Every new hire in British Columbia has to complete two tax forms before you can run payroll correctly: the federal TD1 Personal Tax Credits Return and the provincial TD1BC. Together they tell you how much income tax to withhold from each paycheque. Alongside the forms, you’ll need the employee’s Social Insurance Number and an open CRA payroll account. Get those four pieces in place on day one and the rest of payroll follows cleanly.
The Federal TD1
The TD1 is where the employee declares the federal tax credits that reduce withholding. The main line is the basic personal amount, the income threshold below which no federal tax applies. All current dollar thresholds are printed on the form itself, which you download from the CRA.1Canada Revenue Agency. TD1 2026 Personal Tax Credits Return Most employees claim the basic personal amount and nothing else.
Other lines cover specific situations: supporting a spouse or common-law partner, caring for a dependant with a disability, receiving pension income, being 65 or older, or receiving transferred tuition credits from a child or spouse. The employee fills in only the lines that apply. The total feeds into your payroll software, which applies CRA tax tables to calculate the correct withholding.
Employees With More Than One Job
Someone working two jobs at the same time should claim the basic personal amount on only one TD1, usually the one filed with their primary employer. The second page of the TD1 has a checkbox labeled “more than one employer or payer at the same time.” Ticking that box tells the secondary employer to withhold tax without applying the basic personal amount, which prevents the under-withholding that would leave the employee owing money in April.
If the Employee Never Returns the Form
You don’t get to skip withholding. If the employee fails to hand in a completed TD1, the CRA requires you to deduct tax as if the employee claimed only the basic personal amount, with no additional credits.2Canada Revenue Agency. Get the Completed TD1 Forms From the Individual The same rule applies if you have reason to believe the information on the form is false.
The Provincial TD1BC
The TD1BC mirrors the federal form but uses credit amounts set by the BC government, which are different from the federal figures. For 2026, the BC basic personal amount is $13,216, the age amount for those 65 or older is $5,927, and the disability amount is $9,913.3Province of British Columbia. B.C. Basic Personal Income Tax Credits Both forms are available from the CRA’s page listing all provincial and territorial TD1s.4Canada Revenue Agency. TD1 Forms for 2026 for Pay Received on January 1, 2026 or Later
The multiple-employer rule works the same way provincially: claim the BC basic personal amount on only one TD1BC. Without a completed TD1BC on file, you can only apply the BC basic personal amount by default, which typically means over-withholding through the year.
Remote Workers and Province of Employment
The TD1BC is only the right form if British Columbia is the employee’s province of employment. For someone who reports to your BC office, that’s straightforward. For remote workers, the CRA’s administrative policy in effect since January 1, 2024, looks at whether the employee reports to an establishment of the employer and, if so, where that establishment is. A home office generally does not count as an establishment of the employer.5Canada.ca. Determine the Province of Employment
If the employee reports to one physical location, that location’s province governs, even if visits are occasional. If they report to establishments in more than one province, the tie-breaker is where they spend the most time. For fully remote workers with no physical reporting location, the question turns on whether the worker can reasonably be considered “attached to” an establishment. If you’re hiring across provincial lines, work through the CRA guidance before choosing a form, because the wrong province means the wrong withholding rates.
Collecting the Social Insurance Number
You need a valid Social Insurance Number from every employee before payroll can run. The SIN is used to administer benefits under the Income Tax Act, the Canada Pension Plan Act, and the Employment Insurance Act, and it’s the CRA’s tracking key for lifetime earnings and contributions.6Employment and Social Development Canada. Employer Information – Social Insurance Number (SIN) Record the number directly from the SIN card or Service Canada confirmation letter and check it against the name the employee gives you.
Misuse is a criminal offence. Under the Department of Employment and Social Development Act, knowingly using another person’s SIN or providing a false one is punishable on summary conviction by a fine of up to $1,000, imprisonment for up to one year, or both.7Justice Laws Website. Department of Employment and Social Development Act – Social Insurance Number You’ll also need the employee’s full legal name as it appears in Service Canada records, plus a current residential address so year-end tax slips reach them.
Opening a CRA Payroll Account
The forms and SIN aren’t much use without somewhere to remit what you withhold. Before your first paycheque goes out, you need a payroll program account with the CRA. If your business already has a Business Number for GST or corporate tax, the payroll account is added to that BN. Otherwise, you register for both at once. The account must be open before your first remittance due date, which is the 15th of the month after the month you first withhold deductions.8Canada Revenue Agency. Determine If You Need to Register Missing the registration doesn’t pause the obligation to deduct and remit. It just means you’re already behind when the first payment falls due.
Storing the Forms and Handling Changes
Collect the completed TD1 and TD1BC when the employee starts. If an employee’s personal situation later changes in a way that affects their credits, a new form is due within seven days of the change.2Canada Revenue Agency. Get the Completed TD1 Forms From the Individual Marriage, a new child, or a spouse starting or stopping work can all change what an employee is entitled to claim.
Electronic Forms
You don’t have to hand out paper. The CRA allows electronic TD1 and TD1BC forms completed through a secure portal. The electronic version must mirror the CRA’s approved paper form, include a certification statement that stands in for a signature, be stored in a format the CRA can read on request, and be locked so an employee can’t alter a submitted form without filing a new one.2Canada Revenue Agency. Get the Completed TD1 Forms From the Individual Most modern payroll platforms handle these requirements out of the box.
How Long to Keep Them
Payroll records, including TD1 and TD1BC forms, must be kept for at least six years from the end of the tax year they relate to.9Canada Revenue Agency. Where to Keep Your Records, for How Long and How to Request the Permission to Destroy Them Early Failing to maintain adequate books and records can lead to prosecution, with penalties starting at a minimum fine of $1,000 on summary conviction.10Canada Revenue Agency. Income Tax Information Circular – Books and Records Retention/Destruction
What Sits Alongside the Forms
The TD1 and TD1BC only cover income tax withholding. Two other deductions come off every paycheque from day one. For 2026, CPP is 5.95% of pensionable earnings between the $3,500 basic exemption and the $74,600 ceiling, with the employer matching dollar for dollar; a second-tier CPP2 contribution applies on earnings above the first ceiling.11Canada Revenue Agency. CPP Contribution Rates, Maximums and Exemptions EI premiums for 2026 are 1.63% of insurable earnings up to $68,900, with the employer paying 1.4 times the employee amount.12Canada Revenue Agency. EI Premium Rates and Maximums
Once withholding is running, you’ll be remitting income tax, CPP, and EI to the CRA on a set schedule, most commonly monthly for new and small employers.13Canada Revenue Agency. When to Remit (Pay) At year end, you’ll issue each employee a T4 slip summarizing earnings and deductions.14Canada Revenue Agency. Employers’ Guide – Filing the T4 Slip and Summary
Two BC-specific items sit outside the TD1/TD1BC process but belong on the same onboarding checklist. Any BC business that hires workers, whether full-time, part-time, casual, or contract, must register with WorkSafeBC so those workers are covered for workplace injury or illness.15WorkSafeBC. Learn About Employers’ Responsibilities The BC Employer Health Tax is an employer-only cost that kicks in once total BC remuneration exceeds $1,000,000, so most small employers won’t hit it right away, but it’s worth tracking as payroll grows.16Province of British Columbia. Employer Health Tax Overview