Tables (T4032) +++ We no longer automatically mail printed copies of the T4032 Payroll Deductions Tables. We encourage businesses to use electronic T4032 publications or the Payroll Deductions Online Calculator (PDOC). +++ PAGE A-2 Tables on the Web You can download the tables from our Web site at www.cra.gc.ca/payroll and save them on your computer. You can choose to print only the specific pages or information you need. Generally, the electronic version of the T4032 publication is available on our Web site before the printed version is available. We can still mail a paper version of the tables to you on request. Simply order one from our Web site at www.cra.gc.ca/orderforms or call toll free at 1-800-959-2221. Let us notify you The CRA provides an electronic service that lets us notify you immediately, free of charge, of any changes to the payroll deductions. To subscribe, simply visit the CRA Web site at www.cra.gc.ca/lists and provide your business's email address for each mailing list that interests you. You have to deduct both federal and provincial income tax If you are using the income tax tables in this publication to determine your employees' and pensioners' total tax deductions, you have to look up the amounts in the federal tax table and the provincial tax table. If not enough taxes have been deducted, employees and pensioners can ask to have more tax withheld at source to adjust any tax shortfall. To do so, employees and pensioners should complete a federal Form TD1 and return it to you. New employees and pensioners or employees and pensioners who wish to change their federal or provincial claim amounts will have to complete a federal Form TD1 and a provincial Form TD1 for 2009. Example You are an employer in Ontario. Sara, your employee, earns $605 a week in 2009 with a federal claim code 1 and a provincial claim code 1. In the federal tax deductions table, the federal tax deduction for $605 weekly under claim code 1 is $52.10 (see Figure 1 on page A-3). In the Ontario tax deductions table, the provincial tax deduction for $605 weekly under claim code 1 is $29.85 (see Figure 2 on page A-3). Sara's total tax deduction is $81.95 ($52.10 + $29.85). This amount of taxes will be included in your remittance to us. PAGE A-3 \\\ Figure 1 $605 weekly under claim code 1 Federal tax deductions Effective April 1, 2009 Weekly (52 pay periods a year) Also look up the tax deductions in the provincial table Pay From $600 Less than $608 Federal claim codes 1 Deduct from each pay $52.10 Figure 2 $605 weekly under claim code 1 Ontario provincial tax deductions Effective April 1, 2009 Weekly (52 pay periods a year) Also look up the tax deductions in the federal table Pay From $602 Less than $610 Provincial claim codes 1 Deduct from each pay $29.85 \\\ PAGE A-4 (blank) PAGE A-5 Table of contents A Who should use this publication?, page A-7 What if your pay period is not in this publication?, page A-7 Which provincial or territorial tax table should you use?, page A-7 Federal tax changes effective April 1, 2009, page A-8 Tax rates and income thresholds, page A-8 Canada Employment Credit, page A-8 Personal amounts, page A-8 Labour-sponsored funds, page A-9 Provincial tax for 2009, page A-9 Tax rates and income thresholds, page A-9 Ontario Health Premium, page A-9 Surtax, page A-9 Tax reduction, page A-10 Personal amounts, page A-10 Labour-sponsored funds, page A-10 Canada Pension Plan (CPP) and Employment Insurance (EI), page A-11 CPP contributions, page A-11 EI premiums, page A-11 Personal tax credits returns (TD1 forms), page A-11 Federal Form TD1, 2009 Personal Tax Credits Return, page A-11 Provincial Form TD1ON, 2009 Ontario Personal Tax Credits Return, page A-12 Claim codes, page A-12 Explanation of claim codes, page A-12 Claim code 0, page A-12 Claim codes 1 to 10, page A-13 Chart 1A (January 1, 2009) - Federal claim codes, page A-13 Chart 1B (April 1, 2009) - Federal claim codes, page A-13 Chart 2 - 2009 Ontario claim codes A-14 Employment income from all sources, page A-14 Tax deductions from commission income, page A-14 Form TD1X, Statement of Commission Income and Expenses for Payroll Tax Deductions, page A-14 Payroll Deductions Online Calculator, page A-15 Tables on Diskette, page A-15 Some information about payroll deductions, page A-16 Deducting tax from income not subject to CPP contributions or EI premiums, page A-16 Deducting tax when the employee has a labour-sponsored funds tax credit, page A-16 PAGE A-6 Step-by-step calculation of tax deductions, page A-17 Example 1 - Tax to deduct for all income except commissions, page A-17 Example 2 - Tax to deduct for commission income, page A-20 Chart 3 - 2009 federal tax rates and income thresholds, page A-22 Chart 4 - 2009 Ontario tax rates and income thresholds, page A-22 Chart 5 - Ontario tax reduction for 2009, page A-23 Your opinion counts!, page A-23 *** Transcriber's Note: Please note that sections B to E as indicated in the Table of Contents are not reproduced as a voice synthesizer document. You can review the payroll deductions online calculator as indicated on page A-15. *** B Canada Pension Plan Contributions Tables The CPP tables are not part of this file. However, they are available in the January 1, 2009 paper version of this publication and on our Website. C Employment Insurance Premiums Table The EI table is not part of this file. However, it is available in the January 1, 2009 paper version of this publication and on our Website. D Federal Tax Deductions Tables, page D-1 Weekly (52 pay periods), page D-1 Biweekly (26 pay periods), page D-7 Semi-monthly (24 pay periods), page D-13 Monthly (12 pay periods), page D-19 E Provincial Tax Deductions Tables, page E-1 Weekly (52 pay periods), page E-1 Biweekly (26 pay periods), page E-7 Semi-monthly (24 pay periods), page E-13 Monthly (12 pay periods), page E-19 This publication uses plain language to explain the most common tax situations. If you need more help, contact your tax services office. PAGE A-7 Who should use this publication? You use this publication if you are an employer or a payer. This publication contains tables for federal and provincial tax deductions, CPP contributions and EI-premiums. It will help you determine the payroll deductions for your employees or pensioners. For more information on deducting, remitting, and reporting payroll deductions, see the following employers' guides: - T4001, Employers' Guide - Payroll Deductions and Remittances - T4130, Employers' Guide - Taxable Benefits - RC4110, Employee or Self-employed? - RC4120, Filing the T4 Slip and Summary Form - RC4157, Deducting Income Tax on Pension and Other Income, and Filing the T4A Slip and Summary Form These guides are available on our Web site at www.cra.gc.ca. You can also complete the order form available on our Web site, or call 1-800-959-2221. Note The CPP and EI rate did not change. Therefore, the CPP and EI tables shown in the January 1, 2009 edition are not reproduced in this edition. You will have to keep the January 1, 2009 edition to determine the CPP and EI deductions for the period from January 1 to December 31, 2009. What if your pay period is not in this publication? This publication contains the most common pay periods: weekly, biweekly (every two weeks), semi monthly, and monthly. If you have unusual pay periods, such as hourly, daily (240 working days), or 10, 13, or 22 pay periods a year, see the Payroll Deductions Supplementary Tables (T4008) or Tables on Diskette (TOD) to determine the tax deductions. Which provincial or territorial tax table should you use? Before you decide which tax table to use, you have to determine your employee's province or territory of employment. This depends on whether or not you require the employee to report for work at your place of business. If the employee reports for work at your place of business, the province or territory of employment is considered to be the province or territory where your business is located. PAGE A-8 To withhold payroll deductions, use the tax table for that province or territory of employment. If you do not require the employee to report for work at your place of business, the province or territory of employment is the province or territory in which your business is located, and from which you pay your employee's salary. Federal tax changes effective April 1, 2009 Tax rates and income thresholds +++ The Federal budget tabled on January 27, 2009, contains proposed changes to the top two lowest personal income thresholds. Effective April 1, 2009, the federal tax rates and income thresholds are revised as follows: - 15% of taxable income less than or equal to $41,200; - 22% of taxable income greater than $41,200 and less than or equal to $82,399; - 26% of taxable income greater than $82,399 and less than or equal to $126,264; and - 29% of taxable income greater than $126,264. +++ Canada Employment Credit The non refundable tax credit, Canada Employment amount is built into the federal payroll deductions tables. The federal Canada Employment Credit is the lesser of: - $1,044; and - the individual's employment income for the year. The maximum annual credit is $156.60. Please note that pension income in not eligible for this credit. If you are paying pension income use Tables on Diskette to find the tax deduction. Personal amounts +++ Listed below are the revised federal non refundable personal tax credits, effective April 1, 2009. For more detailed information on the personal amounts, see Form TD1. Basic personal amount $10,375 Spouse or common-law partner amount $10,375 Amount for an eligible dependant $10,375 +++ PAGE A-9 Labour-sponsored funds The federal labour-sponsored funds tax credit is the lesser of: - $750; or - 15% of the purchase of approved shares. The credit is not built into the federal payroll deductions tables but it is included in examples 1 and 2. For more information, see the section called "Step-by-step calculation of tax deductions" on page A-17. Provincial tax for 2009 Tax rates and income thresholds Ontario's tax rates and income thresholds for 2009 are as follows: - 6.05% on taxable income less than or equal to $36,848; - 9.15% on taxable income greater than $36,848 and less than or equal to $73,698; and - 11.16% on taxable income greater than $73,698. Ontario Health Premium The Ontario Health Premium for 2009 is as follows: - when taxable income is less than or equal to $20,000, the premium is $0; - when taxable income is greater than $20,000 and less than or equal to $36,000, the premium is equal to the lesser of (i) $300, and (ii) 6% of taxable income greater than $20,000; - when taxable income is greater than $36,000 and less than or equal to $48,000, the premium is equal to the lesser of (i) $450, and (ii) $300 plus 6% of taxable income greater than $36,000; - when taxable income is greater than $48,000 and less than or equal to $72,000, the premium is equal to the lesser of (i) $600, and (ii) $450 plus 25% of taxable income greater than $48,000; - when taxable income is greater than $72,000 and less than or equal to $200,000, the premium is equal to the lesser of (i) $750, and (ii) $600 plus 25% of taxable income greater than $72,000; and - when taxable income is greater than $200,000, the premium is equal to the lesser of (i) $900, and (ii) $750 plus 25% of taxable income greater than $200,000. PAGE A-10 Surtax Ontario's surtax for 2009 is as follows: - where the basic provincial tax payable is less than or equal to $4,257, the surtax is $0; - where the basic provincial tax payable is greater than $4,257 and less than or equal to $5,370, the surtax is 20% of the basic provincial tax payable over $4,257; and -where the basic provincial tax payable is greater than $5,370, the surtax is 20% of the basic provincial tax payable over $4,257, plus 36% of the basic provincial tax payable over $5,370. Tax reduction Ontario's tax reduction amounts for 2009 are as follows: Basic personal amount $205 Amount for each dependant under age 18 $379 Amount for each dependant with a disability that the employee or pensioner has claimed on Form TD1ON $379 The reduction remains equal to twice the individual's personal amounts minus the provincial tax payable before reduction. The reduction cannot be more than the provincial tax payable before reduction. The reduction is nil when the provincial tax payable before reduction exceeds twice the personal amounts. Because of the way the reduction for dependants with disabilities is determined, we include only the basic amount in the provincial tax tables. Personal amounts Listed below are some of the provincial non-refundable personal tax credits. For more detailed information on the personal amounts, see Form TD1ON. Basic personal amount $8,881 Spouse or common-law partner amount $7,541 Amount for an eligible dependant $7,541 Labour-sponsored funds The provincial labour-sponsored funds tax credit for Ontario is the lesser of: - $1,125; or - 15% of the purchase of approved shares. The credit is not built into the provincial payroll deductions tables but it is included in examples 1 and 2. For more information, see the section called "Step-by-step calculation of tax deductions" on page A-17. PAGE A-11 Canada Pension Plan (CPP) and Employment Insurance (EI) Do not discard the January 1, 2009 publication. The CPP and EI tables have not been reproduced in this publication. CPP contributions There are no changes to the CPP contributions for the period of April 1, 2009 to December 31, 2009. The maximum pensionable earnings for CPP are $46,300 and the basic exemption for the year is $3,500. The contribution rate for employees is 4.95%. An employee's maximum contribution for the year is $2,118.60. EI premiums There are no changes to the EI premiums for the period of April 1, 2009 to December 31, 2009. The maximum insurable earnings for EI are $42,300 and the premium rate is 1.73%. The maximum annual premium is $731.79. Personal tax credits returns (TD1 forms) 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 claim code amounts do not appear on either the federal or the provincial TD1 form. See the section called "Claim codes" on page A-12. Federal Form TD1, 2009 Personal Tax Credits Return +++ We have revised the federal Form TD1 effective April 1, 2009. We do not require every employee or pensioner to file a Form TD1 for 2009. However, new employees and pensioners, or employees and pensioners who wish to change their federal claim amounts will have to complete the federal Form TD1 for 2009. +++ Form TD1-WS, Worksheet for the 2009 Personal Tax Credits Return, is available for employees or pensioners who choose to calculate reduced claims for some of the federal personal tax credits. PAGE A-12 Provincial Form TD1ON, 2009 Ontario Personal Tax Credits Return We have not revised the provincial Form TD1ON effective January 1, 2009. We do not require every employee or pensioner to file a Form TD1ON for 2009. However, new employees and pensioners, or employees and pensioners who wish to change their provincial claim amounts will have to complete the provincial Form TD1ON for 2009. Form TD1ON-WS, Worksheet for the 2009 Ontario Personal Tax Credits Return, is available for employees or pensioners who choose to calculate reduced claims for some of the provincial personal tax credits. Employees must complete the Form TD1 that corresponds to their province of employment. Pensioners must complete the Form TD1 that corresponds to their province of residence. An employee who lives in one province or territory but works in another may be subject to excessive tax deductions. If so, the employee can ask for a reduction in tax deductions by asking for a letter of authority from any tax services office. For more information, see Chapter 6 of the employers' guide called Payroll Deductions and Remittances. Claim codes The total personal amount an employee claims will determine which claim code you will use. +++ For the claim codes, the chart you use depends on which federal form TD1 and form TD1ON E the employee filed. When the employee filed a January 1, 2009 form or forms, use Chart 1A (federal) and Chart 2 (Ontario) as applicable. When the employee filed an April 1, 2009 form or forms, use Chart 1B (federal) and Chart 2 (Ontario) as applicable. If the employee filed a form or forms in a prior year, use the same claim code you used in the past for the employee. +++ 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 allowed. If the federal claim code is "0" because the employee is a non-resident, the provincial claim code must also be "0." PAGE A-13 Claim codes 1 to 10 You match the total claim amount reported on line 12 of 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. *** Transcriber's Note: In print, the following charts 1A, 1B and 2 were set- up as 2 columns, labelled as: Total claim amount ($); Claim code *** \\\ Chart 1A (January 1, 2009 - Federal claim codes Total claim amount ($) No claim amount Claim code 0 Total claim amount ($) Minimum to 10,100.00 Claim code 1 Total claim amount ($) 10,100.01 to 12,072.00 Claim code 2 Total claim amount ($) 12,072.01 to 14,044.00 Claim code 3 Total claim amount ($) 14,044.01 to 16,016.00 Claim code 4 Total claim amount ($) 16,016.01 to 17,988.00 Claim code 5 Total claim amount ($) 17,988.01 to 19,960.00 Claim code 6 Total claim amount ($) 19,960.01 to 21,932.00 Claim code 7 Total claim amount ($) 21,932.01 to 23,904.00 Claim code 8 Total claim amount ($) 23,904.01 to 25,876.00 Claim code 9 Total claim amount ($) 25,876.01 to 27,848.00 Claim code 10 Total claim amount ($) 27,848.01 and over Claim code X The employer must do a manual calculation of tax. No withholding Claim code E \\\ \\\ Chart 1B (April 1, 2009 - Federal claim codes Total claim amount ($) No claim amount Claim code 0 Total claim amount ($) Minimum to 10,375.00 Claim code 1 Total claim amount ($) 10,375.01 to 12,347.00 Claim code 2 Total claim amount ($) 12,347.01 to 14,319.00 Claim code 3 Total claim amount ($) 14,319.01 to 16,291.00 Claim code 4 Total claim amount ($) 16,291.01 to 18,263.00 Claim code 5 Total claim amount ($) 18,263.01 to 20,235.00 Claim code 6 Total claim amount ($) 20,235.01 to 22,207.00 Claim code 7 Total claim amount ($) 22,207.01 to 24,179.00 Claim code 8 Total claim amount ($) 24,179.01 to 26,151.00 Claim code 9 Total claim amount ($) 26,151.01 to 28,123.00 Claim code 10 Total claim amount ($) 28,123.01 and over Claim code X The employer must do a manual calculation of tax. No withholding Claim code E \\\ \\\ Chart 2 - 2009 Ontario claim codes Total claim amount ($) No claim amount Claim code 0 Total claim amount ($) Minimum to 8,881.00 Claim code 1 Total claim amount ($) 8,881.01 to 10,794.00 Claim code 2 Total claim amount ($) 10,794.01 to 12,707.00 Claim code 3 Total claim amount ($) 12,707.01 to 14,620.00 Claim code 4 Total claim amount ($) 14,620.01 to 16,533.00 Claim code 5 Total claim amount ($) 16,533.01 to 18,446.00 Claim code 6 Total claim amount ($) 18,446.01 to 20,359.00 Claim code 7 Total claim amount ($) 20,359.01 to 22,272.00 Claim code 8 Total claim amount ($) 22,272.01 to 24,185.00 Claim code 9 Total claim amount ($) 24,185.01 to 26,098.00 Claim code 10 Total claim amount ($) 26,098.01 and over Claim code X The employer must do a manual calculation of tax. No withholding Claim code E \\\ 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" on line 12 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" on line 12 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. Tax deductions from commission income For information about tax deductions for commission income, see the section called "Example 2, Tax to deduct for commission income" on page A-20. You can also use the Payroll Deductions Online Calculator to find the payroll deductions for commission income. Form TD1X, Statement of Commission Income and Expenses for Payroll Tax Deductions We have not revised Form TD1X, Statement of Commission Income and Expenses for Payroll Tax Deductions, for 2009. PAGE A-15 Your employees must complete a Form TD1X, if they want you to adjust their tax deductions to take into account their commission expenses. You deduct tax from your employees commission pay using the "Total claim amount" at line 12 of their Form TD1, in one of the following cases: - if your employees do not complete a Form TD1X; or - if they inform you in writing that they want to cancel a previously completed Form TD1X. Payroll Deductions Online Calculator For your 2009 payroll deductions, you can use our Payroll Deductions Online Calculator free of charge. The Payroll Deductions Online Calculator is an interactive web application that calculates payroll deductions for all pay periods, provinces (except for Quebec), and territories. You will find a link to the Payroll Deductions Online Calculator at www.cra.gc.ca/pdoc. The Payroll Deductions Online Calculator applies the exact taxable income amount to determine the tax deductions. The calculations are more precise than those produced by the Tables on Diskette (TOD) and tax tables. The Payroll Deductions Online Calculator offers you the most recent calculations as well as previous versions back to January 1, 2007. Tables on Diskette Tables on Diskette (TOD) is a stand alone computer program that calculates payroll deductions for all pay periods, provinces (except for Quebec), and territories. +++ The April 1, 2009, edition of the Tables on Diskette will be published in limited quantities. TOD includes the revised federal payroll deductions effective April 1, 2009. +++ PAGE A-16 Some information about payroll deductions Use the information in this publication with our employers' guides. These guides will give you all the information you need for deducting, remitting, and reporting amounts. Deducting tax from income not subject to CPP contributions or EI premiums Note The Chart 3 - CPP and EI credit amounts has been removed from the T4032 publication as result of the non-refundable tax credit, Canadian Employment Credit (CEC) introduced in 2006 and built into the federal payroll deductions tables. To determine the amount of tax to deduct from income not subject to CPP contributions or EI premiums, you can use the Payroll Deductions Online Calculator or the Tables on Diskette. Deducting tax when the employee has a labour-sponsored funds tax credit You may reduce tax deductions for an employee who has a tax credit from the purchase of qualifying shares of a labour-sponsored venture capital corporation. If the amounts for the share purchase are payroll deducted, you can make the reduction in tax without a letter of authority from a tax services office. To allow the credit, first determine the annual federal and provincial tax credit arising from the share purchase. Next, divide the credit by the number of pay periods in the year. Finally, reduce the tax shown in the federal or provincial table by the tax credit for the pay period. If the share purchase or the tax credit deductions begin after the first pay period in the year, the credit can be "accelerated." This is done by multiplying the credit by the total number of pay periods in the year and then dividing by the number of pay periods remaining in the year. The resulting amount is used to reduce tax in each remaining pay period. PAGE A-17 Step-by-step calculation of tax deductions You can use the following step-by-step calculations to calculate the tax deductions for any employee or pensioner who earns more than the maximum amounts included in the tax deductions tables. You can also use the calculations for commission income or any employee with claim code "0" who earns less than the minimum amount shown in the tables. These calculations will also help you to determine a detailed and more exact amount of tax to deduct from the remuneration of your employees or pensioners. Example 1 shows you how to determine the amount of tax to deduct from all income except commissions. Example 2 shows you how to determine the amount of tax to deduct from commission income. You can follow the steps in either of Example 1 or Example 2 to calculate the amount of tax to deduct for a pay period. Follow the order shown, otherwise, your results will not be correct. However, if you design your own payroll program or spreadsheets to calculate tax deductions, do not use either of these calculations. Instead, see the publication called Payroll Deductions Formulas for Computer Programs (T4127). Example 1 Tax to deduct for all income except commissions This example applies to a person who earns $1,500 weekly, contributes $60 to a registered pension plan (RPP), $8 for union dues, and $80 to a registered retirement savings plan (RRSP). This person claims the basic personal amount plus the full claim amount for a dependent spouse. This person bought $850 of approved shares of the capital stock of prescribed labour-sponsored venture capital corporations. Calculate annual taxable income (1) Gross remuneration for the pay period (weekly) $1,500.00 (2) Minus - the RPP or retirement compensation arrangement (RCA) contributions $60.00 - the union dues 8.00 - the other amounts authorized by a tax services office 0.00 - the RRSP contributions* 80.00 *This amount has to be deducted at source. (3) Net remuneration for the pay period (1,500.00 minus 148.00) $1,352.00 (4) Annual net income ($1,352 multiplied by 52 weeks) $70,304.00 PAGE A-18 (5) Minus the annual deduction for living in a prescribed zone, reported on Form TD1 N/A (6) Annual taxable income $70,304.00 Calculate federal tax (7) Multiply the amount at line 6 by the federal tax rate based on Chart 3 on page A-22. ($70,304.00 multiplied by 0.22) $15,466.88 (8) Minus the federal constant based on the annual taxable income at line 6 (see Chart 3) 2,884.00 (9) Federal tax (line 7 minus line 8) (15,466.88 minus 2,884.00) $12,582.88 (10) Minus the federal tax credits: - the total of personal tax credit amounts reported on the federal Form TD1 $20,750.00 - the CPP contributions for the pay period multiplied by the number of pay periods in the year (annual maximum $2,118.60)* 2,118.60 - the EI premiums for the pay period multiplied by the number of pay periods in the year (annual maximum $731.79)* 731.79 - the Canada Employment Credit (annual maximum $1,044.00) 1,044.00 Total $24,644.39 *Note When the maximum CPP contributions or EI premiums for the year is reached, use the maximum amount for subsequent calculations (11) Multiply the total at line 10 by the lowest federal tax rate for the year. 0.15 (12) Total federal tax credits ($24,644.39 multiplied by 0.15) 3,696.66 (13) Basic federal tax (line 9 minus line 12) ($12,582.88 minus 3,696.66) $8,886.22 (14) Minus the federal labour-sponsored funds tax credit The lesser of: (i) $750 or (ii) 15% of the purchase of approved shares (15% multiplied by $850 = $127.50) Labour-sponsored funds federal tax credit 127.50 (15) Total federal tax payable for the year (line 13 minus line 14) ($8,886.22 minus 127.50) $8,758.72 Calculate provincial tax (16) Basic provincial tax for Ontario: multiply the amount at line 6 by the provincial tax rate based on Chart-4 on page A-22. ($70,304.00 multiplied by 0.0915) $6,432.82 (17) Minus the provincial constant based on the annual taxable income at line 6 (See Chart 4) 1,142.00 (18) Provincial tax on income for Ontario (line 16 minus line 17) ($6,432.82 minus 1,142.00) $5,290.82 (19) Minus the provincial tax credits: - the total of personal tax credit amounts reported on Form TD1ON $16,422.00 - the CPP contributions for the pay period multiplied by the number of pay periods in the year (annual maximum $2,118.60)* 2,118.60 the EI premiums for the pay period multiplied by the number of pay periods in the year (annual maximum $731.79)* 731.79 Total $19,272.39 PAGE A-19 *Note When the maximum CPP contributions or EI premiums for the year is reached, use the maximum amount for subsequent calculations (20) Multiply the total at line 19 by the lowest provincial tax rate for the year. 0.0605 (21) Total provincial tax credits ($19,272.39 multiplied by 0.0605) 1,165.98 (22) Basic provincial tax (line 18 minus line 21) ($5,290.82 minus 1,165.98) $4,124.84 (23) Provincial surtax - where line 22 is less than or equal to $4,257, the surtax is $0 - where line 22 is greater than $4,257 and less than or equal to $5,370, the surtax is 20% of line 22 that exceeds $4,257 $0.00 - where line 22 is greater than $5,370, the surtax is 20% of line 22 that exceeds $4,257 plus 36% of line 22 that exceeds $5,370 0.00 Provincial surtax 0.00 (24) Total provincial tax including surtax $4,124.84 (25) Ontario Health Premium Determine the premium based on the annual taxable income (line 6) and the explanation on page A-9. The premium is the lesser of: (i) $600 or (ii) $450 plus 25% of taxable income greater than $48,000 and less than or equal to $72,000: 600.00 (26) Provincial tax payable before reduction (line 24 plus line 25) (4,124.84 plus 600.00) $4,724.84 (27) Minus the provincial tax reduction: The lesser of: (i) the total provincial tax payable at line 24; and $4,124.84 (ii) twice the applicable personal amounts shown in Chart 5 on page A-23 $410.00 minus the amount at line (i) above. If the result is negative, substitute $0 (410.00 minus 4,124.84) $0. $0.00 (28) Provincial tax before labour-sponsored funds tax credit $4,724.84 (29) Minus the provincial labour-sponsored funds tax credit The lesser of: (i) $750 or (ii) 15% of the purchase of approved shares ($850 multiplied by 15% = $127.50) 127.50 (30) Total provincial tax payable for the year (line 26 minus line 29) (4,724.84 minus 127.50) $4,597.34 Calculate total tax and the tax deduction for the pay period (31) Total federal and provincial tax deductions for the year: (line 15 plus line 30) ($8,758.72 + 4,597.34) $13,356.06 If the result is negative, substitute $0. (32) Tax deduction for the pay period: Divide the amount at line 31 by the number of pay periods in the year (52). $256.85 PAGE A-20 Example 2 Tax to deduct for commission income This example is for a person who is paid by commission. Form TD1X shows a total remuneration of $80,400 and expenses of $10,000. This person claims the basic personal claim amount on the federal and provincial TD1 forms. This person bought $1,850 of approved shares of the capital stock of prescribed labour-sponsored venture capital corporations. This person has registered pension plan (RPP) contributions of $1,000 and has received authorization from a tax services office to reduce the amount subject to income tax by an annual deduction of $4,000. Calculate annual taxable income (1) Total remuneration reported on Form TD1X $80,400.00 (2) Minus - the total expenses reported on Form TD1X $10,000.00 - RPP or retirement compensation arrangement (RCA) contributions 1,000.00 - the other amounts authorized by a tax services office 4,000.00 - the RRSP contributions* 0.00 Subtotal 15,000.00 *This amount has to be deducted at source. (3) Annual net income (84,400.00 minus 15,000.00) $65,400.00 (4) Minus the annual deduction for living in a prescribed zone, reported on Form TD1 N/A (5) Annual taxable income $65,400.00 Calculate federal tax (6) Multiply the amount at line 5 by the federal tax rate based on Chart 3 on page A-22. (65,400.00 multiplied by 0.22) $14,388.00 (7) Minus the federal constant based on the annual taxable income at line 5 see Chart 3) 2,884.00 (8) Federal tax (line 6 minus line 7) (14,388.00 minus 2,884.00) $11,504.00 (9) Minus the federal tax credits: - the total of personal tax credit amounts reported on the federal Form TD1 $10,375.00 - the CPP contributions for the year based on line 1 (annual maximum $2,118.60)* 2,118.60 - the EI premiums for the year based on line 1 (annual maximum $731.79)* 731.79 - the Canada Employment Credit (annual maximum $1,044.00) 1,044.00 Total $14,269.39 *Note When the maximum CPP contributions or EI premiums for the year is reached, use the maximum amount for subsequent calculations (10) Multiply the total at line 9 by the lowest federal tax rate for the year. 0.15 (11) Total federal tax credits (14,269.39 multiplied by 0.15) 2,140.41 (12) Basic federal tax (line 8 minus line 11) (11,504.00 minus 2,140.41) $9,363.59 PAGE A-21 (13) Minus the federal labour-sponsored funds tax credit The lesser of: (i) $750 or (ii) 15% of the purchase of approved shares (15% multiplied by $1,850 = $277.50) Labour-sponsored funds federal tax credit 277.50 (14) Total federal tax payable for the year (line 12 minus line 13) (9,363.59 minus 277.50) $9,086.09 Calculate provincial tax (15) Basic provincial tax for Ontario: multiply the amount at line 5 by the provincial tax rate based on Chart 4 on page A-22. (65,400.00 multiplied by 0.0915) $5,984.10 (16) Minus the provincial constant based on the annual taxable income at line 5 (See Chart 4) 1,142.00 (17) Provincial tax on income for Ontario (line 15 minus line 16) (5,984.10 minus 1,142.00) $4,842.10 (18) Minus the provincial tax credits: - the total of personal tax credit amounts reported on Form TD1ON $8,881.00 - the CPP contributions for the year based at line 1 (annual maximum $2,118.60)* 2,118.60 - the EI contributions for the year based at line 1 (annual maximum $731.79)* 731.79 Total $11,731.39 *Note When the maximum CPP contributions or EI premiums for the year is reached, use the maximum amount for subsequent calculations (19) Multiply the total at line 18 by the lowest provincial tax rate for the year. 0.0605 (20) Total provincial tax credits (11,731.39 multiplied by 0.0605) 709.75 (21) Basic provincial tax (line 17 minus line 20) (4,842.10 minus 709.75) $4,132.35 (22) Provincial surtax - where line 21 is less than or equal to $4,257, the surtax is $0 - where line 21 is greater than $4,257 and less than or equal to $5,370, the surtax is 20% of line 21 that exceeds $4,257 $0.00 - where line 21 is greater than $5,370, the surtax is 20% of line 21 that exceeds $4,257 plus 36% of line 21 that exceeds $5,370 0.00 Provincial surtax 0.00 (23) Total provincial tax including surtax (4,132.25 plus 0.00) $4,132.35 (24) Ontario Health Premium Determine the premium based on the annual taxable income (line 5) and the explanation on page A-9. The premium is equal to the lesser of: (i) $600 or (ii) $450 plus 25% of taxable income greater than $48,000 and less than or equal to $72,000: 600.00 (25) Provincial tax payable before reduction (line 23 plus line 24) (4,132.35 plus 600.00) $4,732.35 (26) Minus the provincial tax reduction: The lesser of: (i) the total provincial tax payable at line 23, and $4,132.35 PAGE A-22 (ii) twice the applicable personal amounts shown in Chart 5 on page A-23 minus the amount at line (i). If the result is negative, substitute $0 (410.00 minus 4,132.35) $0.00 (27) Provincial tax before labour-sponsored funds tax credit $4,732.35 (28) Minus the provincial labour-sponsored funds tax credit The lesser of: (i) $750; or (ii) 15% of the purchase of approved shares ($1,850 multiplied by 15% = $277.50) 277.50 (29) Total provincial tax payable for the year (line 25 minus line 28) ($4,732.35 minus 277.50) $4,454.85 Calculate total tax and the tax rate for the commission employee (30) Total federal and provincial tax deductions for the year: (line 14 plus line 29) ($9,086.09 minus $4,454.85) $13,540.94 If the result is negative, substitute $0. (31) Divide the amount at line 30 by the amount at line 1, or rounded to 0.1684 or rounded to 0.17 (32) Multiply each gross commission amount by the tax rate percentage at line 31. Note If your employees who earn commission income amend their TD1 or TD1X forms, you will have to redo this calculation. *** Transcriber's Note: In print, chart 3 was set-up as 3 columns, labelled as: Annual taxable income ($) From; To; Federal tax rate R; Constant ($) K. *** \\\ Chart 3 2009 federal tax rates and income thresholds Annual taxable income ($) From 0.00 - To 41,200.00 Federal tax rate R 0.15 Constant ($) K 0 Annual taxable income ($) From 41,200.01 - To 82,399.00 Federal tax rate R 0.22 Constant ($) K 2,884 Annual taxable income ($) From 82,399.01 - To 126,264.00 Federal tax rate R 0.26 Constant ($) K 6,180 Annual taxable income ($) From 126,264.01 - To and over Federal tax rate R 0.29 Constant ($) K 9,968 \\\ *** Transcriber's Note: In print, chart 4 was set-up as 3 columns, labelled as: Annual taxable income ($) From; To; Provincial tax rate V; Constant ($) KP. *** \\\ Chart 4 2009 Ontario tax rates and income thresholds Annual taxable income ($) From 0.00 - To 36,848.00 Provincial tax rate V 0.0605 Constant ($) KP 0 Annual taxable income ($) From 36,848.01 - To 73,698.00 Provincial tax rate V 0.0915 Constant ($) KP 1,142 Annual taxable income ($) From 73,698.01 - To and over Provincial tax rate V 0.1116 Constant ($) KP 2,624 \\\ PAGE A-23 \\\ Chart - 5 Ontario tax reduction for 2009 ($) Basic amount 205 Amount for each dependant under 18 379 Amount for a dependant with a disability 379 \\\ Your opinion counts! 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