Nova Scotia is making changes to the way TD1 Basic Personal Amounts are calculated effective January 1, 2018. If you have employees in Nova Scotia, their Basic Personal Amounts will now be determined based on their annual taxable income.
Depending on your employees' annual taxable income, you may need to manually adjust the Nova Scotia Provincial TD1 amounts in QuickBooks Desktop Payroll AFTER updating to the January 2018 tax tables.
- If an employee has an annual taxable income greater than $75,000, their Provincial TD1 amount will remain the default value of the new tax table ($8,481) and no manual adjustments are required.
- If an employee has an annual taxable income less than $25,000, you will need to manually adjust their Provincial TD1 amount in QuickBooks Desktop from $8,481 to $11,481 AFTER updating to the January 2018 tax tables.
- If an employee has an annual taxable income greater than or equal to $25,000 and less than or equal to $75,000, you will need to manually adjust their Provincial TD1 amount in QuickBooks Desktop AFTER updating to the January 2018 tax tables, based on the following formula:
Provincial TD1 amount = $11,481 – [(annual taxable income1 - $25,000) x 6%]
Employee “A” has an annual taxable income of $45,000
Provincial TD1 amount = $11,481 – [($45,000 - $25,000) x 6%] = $10,281
Employee “B” has an annual taxable income of $57,500
Provincial TD1 amount = $11,481 – [($57,500 - $25,000) x 6%] = $9,531
1To calculate the annual taxable income you must use this formula as provided by the Canada Revenue Agency:
Annual Taxable Income = [# of pay periods in the year x (Gross remuneration for the pay period - Payroll deductions for the pay period –Alimony or maintenance payments for the pay period – Union dues )] – Annual deduction for living in a prescribed zone – Other annual deductions
- Gross remuneration includes overtime earned and paid in the same pay period, pension income, qualified pension income, and taxable benefits, but does not include bonuses and retroactive pay increases
- Payroll deductions include employee contributions to RPP, RRSP, PRPP or an RCA
- Alimony or maintenance payments required by a legal document dated before May 1, 1997
- Union dues include monies paid to a trade union, an association of public servants or dues required under the law of a province to parity or advisory committee
- Other annual deductions include childcare expenses and support payments, requested by an employee or pensioner and authorized by a tax services office or tax centre.
To update Provincial TD1 amounts in QuickBooks Desktop for your employees in Nova Scotia:
- From the Employees tab, select the Employee Centre.
- Select the Employee you need to update.
- Select the Payroll Info tab.
- Select Taxes and TD1
- Manually enter the Provincial TD1 amount based on the instructions above.
- Click OK.