Dayforce understands that, in Canada, tax withholding for employees who aren't required to report for work is to be based on the province where an employee is paid from (under s.100(4) of the Income Tax Regulations).
Despite that requirement, many Canadian employers choose to reduce administration by deducting at-source amounts that more closely match the employees’ actual liability to pay tax (as determined by their province of residence on December 31). This achieves a reasonable estimation without introducing the risk of under or over-remitting. Dayforce’s virtual checkbox is designed for the use of these employers. By referring to residence, the checkbox also more accurately segregates WCB assessable earnings (in the province where the employee is at risk of injury) and tends to align with an employer’s liability to accumulate provincial payroll tax remuneration.
Employers who want to strictly adhere to s.100(4) can't use Dayforce’s virtual checkbox. Instead, they need a special set up for employees who aren't required to report for work and are paid from a province outside where they reside. WCB and provincial payroll tax remuneration accumulations might require additional manual review/consideration. The employees of these employers have the option of submitting a T1213 to waive withholding or a TD1 request for Additional Tax, depending on their circumstances.
- If the employee takes action, the employer will receive a letter from CRA with permission to make the withholdings more closely align with the province of residence.
- If the employee takes no action, it would be reasonable for them to expect a discrepancy between the annual withheld funds and the individual’s liability.