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New Provincial Taxation: Tax-On-Income
On January 1, 2001, the Canada Customs and Revenue Agency (CCRA)
introduced a new method for calculating provincial personal income
tax based on taxable income. This new tax method referred to as
TONI (Tax-on-Income) enables each province to determine a separate
tax rate and establish a separate personal tax credit. In the former
tax-on-tax system, the provincial personal income tax was calculated
as a percentage of the basic federal tax. With the new TONI
method, provincial tax is calculated by applying provincial tax
rate(s) to the taxable income amount.
With the introduction of this tax method, there are now two
separate TD-1 forms to be completed. One form is for provincial
tax credits called the TD1ON ONTARIO PERSONAL TAX CREDITS
RETURN. The other form is for federal tax credits called
the TD1 Personal Tax Credits Return. Although
the total income on which you are taxed is the same for both federal
and provincial tax calculations, the basic personal tax credit and
the amount of credit you can claim under various categories on the
TD1's is now different.
Who should complete a federal Form TD1?
A general re-filing of the federal TD1 form is not required every year if no changes occur from the previous filing. However, all employees and/or pensioners who wish to change their federal claim amounts must complete the Federal TD1 form.
Who should complete a provincial Form TD1?
All new employees or pensioners must complete the Provincial Form TD1. A general re-filing of the provincial TD1 form is not required every year if no changes occur from the previous filing. However, all employees and/or pensioners who wish to change their provincial claim amounts must complete the Provincial TD1 form.
What happens if I don't complete a new provincial/federal
Form TD1?
In the event that you do not complete both TD1's, the employer is required
to enter the basic personal tax credit amount.
The TD1 forms are available from the HRIM department . To obtain more
detailed information about this subject, or to download the forms in PDF
format, please visit the Canada Revenue Agency website at:
http://www.cra-arc.gc.ca/formspubs/forms/td1-e.html
Note: The Federal form can be accessed by clicking on the link, TD1,
Personal Tax Credit Returns form. The Federal form is located at the top of
the page. To obtain the Provincial form for Ontario, please scroll down the
page to the Ontario section
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