Understanding Your Employment Income
12 Different Employer, More Paperwork
Anne Lee
Importance of an Employment Agreement
Whenever there is a new employer-employee relationship, it is highly recommended that an employment agreement be in place. An employment agreement is legally binding and enforceable. It should clearly outline the terms and conditions of the employment relationship. Items in an employment agreement may include:
- Job title
- Employee responsibilities
- Scheduled working hours
- Compensation structure
- Benefits provided
- Other details
The employment agreement serves as legal protection for both parties. In the event that there are any disagreements or disputes, the employment agreement will usually be looked upon as the first point of reference.
An employment agreement is essential in establishing a clear and formal understanding between the employer and the employee.
It is recommended that one reviews also the collective agreement if a trades worker is signing up to be employed with a union. The collective agreement will outline in more detail the employee’s rights and responsibilities, as well as any benefits that the employee may be entitled to.
Tax Forms with New Employer
Individuals must fill out the Form TD1 – Personal Tax Credits Return forms in the following situations:
- Have a new employer or payer
- Want to change amounts from previous amounts claimed
- Want to claim the deduction for living in a prescribed zone
- Want to increase the amount of tax deducted at source
This form is used to determine the amount of tax to be deducted from an employee’s gross paycheck. All employers are required to make source deductions of income tax withholdings and remit the amounts to Canada Revenue Agency on the employee’s behalf.
Provinces and Territories also have a corresponding TD1 – Personal Tax Credits Return to be completed at the same time.
These TD1 tax forms look pretty intimidating at first glance, but an employee can ask for assistance from the employer and Canada Revenue Agency if needed in completing the forms accurately. The Government of Canada also provides guidance on completing the TD1 forms for both the employee and employer.
Tax Tip: Change in Tax Situation
Trade workers may have more frequent employer changes or multiple employers at the same time. Also, a trade apprentice’s full-time student status may be different each calendar year depending on the timing of technical training levels. These employment status updates may change an individual’s personal tax situation and available tax credits. It is recommended to review periodically and potentially complete an updated TD1 Form(s) with the employer, so that sufficient withholdings of income tax are deducted at source as you earn the income. From a planning and budgeting perspective, this will assist in reducing the likelihood of a surprise significant tax liability when the tax return is filed the following year.
Registration with Trades Training Authority
Each trades apprentice needs to be registered with the Provincial or Territorial Trades Training Authority for the particular trade. It is the trade apprentice’s responsibility to also ensure that every new sponsoring employer has associated the apprentice’s registration number to that employer. This is to warrant that work-based training hours can be recorded into the system towards certification.
tax form used to determine the amount of tax to be deducted from an individual's employment income or other income. Federal and provincial/territorial TD1 forms are completed separately
amount of funds that employers are obligated to withhold from their employees and remit to Canada Revenue Agency. Includes Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax
agency that administers tax, benefits, and related programs to ensure compliance on behalf of governments across Canada, thereby contributing to the ongoing economic and social well-being of Canadians
