Reduction to Income Tax at Source

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Occasionally, an employee may request that their tax deductions be reduced at source. If this is the case, the employee can send a T1213 Request to Reduce Tax Deductions at Source to the Canada Revenue Agency (CRA). This request will ask for reduced tax deductions at source for any deductions or non-refundable tax credits that are not part of the TD1 form.

If the CRA approves the request, they will send a letter to the employee, instructing the employee to pass the letter along to their employer.

Provincial vs Federal Amounts

Please note that even though this request is made to the Federal agency, the CRA can authorize both Federal and Provincial deductions or tax credits in the letter.

 

How to Reduce the Income Tax at Source in Humi

To enter this information in Humi, you'll need to have both the letter from the CRA and the employee's completed TD1 form. Once you have both pieces of information, follow the steps below.

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  1. In People, use the search bar to find the employee you require and click on their name.
  2. Click on the Job & Pay tab on their employee profile and scroll down to the Personal Tax Credits and Deductions section.
  3. In the Federal section, click the + Add button to open the creation window for personal tax amounts. When you click the + Add button you’ll be adding a new amount that will replace the existing amount for that year.
  4. Enter the Calendar Year from the TD1 form provided.
  5. In the Total Claim Amount field, enter the value on Line 13 Total Claim Amount from the TD1 form provided.
  6. If the employee has entered a value on the form in the field Additional tax to be deducted on the TD1 provided, then enter this value into the corresponding box.
  7. If the employee has entered a value on the form in the field Deduction for living in a prescribed zone on the TD1 provided, then enter this value into the corresponding box.
  8. Enter the values exactly as they appear on the CRA letter, in the boxes that correspond to the letter.

 

Choosing the Right Box

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The letter provided by the CRA contains various information about your employee’s tax situation. To help you navigate it all, the only information you’re looking for is the dollar amount and its corresponding box value.

In the letter, you should see one or more of the following:

  • use $____ for the F1 value
  • use $____ for the F2 value
  • use $____ for the K3 value
  • use $____ for the K3P value

Humi takes care of the heavy lifting. All you need to do is find the numbers the CRA provides and enter the amount(s) into the correct box in Humi.

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