As an employee, your offer letter shows how much you will earn as your weekly, bi-weekly, monthly, or annual gross pay.
However, the net income you receive as cash or cheque from your employer is lower than your gross pay due to various deductions such as taxes or pension contributions.
Taxes are usually applied on a taxable income, i.e., the amount that is used to calculate how much federal or provincial (or territorial) tax you are required to pay.
You can reduce your taxable income amount when you fill and submit the T1213 form.
The T1213, Request to Reduce Tax Deductions at Source form is used to reduce the taxes on your remuneration instead of waiting until a tax return filing season for a tax refund.
Certain amounts can be deducted from your remuneration by your employer to reduce your taxable income amount for the tax year.
These could be eligible amounts for living in a specific zone, or contribution amounts that an employee or employer has made to a registered retirement plan.
When the Canada Revenue Agency assesses your income tax and benefit returns at the end of a tax year, you may be eligible to receive a tax refund based on some eligible deductions such as your Registered Retirement Savings Account (RRSP) contributions, childcare expenses, employment expenses, or even moving costs in the tax year.
Some of these deductions can be reduced directly from your taxable income amount by your employer when you fill and submit the T1213 form.
Did You Know?
The amount of taxes deducted from your income could be reduced by an amount that the tax services office has authorized based on the T1213 form that you have filled and submitted.
When Should I Use the T1213?
As an employee, you can use the T1213 form to authorize an employer to reduce tax deductions that are not part of the TD1 form for Personal Tax Credits Return.
Typically, you should use the T1213 form if receiving more income now is more valuable to you than receiving this income much later in the form of a tax refund.
An example of when you can use the T1213 form is when you have made eligible registered retirement savings plan (RRSP) contributions in the tax year.
Some RRSP contributions are tax-deductible, and when reported in your income tax and benefit return, can result in tax refunds from the CRA.
If you fill out and submit the T1213 form to the CRA, you can have your employer authorized to apply these eligible deductions on your income, and thereby receive the benefit sooner rather than later.
Other income deductions or non-refundable tax credits that can reduce your taxable income using a T1213 form are:
- Union fees
- Family support payments
- Interest payments for investment loans
- Employment expenses
- Donations to charity
- Education expenses
- Medical expenses
You will need to include supporting documents for the requested deductions when you fill and submit the T1213 form to the Canada Revenue Agency.
Examples of supporting files include documents showing RRSP contributions, eligible employment expenses, or relocation costs.
Additionally, you cannot use the T1213 form to request a reduction of your old age security (OAS) recovery tax.
The application form for reducing your OAS recovery tax is the T1213(OAS) form.
A letter of authority will not be issued to you if you owe the CRA or you have not filed previous income tax and benefit returns.
What you should be aware of as an employer
As an employer, a letter of authority permits you to reduce the income tax that will be deducted from an employee’s income.
You will receive a letter of authority when the employee fills and submits the T1213 form to the applicable tax service office.
The tax service office will issue the letter of authority to an employee, provided they have met the specified criteria.
The employee will provide this letter of authority to the employer.
You do not require the T1213 form or authority letter from the CRA for certain amounts which you can automatically deduct from an employee’s remuneration when determining their taxable income.
These deductions include contributions to pooled registered pension plans (PRPP), registered retirement savings plans (RRSP), the deduction for living in certain locations, and others.
An employee is required to fill and submit the T1213 for every specific tax year in order to obtain a letter of authority which they will provide you with.
Frequently Asked Questions
- How do I submit a T1213 form?
As an employee, if you want your employer to reduce your withheld taxes, you will need to submit the T1213 form or a written request to the taxpayer services centre as specified by the CRA.
- How long does it take to process T1213?
Usually, the processing time for a T1213 form may take up to 6 weeks, but this could be affected by each case’s unique circumstances.