The federal basic personal amount for most Canadians increased on Jan. 1, 2020. The changes will mean that by 2023, most Canadians will pay no federal taxes on the first $15,000 they earn (this is an increase from $12,069).
If you manage and/or are responsible for payroll, these changes can affect how you calculate deductions and contributions on employees’ pay.
To help ensure you have the right information, the Canada Revenue Agency (CRA) has updated following payroll references on Canada.ca with the new basic personal amount for 2020:
- Form TD1 2020 Personal Tax Credits Return
- Guide T4032, Payroll Deductions Tables
- Guide T4008, Payroll Deductions Supplementary Tables
- Guide T4127, Payroll Deductions Formulas
- Payroll Deduction Online Calculator
For those unable to make the system and procedure changes necessary to implement the new federal basic personal amount calculation for 2020, you have the option to use the 2020 basic personal amount of $13,229 for all employees. If using this amount, you can tell employees who have a net income higher than $150,473 that they can complete a form TD1 to have deductions taken from their pay. These employees are not entitled to part or all of the increased basic personal amount. By filling out the TD1, they will be able to change to their basic personal amount immediately as opposed to reconciling it when they file their tax returns.
Need more information?
The CRA has a number of resources to assist you in calculating deductions and contributions on employee pay, opening a payroll account to send deductions, and reporting income deductions. For more information on the increased basic personal amount, visit the Basic personal amount web page on Canada.ca.
For direct updates on what is new at the CRA, you can:
- Like the CRA on Facebook
- Follow the CRA on Twitter – @CanRevAgency
- Follow the CRA on LinkedIn
- Subscribe to a CRA electronic mailing list
- Add our RSS feeds to your feed reader
- Watch CRA tax-related videos on YouTube
If you have any questions or would like more information, you can get in touch with David Lefebvre, Restaurants Canada Vice President, Federal and Quebec, at DLefebvre@restaurantscanada.org.