Basic Exemption

Every year the CRA publishes the basic claim amount for federal and provincial tax calculations.  The basic claim amount is the amount of income an individual can earn before they start paying tax.  This claim amount is divided evenly for the number of pay periods your organization has during a year.

For example in 2017 the federal basic claim amount is $11 635.00.  For a biweekly organization with 26 pay periods the basic exemption per pay period is $447.50.  If an employee is claiming the basic exemption and their income is less than $447.50 on a pay period then there will be no federal tax calculated.

The basic exemption is turned on by default and can be found in the Personal Tax Configuration section on the Tax tab of an employees profile.

When an employee is working for multiple employers at a time it is important to ensure that they are only claiming the basic exemption at one job. Claiming the exemption with more than one employer at the same time will likely cause the employee to end up owing taxes at year end.  In this case the employee should complete a TD1 form and select the option More than one employer or payer at the same time.

Once an employee provides you with this form with the option More than one employer or payer at the same time selected then you can remove the basic exemption from their profile by clearing the check mark from the Employee is claiming the personal tax credit field in their profile.

 

This setting will remain deselected in their profile until they submit a new TD1 and you update this field. 

There is a similar setting in the Personal Regional Tax configuration settings section. If an employee has submitted a TD1 form for their provincial taxes as well then you may need to make similar changes to their Regional Tax settings depending on the options selected on their TD1.

This setting does not reset when a new tax year is started. It is a good idea at the start of each tax year to remind any employees who have submitted TD1 forms with anything other than just the basic amount that they should review their TD1 and update it if their circumstances have changed.