TD1 Additional Tax to Be Deducted: Extra Withholding Per Pay Period

Where does the amount come from?

The federal TD1 has an “Additional tax to be deducted” box on page 2, in the section the employee completes when they want more tax taken off. The employee fills in a dollar amount, signs the form, and gives it to the employer. Provincial and territorial TD1 forms may provide related instructions, but the additional amount itself should be taken from the applicable CRA form the employee submitted rather than assumed from a matching provincial field.

The employer's job is mechanical: withhold that amount from every pay in addition to the calculated income tax, and keep the completed TD1 with the employee's records. As with the rest of the TD1, the form is not sent to CRA unless CRA later asks to inspect records.

The current federal form is on CRA's 2026 TD1 Personal Tax Credits Return page, and employer obligations around TD1 forms are covered in the T4001 Employers' Guide.

Why do employees ask for extra withholding?

Payroll withholding is built for employment income. When an employee has significant income that nobody withholds tax on, the year-end math produces a balance owing — and repeated balances owing can put the employee into CRA's quarterly-instalment system. Common examples:

• rental income from a property;
• self-employment or gig income earned alongside the job;
• investment income such as interest, dividends, or capital gains;
• a second pension or other periodic payment with little or no tax withheld.

Rather than setting money aside themselves, the employee can use the TD1 additional-tax box to request more withholding from payroll. CRA's computerized-payroll formulas treat that amount as Factor L for the pay period.

How does Beanflow apply it?

Beanflow treats the TD1 amount as CRA T4127 Factor L for the pay period and adds it to the income tax calculated from income, claim amounts, and the applicable tax formulas.

The same review is worth doing each January. The employee's other income may have changed, and a stale additional-tax amount keeps withholding until a new TD1 replaces it.

What additional tax is not

Two practical consequences follow. First, additional tax is not a substitute for a $0 total claim: an employer should not invent an arbitrary extra amount for an employee with a second job — the employee's TD1 declaration drives that. Second, when a reduction requires CRA authority, the employer needs CRA's letter before applying it; an employee's informal request alone is not enough. Separate CRA rules can reduce remuneration automatically for qualifying payroll deductions such as employer-withheld RRSP or FHSA contributions.

How Beanflow applies it

1. Enter the TD1 amount in Additional tax to be deducted per pay period on the employee's tax information.
2. Beanflow applies that amount as CRA T4127 Factor L for the pay period, in addition to the calculated federal and provincial income tax.
3. The amount is not automatically rescaled if the pay frequency changes — review it with the employee and update it from a new TD1.
4. A zero or empty amount means no extra withholding; the standard calculation stands on its own.

Employer checklist

1. Take the amount from a completed TD1, not from a conversation or email.
2. Use the current CRA treatment for the payment pattern. For standard payroll, apply the amount as Factor L in the pay-period calculation; for multiple separate payments in one period, verify the CRA treatment rather than assuming a once-only rule.
3. Keep the TD1 on file with the employee's records; do not send it to CRA unless asked.
4. Revisit the amount when pay frequency changes and at the start of a new year.
5. Never use the additional-tax field to reduce withholding. A separate reduction request generally requires CRA authority unless a specific CRA payroll rule already allows the deduction to reduce remuneration, such as qualifying employer-withheld RRSP or FHSA contributions.