Form TD1, Personal Tax Credits Return, is the official Canada Revenue Agency (CRA) form that every employee in Canada must complete when starting new employment or when their personal tax credit situation changes. It is the Canadian equivalent of the U.S. Form W-4 and serves the same fundamental purpose: telling the employer how much federal income tax to withhold from each paycheque. The form is authorized under section 118 of the Income Tax Act (R.S.C., 1985, c. 1, 5th Supp.) and the Income Tax Regulations (C.R.C., c. 945).

The TD1 form collects information about the employee's eligibility for various non-refundable personal tax credits at the federal level. These credits reduce the amount of federal tax payable and therefore affect how much tax the employer must deduct at source. The basic personal amount is the foundation credit that every Canadian resident can claim — for the 2024 tax year, this amount is $15,705 for individuals with net income of $173,205 or less. Higher-income individuals (net income between $173,205 and $246,752) receive a gradually reduced basic personal amount down to $14,156.

Beyond the basic personal amount, the TD1 allows employees to claim additional credits including the age amount (up to $8,790 for individuals 65 and older), pension income amount (up to $2,000 for eligible pension recipients), tuition amounts for students or transferred education credits, the disability tax credit ($9,428 for individuals with an approved Form T2201), the spouse or common-law partner amount for employees supporting a low-income spouse, the eligible dependant amount for single parents supporting a dependant, and the Canada caregiver amount for employees caring for infirm dependants. The total of all these credits determines the employee's total claim amount, which the employer uses alongside the CRA payroll deduction tables to calculate the correct federal tax withholding from each pay period.

A TD1 form must be completed whenever an individual begins new employment in Canada. This is a mandatory requirement — the employer cannot process the first paycheque without determining the employee's federal tax credit entitlements. If the employee fails to submit a TD1, the employer must withhold federal tax based solely on the basic personal amount with no additional credits, which typically results in higher withholding than necessary and a larger refund when the employee files their T1 General Income Tax Return.

Employees must also file a new TD1 within seven days of any change in circumstances that affects their personal tax credit claims, as required under subsection 227(2) of the Income Tax Act. Common triggering events include getting married or entering a common-law relationship (enabling the spouse or common-law partner amount claim), separation or divorce (losing the spouse amount but potentially gaining the eligible dependant amount), the birth or adoption of a child, a dependant's income rising above the threshold (reducing or eliminating the spouse or dependant amount), turning 65 years of age (enabling the age amount claim), starting to receive eligible pension income (enabling the pension income amount), receiving CRA approval for the Disability Tax Credit via Form T2201, beginning or ending post-secondary education (affecting tuition amount claims), and taking on caregiving responsibilities for an infirm family member.

The TD1 is also relevant when an employee wants additional tax deducted from each pay period. Employees with multiple sources of income — such as those working two jobs, receiving rental income, or earning investment income — may find that their combined income pushes them into a higher tax bracket than either employer anticipates. By requesting additional withholding on the TD1, the employee can avoid owing a large balance when filing their annual T1 return. Pensioners receiving payments from a registered pension plan, RRIF, or annuity also complete a TD1 to inform the payer of their applicable credits.

The TD1 form requires the employee's full legal name, Social Insurance Number (SIN) in XXX-XXX-XXX format, date of birth, and complete residential address including province or territory and postal code. The SIN must match CRA records exactly — discrepancies can cause payroll reporting errors on the T4 slip at year-end. The employer's name and address are also recorded on the form.

The core of the TD1 is the personal tax credit calculation. Line 1 is the basic personal amount — $15,705 for 2024 if net income is $173,205 or less. Lines 2 through 8 capture additional eligible credits: the age amount (Line 2, maximum $8,790, reduced when net income exceeds $42,335), pension income amount (Line 3, maximum $2,000 for eligible pension income from RPPs, RRIFs, or annuities — excluding CPP, OAS, and GIS), tuition amounts (Line 4, including fees paid to eligible institutions and credits transferred from a child or grandchild), the disability amount (Line 5, $9,428 for individuals with approved Form T2201), the spouse or common-law partner amount (Line 6, calculated as $15,705 minus spouse's net income), the eligible dependant amount (Line 7, available to single, separated, divorced, or widowed individuals supporting a dependant), and the Canada caregiver amount (Line 8, $7,999 for infirm adult dependants, $2,616 for infirm children under 18).

The total claim amount on Line 9 is the sum of all applicable credits. This total drives the employer's payroll tax calculation using the CRA's payroll deduction tables published in guide T4032. An optional section allows the employee to request additional tax withholding per pay period — particularly important for employees with multiple income sources or self-employment income. A separate section addresses employees with more than one employer, warning that credits should generally be claimed with only one employer to prevent under-withholding. The employee must sign and date the form, certifying accuracy under the provisions of the Income Tax Act. Employers must retain completed TD1 forms in their payroll records and make them available to CRA auditors upon request.