What exactly is the T1213 tax form? Well, another name for it is Request to Reduce Tax Deductions at Source. This means that this form will influence how much tax is taken out of your pay. Before you submit the request to your employer, though, you must submit it to the CRA (Canada Revenue Agency) for approval. Once it’s approved, you receive a letter that you can give to your employer to reduce taxes and have less money deducted from your income.
Filling Out the T1213 & Processing Time
When it comes to filling out the T1213, you can do so through your MyAccount online or fill out a paper application. Once that’s done, you wait for approval before submitting it to your employer to reduce tax deductions on tax-deductible income. That said, it’s important to remember that your application won’t be processed immediately. It can take up to between 4-6 weeks to be processed.
Form T1213 Eligibility
Not everyone will qualify for this, though. There are a few instances in which you should consider filling out a T1213. These are:
- If you make high RRSP contributions
- Get foreign tax credits
- Qualify for a large medical expense tax credit
- Employment expenses
- Interest expenses
- Non-refundable tax credits
Really, if you’re anticipating a tax refund, then this could be a good option for you. You can save money throughout the year by paying fewer taxes instead of waiting until tax time to receive a refund. You can submit this form at any time. It’s recommended that you submit in October for the upcoming tax year. This form will have to be filled out annually.
T1213 OAS
Similar to the original T1213 form, the T1213 OAS form is meant to be filled out if you’re looking to reduce the amount of income taxes you pay. The only difference is that you fill out this version if you’re on Old Age Security, also referred to as OAS. Specifically, you fill out this form if you’re looking to have the amount of Recovery Tax withheld reduced.
More or Less Income Tax?
While the T1213 form will make it so you pay less tax, there may be reasons that you actually want to increase how much income tax comes from your paycheque. This is usually done if you receive the extra benefits of having a second income and want to avoid paying taxes when tax time rolls around.
If this is something that you choose to do, you don’t have to submit this form to the CRA first; it can be submitted directly to your employer. This form is called a TD1, also known as: Personal Tax Credits Return. s called a TD1, also known as: Personal Tax Credits Return.
TD1 and How Much Extra You Should Deduct
If you choose to deduct more than the basic personal amount of your income, you may be wondering how much more to deduct. Well, that actually depends on how much you earn. Whether you pay it throughout the year or during tax time, it still has to be paid. That said, if you’re hoping to avoid a bill during tax season, then more is better. If you end up paying too much, then you’ll receive a refund.
The best way to figure out what you’ll end up owing is to calculate your annual salary and figure out which tax rate you fall into, federally and provincially. This will give you an idea of how much taxes you’ll likely owe for the year. If you want to take out more for reasons such as capital gains, then you’ll have to calculate the capital gain tax rate.
Federal Tax Rates
| Tax Rate | Income |
| 14% | On the portion of income from $0 – $58,523 |
| 20.5% | On the portion of income from $58,523 – $117,045 |
| 26% | On the portion of income from $117,045 – $181,440 |
| 29% | On the portion of income from $181,440 – $258,482 |
| 33% | On the portion of income that’s $258,482 plus |
Provincial Tax Rates
| Province/Territory | Tax Rate |
| British Columbia | 5.06% on amounts from $0 – $50,3637.7% on $50,363- $100,72810.5% on $100,728 – $115,64812.29% on $115,648- $140,43014.7% on $140,430 – $190,40516.8% on $190,405 – $265,54520.5% on $265,545 and over |
| Alberta | 8% on the first $61,20010% over $61,200 up to $154,25912% over $154,259 up to $185,11113% over $185,111 up to $246,81314% over $246,813 up to $370,22015% over $370,220 |
| Saskatchewan | 10.5% first $54,53212.5% over $54,532 up to $155,80514.5% over $155,805 |
| Manitoba | 10.8% first $47,00012.75% over $47,000 up to $100,00017.4% over $100,000 |
| Ontario | 5.05% on the first $53,8919.15% over $53,891 up to $107,78511.16% over $107,785 up to $150,00012.16% over $150,000 up to $220,00013.16% over $220,000 |
| Quebec | 14% on the first $54,34519% over $54,345 up to $108,68024% over $54,345 up to $108,68025.75% on amounts over $132,245 |
| Nova Scotia | 8.79% on the first $30,99514.95% over $30,995 up to $61,99116.67% over $61,991 up to $97,41717.5% over $97,417 up to $157,12421% over $157,124 |
| New Brunswick | 9.4% on the first $52,33314.0% over $52,333 up to $104,66616% over $104,666 up to $193,86119.5% on amounts over $193,861 |
| Prince Edward Island | 9.5%% on the first $33,92813.47% over $33,928 up to $65,82016.60% over $65,820 up to $106,89017.62% over $106,890 up to $142,25019% over $142,250 |
| Newfoundland and Labrador | 8.7% first $44,67814.5% over $44,678 up to $89,35415.8% over $89,354 up to $159,52817.8% over $159,528 up to $223,34019.8% over $223,340 up to $285,31920.8% over $285,319 up to $570,63821.3% over $570,638 up to $1,141,27221.8% over $1,141,275 |
| Yukon | 6.4% on the first $58,5239% over $58,523 up to $117,04510.9% over $117,045 up to $181,44012.93% over $181,440 up to $258,48212.80% over $258,482 up to $500,00015% on amounts over $500,000 |
| Nunavut | 4% on the first $55,8017% over $55,801 up to $111,6029% over $111,602 up to $181,43911.5% on amounts over $181,439 |
| Northwest Territories | 5.9% on the first $53,0038.6% over $53,003 up to $106,00912.2% over $106,009 up to $172,34614.05% on amounts over $172,346 |
How Much is Bonus Taxed in Canada?
If you receive bonuses in Canada, these are counted as employment income. This means that anything you receive as income will be taxed using your marginal tax rate. This won’t qualify for a tax reduction.
Specific Situations that Benefit from this Form and How They Work
As we previously mentioned, you can request a tax reduction for large Registered Retirement Savings Plan contributions for the current year. This means that you’re requesting to have less tax deducted from your pay instead of waiting for your tax return. This also also commonly done for spousal support payments, and if you have a formal pension plan with a pension plan administrator.
To fill out this form means you’re requesting to reduce your tax withholdings, and you have significant deductions that qualify, such as significant RRSP contributions. However, you will need supporting documents in order to get CRA approval. The Canada Revenue Agency (CRA), provides access to the form on the CRA website.
Other Ways to Reduce Your Tax Liability
When you do your annual tax return, you can use other things than anticipated deductions to reduce your tax liability. You can claim eligible medical expenses, RRSP contribution receipts, childcare expenses, and other expenses you’re eligible for. If you have a pension plan, you should also receive a tax slip from your pension administrator that you can claim as well.
That said, in order to claim tax credits and deductions, you are going to need supporting documentation. This is to verify that you qualify for these deductions, and you won’t have to pay the funds back. Taxpayers who end up filing incorrectly can also end up carrying charges on any incorrect or unpaid amounts.
Final Thoughts
The T1213 allows you to avoid overpaying your taxes and prevent an interest-free loan to the government. When you apply, though, you will need to supply the CRA with your Social Insurance Number as well as your current mailing address in order to receive the CRA’s letter with their decision. Keep in mind that you will have to repeat annually, and it will affect the net amount that you earn.
Some of the key takeaways from this, though, are that there are ways to reduce your tax liability as well as avoid paying taxes that you don’t owe. Instead, you can save that money and earn interest on it, instead of waiting to receive it back interest-free from the government. Either way, though, if you overpay, you will receive amounts owing back once you file your taxes. If you underpay, though, you will have to pay a tax bill.
