# Income tax deduction on pay cheque



## Hipster (May 17, 2011)

Is it up to the individual whether they have income tax deducted from each pay cheque, or pay in one lump sum at year end? Just wondering, because I usually get an income tax refund of around 7K after RRSP contributions, and would prefer to break even or thereabouts. 

My income tax deduction is around $1,200 mthly and that's money that could be invested and gain interest, between now and mid-April 2012. If it was used for an RRSP contribution then it would be an income tax deduction, instead of a gov't loan with no interest.

What do you think? 

thx


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## DanFo (Apr 9, 2011)

you can request to have your taxes taken off your pay reduced..though not sure they will let you pay no tax all ...Form T1213 ( for an rrsp) I think a TD1 has other possible reductions on it (i know you can ask them to take more off with a td1) ...you have to apply for the tax reductions each year with the t1213.. the forms can be found on the canada revenue agency website with instructions of how to fill em out


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## Plugging Along (Jan 3, 2011)

There is a legal obligation to remit tax through out the year if it's over a certain amount (can't remember the amount, but its really low).

You can fill out the form to reduce your deductions based on your RRSP contributions, but it should be pretty close to break even. You cannot completely not pay tax.


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## King Tut (May 3, 2009)

Hipster said:


> Is it up to the individual whether they have income tax deducted from each pay cheque, or pay in one lump sum at year end? Just wondering, because I usually get an income tax refund of around 7K after RRSP contributions, and would prefer to break even or thereabouts.


I think 7k is quite high. If you are married, and have kids while your employer is withholding tax as if you are single, then you will tend to get more taxes deducted up front. If that is the case, you can ask your HR for the form that you need to fill where you would provide your spouse income and number of dependents. That way you would be closer to break even when it is time for refund. I agree with you, it is better to have the money upfront than loan the government at zero interest!


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## Hipster (May 17, 2011)

Nope, I'm single. I went to HR and got a TD1 - nothing appropriate for me to lower taxes - no kids, dependents etc. Except for the RRSP contributions. Then I searched online for the T1213 that DanFo mentioned. I need to let CRA know what my RRSP contributions will be and when, and have a signed letter or documentation to submit with the form. I'll have already paid taxes for half the year before they get back to me, and I'm not sure how they'll work it out for the rest of the year. The 7K return is mostly because of the RRSP contribution last year of 20K. I'm making up for lost time - lots of lost time.


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## MoneyGal (Apr 24, 2009)

They'll work it out for the rest of the year based on your monthly contributions. If you have a monthly contribution of $1000 (for example), they will reduce your taxable income by $1000 and adjust your tax payable accordingly.


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