Question

explain why and how an employee would: request additional tax deductions at source apply for a reduction in tax deductions at source

Answer 1

If you’re an employee, your employer will deduct income tax from your pay cheque. This is known as tax deductions at source. Your employer then sends this tax on your behalf to the Government or Revenue Authority.

If you regularly get a tax refund from the Authority, this is no cause for celebration. You may be having too much tax withheld at source. Reducing the tax withheld will increase your net take-home pay.

Three ways to reduce tax

1. Give your employer accurate information

When you start a new job, you must fill Form. Your employer uses this form to calculate how much tax to deduct from your pay cheque, based on the non-refundable tax credits you are entitled to. Examples: spousal amount, care giver amount, tuition and education amounts.

2. Tell your employer if your personal circum​stances change

if a change in your circumstances means that you are entitled to additional or fewer tax credits, complete a new form. For example, if you get married or enroll at a university or college

3. Ask the Authority to apply other tax deductions

Complete and file Form Request to Reduce Tax Deductions at Source if you know you’re going to have significant deductions in a given year. Examples: RRSP contributions, rental losses, child care expenses. Give the approval letter you receive from the Authority to your employer. They will reduce the tax taken from your pay.