Reducing Payroll Deductions
If you are making RRSP contributions, you might be able to reduce the income tax deducted from your paycheque. Consider asking your employer to make your RRSP contribution(s) directly to your RRSP administrator and deduct the payments from your salary. Your employer can then reduce your tax withholdings because the payments made directly to your RRSP are not subject to income tax withholdings.
If you have an employer willing to make direct RRSP contributions without tax withholdings, be prepared to provide proof to your employer of your RRSP deduction room for the year. This will generally require you to provide to your employer a copy of your Notice of Assessment for the prior year showing your RRSP deduction limit for the year. You do not need to apply to the CRA for the reduced withholdings.
If you pay amounts for spousal support, childcare expenses, charitable donations from your paycheque, employment expenses, rental losses, as well as interest and carrying charges on investments, consider completing Form T1213, Request to Reduce Tax Deductions at Source, and filing it with the Client Services Division of your Tax Services Office along with documentary support of the various expenses. If accepted by the CRA, your employer will be authorized to reduce your payroll withholdings.
Payroll withholdings will generally not be reduced for amounts related to child support because these payments are not deductible for income tax purposes and for tax shelter investments.
Reduced tax withholdings generally means a smaller tax refund when you file your income tax return because a tax refund is inevitably the return of the overpayment of withholdings.
If you think you might be able to reduce your payroll withholdings, you should consult a Chartered Professional Accountant to see if you qualify and to understand the implications of reducing your withholdings.