Law Business Essentials

Hiring an Employee

When you hire an employee you must:

• get their social insurance number and
  
• have them complete a Form TD1 (Personal Tax Credits Return).

The TD1 is a form used by you to determine the amount of federal and provincial tax to be deducted from an individual's employment income. You keep the TD1 and are not required to send it to the CRA. All individuals who have a new employer must complete the form. If the employee claims more than the basic personal amount, then the Alberta TD1 must also be completed.

The form does not have to be completed every year but if there is a change in entitlement to either the federal or provincial credit entitlement, a new form must be completed within seven days of the change. Learn more about when your employee wants to increase or reduce their income tax deductions.

Even if you cannot get a social insurance number or TD1, you are still responsible for calculating payroll deductions once the employee starts to work for you, allowing the basic personal amount only.

The CRA website has information about all the forms and the tax tables needed to complete them.