Application for a Reduction in Source Deductions of Income Tax (Form TP-1016-V)
We may authorize you to reduce an individual's remuneration subject to source deductions of income tax based on the deductions the individual can claim in calculating his or her net or taxable income.
We may also authorize you to reduce the amount of income tax you withhold from the individual's remuneration based on the tax credits the individual can claim in calculating his or her income tax payable.
To reduce source deductions of income tax, you must reduce either the remuneration subject to source deductions or the amount of income tax to be withheld. Do not increase the amounts on form TP-1015.3-V. The amount of the authorized reduction must be divided between the pay periods remaining in the year (see the examples given below).
An individual must complete and send us a copy of the Application for a Reduction in Source Deductions of Income Tax (form TP-1016-V) to request that we authorize you to reduce the amount of income tax you withhold (see the note below). We will send the individual an authorization letter specifying the amount of the reduction to be taken into account. The individual must then submit the letter to you.
The authorization is valid only for the year for which it is requested.
We may grant a general authorization to reduce source deductions of income tax if, for example, you pay your employees a lump-sum pay-equity settlement and they undertake to deposit all or a portion of the amount received in a registered retirement savings plan (RRSP). Contact us to find out how to proceed.
Fred receives a gross salary of $1,000 per week and contributes $60 per week to a registered pension plan (RPP). You are authorized to reduce his remuneration subject to source deductions by $3,000 for the deduction of contributions to an RRSP. There are 30 pay periods remaining in the year.
| Remuneration subject to source deductions of income tax for the pay period | = | $840 | |||
|---|---|---|---|---|---|
| Remuneration subject to source deductions of income tax before the reduction | Fred's gross remuneration for the pay period | $1,000 | |||
| RPP contribution | − | $60 | |||
| = | $940 | $940 | |||
| Reduction of the remuneration subject to source deductions of income tax per pay period | Reduction authorized for RRSP contributions | $3,000 | |||
| Number of pay periods remaining in the year | ÷ | 30 | |||
| = | $100 | − | $100 | ||
Sarah has a source deduction of Québec income tax of $165 per pay period. You are authorized to reduce her remuneration subject to source deductions by $1,150 for a tax credit for donations and gifts. There are 40 pay periods remaining in the year.
| = | $136.25 | ||
| Reduction of the source deduction of income tax per pay period | Reduction granted for a tax credit for donations and gifts | $1,150 | |
| Number of pay periods remaining in the year | ÷ | 40 | |
| = | $28.75 | ||
| Source deduction of Québec income tax for the pay period | Source deduction of Québec income tax for the pay period (before reduction) | $165 | |
| Reduction per pay period | − | $28.75 | |