Reduce/withhold the income tax deduction from my paycheck

I reduced my payroll tax deductions many years ago when I had 3 kids in daycare and a lot of deductions. I don't know if you can withhold ALL your taxes though. I was just aiming to get my net return to be 0.

Did a quick google and there's some info on the web.
https://turbotax.intuit.ca/tips/employe ... olding-244

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Thansk @queentasha.

I found forms here https://www.canada.ca/en/revenue-agency ... t1213.html. But I don't quite understand this. I figured I would need to ask my employer to reduce the tax deductions, but these forms are to be submitted to the govt.

Because I'm not looking to pay less income tax. I just want to hold back part (or as much as I can) of the amount, that is deducted from my payroll.

If anything on the Person Tax Credit Return applies to you, you can have your taxes reduced but not eliminated.
https://www.canada.ca/content/dam/cra-a ... d1-21e.pdf

fractall wrote: ↑ Thansk @queentasha.

I found forms here https://www.canada.ca/en/revenue-agency ... t1213.html. But I don't quite understand this. I figured I would need to ask my employer to reduce the tax deductions, but these forms are to be submitted to the govt.

Because I'm not looking to pay less income tax. I just want to hold back part (or as much as I can) of the amount, that is deducted from my payroll.

Only for those categories on the form. If they do not apply to you, you cannot reduce your taxes taken off your paycheque. Even on the T1213 it is not your whole salary. Your employer has to legally submit your taxes/CPP/EI to the government on a monthly or quarterly basis.

fractall wrote: ↑ Is there a way for me to reduce the amount of provincial and federal income tax deducted from my biweekly pay?

Basically instead of it being deducted when I get my pay, I would like to pay this amount at the end of the year (Apr of the following year) when doing my taxes. This way I have the money in hand and can choose to invest it (even if for short term gains) rather than it sitting with the government.

If this is possible, do I need to pay an interest since the deductions were paid later on?

If this is an absurd question please go easy on me, I don't know much about taxes but was hoping to learn more.

Thanks.

Let me see....is the Gov't OK with you holding their money? and maybe you don't have later when you owe your taxes.... Hmmm.

Is it OK if your employer holds your pay till the end of the year....you know so they can invest it....hmmmm

I did this for a couple of years.

I set up a recurring monthly contribution into my RRSP. Then I filled out the T1213 form (the one you found and linked to above). Sent it into the appropriate centre listed on the form. When I got the approval back, I gave that to my employer and they reduced my tax deductions.

This basically takes the tax refund I would have gotten in the following year and spread it out through the current year.

If you're a regular employee, I don't think you can reduce your tax deductions all the way to zero. But if you're self-employed independent contractor then your client wouldn't deduct taxes from your pay. You deal with the taxes yourself.

Self-employed (and anyone else, retired people, independently wealthy people etc.) have to pre-pay their taxes by quarterly installments if they owe very much tax to be paid on April 30. I don't remember the exact amount, but I think installment payments are required the following year if you owe more than $3000 in tax when you file your return. If you ignore the installment instructions and owe too much again the next April 30 they will charge you a penalty.

CRA posts stuff on installment payments https://www.canada.ca/en/revenue-agency ... ments.html etc.

So I doubt that you can get too much less deducted at source by your employer simply so you can use the money until you pay it on April 30.

You will be charged interest if you owe >$3000 when file your tax return.

gr8dlr wrote: ↑ Let me see....is the Gov't OK with you holding their money? and maybe you don't have later when you owe your taxes.... Hmmm.

Is it OK if your employer holds your pay till the end of the year....you know so they can invest it....hmmmm

That is a good point. After all the tax is their money lol that we earn.

gr8dlr wrote: ↑ Let me see....is the Gov't OK with you holding their money? and maybe you don't have later when you owe your taxes.... Hmmm.

Is it OK if your employer holds your pay till the end of the year....you know so they can invest it....hmmmm

You really think the money you earn is you "holding onto their money"?
You think it's an equivalent argument to imply that it's like an employer withholding pay because a government "earned" a portion of your paycheque?

It's no wonder we keep getting hosed on taxes and have people believing Trudeau saying "we won't raise taxes until the economy returns to normal" the SAME WEEK as he already announced tax increases...some people just think we're holding onto the governments money for them.

BatCountry wrote: ↑ You really think the money you earn is you "holding onto their money"?
You think it's an equivalent argument to imply that it's like an employer withholding pay because a government "earned" a portion of your paycheque?

It's no wonder we keep getting hosed on taxes and have people believing Trudeau saying "we won't raise taxes until the economy returns to normal" the SAME WEEK as he already announced tax increases...some people just think we're holding onto the governments money for them.

"Equivalence" is grey and relative depending on how you perceive and think of things. It's not black and/or white. My point was to illustrate that what OP may be perceived as reasonable can be looked at from a different angle.

Gov't supplies health care, education, the roads you drive on, they are and integral part of your life and everything around you. Everyday you work/earn money, you keep some and you give some to them via payroll deductions. Is it OK to not pay them as you work because you'll pay them later? What if they said we'll provide healthcare later? Consider that you can go into the hospital and incur $100,000 of cost and yet you haven't paid in $100,000 of taxes. If everyone was like OP, how does the Gov't function?

I don't like taxes, I don't like the way the Gov't wastes my money but I recognize the system has it's benefit and that benefit comes with a cost and if everyone held onto the "gov'ts money" we won't have the same benefits.

fractall wrote: ↑ Thansk @queentasha.

I found forms here https://www.canada.ca/en/revenue-agency ... t1213.html. But I don't quite understand this. I figured I would need to ask my employer to reduce the tax deductions, but these forms are to be submitted to the govt.

Because I'm not looking to pay less income tax. I just want to hold back part (or as much as I can) of the amount, that is deducted from my payroll.

I used to be an admin and would get these forms. You have to fill it out, submit to admin/HR/payroll. They then enter it into the payroll system so it actually gets reduced and send the form to CRA as proof for why they are remitting less taxes than the standard remittance. These are the only reductions allowed. For most people, it is not a lot but some find it worthwhile.

You can't withold a material amount of income tax until you file your taxes. Filing is to reconcile and balance your tax account, it's not meant to be the main payment date. When you buy a item, you pay HST/GST/PST in the purchase transaction. You don't get to say, let me tally up my purchases at year end and send CRA a check for the sales tax. Income tax actually works the same way. When you earn the income/salary, you have to pay the income tax at the time the money was earned. Your employer simply facilitates this on your behalf on each paycheck and remits for you. CRA gives self-employed people a break by letting them do it quarterly.

To summarize:
- If you are entitled to tax credits, you can reduce your payroll deductions so that your employer doesn't withhold too much (instead of waiting for a refund in April).
- But you can't reduce withholding to the point where you will owe alot of tax in April.
- For basic credits like tuition, disability, caregiver, etc. you just fill out a TD1 form (both the federal and provincial versions) and give this to your employer. This is very common and I believe it stays in effect year to year until you change it.
- If you have more unusual deductions or credits in a particular year (i.e. RRSP contributions, moving expenses, large medical expenses, etc.) you can complete the T1213 form you mentioned and send it to the CRA for approval. This must be done each year and contain supporting documents.