Five ways small biz owners can help new hires navigate TD1 or TP-1015.3-V confusion

When you’ve got a small business to run, there are seemingly never enough hands on deck. So we get it: you’re looking for your new hires to hit the ground running on Day One! The fact is that one of the best ways to set them (and your business) up for quick success is to make their onboarding experience as seamless as possible. But amidst getting to know the team, becoming familiar with the Employee Handbook, and setting up the right tech, there’s also some paperwork to be filled out… and those forms can inspire a whole lot of questions.

Today, we’re sitting down with our in-house experts to take a closer look at Canada’s national and regional TD1 forms (with the latter known as the TP-1015.3-V in Québec) – more specifically, how you can support your newest team members in filling them out with confidence so they can get started on the job you hired them to do in the first place!

Where should you start?

First things first: do you have a clear understanding of your own responsibilities when it comes to your employees’ TD1s/TP-1015.3-Vs? If not, perusing the TD1 section of the Canada Revenue Agency’s (CRA’s) Employers’ Guide – Payroll Deductions and Remittances (and Revenu Québec’s TP-1015.3-V details, if relevant to your employees) should be your first move! Keep an eye out in particular for the details around penalties for late or false submissions to save yourself a headache down the road.

What kinds of questions might arise among employees when it comes to TD1s or TP-1015.3-Vs?

Our own HR and payroll folks agree – while many of the fields are straightforward (“Name?” Yep, got that one), there plenty of opportunities for uncertainty. For example…

“Tuition (full-time or part-time)”

Within the federal TD1 form and on some of the provincial and territorial TD1 forms, university or college students who “will pay more than $100 per institution in tuition fees” are eligible for a tax credit. But depending on the time of year in which they’re hired, they may not yet have a sense of upcoming tuition fees… so how should they fill it out?

“More than one employer or payer at the same time”

All of the provincial, territorial and federal TD1 forms/TP-1015.3-V form ask the taxpayer to confirm whether or not they have “more than one employer or payer at the same time” because if you “have already claimed the personal tax credits on another Form… for [this year], you cannot claim them again.” Employees can have a difficult time remembering what they may have filled out for another employer, and be unsure how to proceed. What to do?

“Additional tax to be deducted”

The federal TD1 form provides the voluntary option for taxpayers to have additional taxes deducted throughout the year beyond the amount they owe for each pay period. As stated on the form, “You may have less tax to pay when you file your income tax and benefit return by doing this” – which is to say that, for people who often owe taxes each year due to a variety of possible circumstances, this can be a great way to mitigate a big hit in April. But how can employees know whether or not this is right for them and how much to deduct?

As the employer, how can you help?

Let’s start with the bad news – there’s no “one size fits all” answer to any of these questions.

The good news: you can still provide guidance and support to your employees as they work through this process, building trust and helping to reinforce that they made the right choice in joining your team! Here’s what our own team recommends:

1. Get ahead of the game. As soon as you hire your new employee, you can get TD1s/TP-1015.3-Vs and other onboarding tasks underway – even if they’re days or weeks away from their first day. Provide them with a structured timeline for their tasks so that they can tick them off one by one. The more time employees have to look into the details of their tuition, the tax credits they may already be claiming through another employer, or otherwise, the less panicked they’ll feel (and the more human error they can avoid – more on that below).
   
   Payworks Pro Tip: If you’re a Payworks client, you can save yourself (and your new staff) a flurry of disjointed emails by instead delivering onboarding forms to be filled out or Read/Acknowledged through Employee Self Service!
2. Direct them to the tax pros for advice. Unless your business is a tax consultancy (and in that case, what are you doing reading this article?!), you’re likely not a tax expert yourself – and that’s ok! You’ll create far more trust with your new team members by acknowledging that you don’t have all the answers and referring them to the folks who do – whether that’s the CRA/Revenu Québec, the employee’s own tax consultant, or otherwise – than you would by “faking it til you make it” and giving advice that leaves the employee paying an unexpected sum at the end of the year. The CRA’s TD1 worksheets are a great place for them to start!
3. Remind them that they can (and should!) resubmit their TD1s/TP-1015.3-Vs over the course of the year as circumstances change or new information becomes available… Leaving their other employer, finally receiving the details of next semester’s tuition, or looking to change the additional tax they initially chose to have deducted are just some of the reasons why an employee might need to update and re-submit their TD1s/TP-1015.3-Vs in the months after onboarding.
   
   While employees need to provide accurate info on their TD1s/TP-1015.3-Vs when they start with their new employer, post-start-date adjustments are common and to be expected (and are in fact required within seven days of a change in circumstance). So while they should obviously fill the forms out as best they can, they don’t have to have all of the answers immediately! Make sure to remind them of this upfront to help take some of the pressure off.
4. …but also that they can’t forget to dot their I’s and cross their T’s. According to our own team, some of the most common TD1/TP-1015.3-V errors aren’t related to legislation; rather, a new employee will forget to sign or tally up the total on their forms! This is where having some extra time to take a breath and double-check the details before submission can make all the difference.
5. Check in with your employees at the start of the new year. Our own Payroll Team Leader’s approach: every January, connect with any employee claiming more than the Basic tax credit on their TD1s/TP-1015.3-Vs and ask them to review their forms to ensure that they’re still accurate. While the onus is on the individual to resubmit forms as information evolves, a gentle reminder will go a long way in reinforcing that you’ve got their backs.

You may not have all the answers… but with Payworks HR Advisory Services, you’re connected to the professionals who do. For HR, legal and financial guidance you can count on, look no further than this lineup of experts and practical resources: https://www.payworks.ca/solutions/hr-advisory-services.

This article is produced by Payworks as an information service. It is not intended to substitute professional legal, regulatory, tax, or financial advice. Readers must rely on their own advisors, as applicable, for such advice.