General information only — not financial advice for your situation.
This is a learning tool. Always check CRA My Account records and talk to a qualified professional for your own numbers.
Plain English
Tax that gets taken off your pay before you even receive it. Your employer sends it straight to CRA on your behalf throughout the year.
Technical definition
Withholding tax is a mandatory prepayment of estimated income tax deducted at source by the payer (typically an employer) and remitted to CRA. The amount is based on the employee's TD1 form and projected annual income. Withholding also applies to RRSP withdrawals (10%/20%/30% depending on amount) and certain payments to non-residents.
Examples
- • Your employer withholds $1,200/month in income tax from your $80,000 salary. At tax time, if too much was withheld, you get a refund.
- • You withdraw $15,000 from your RRSP (outside HBP). The financial institution withholds 20% ($3,000) and sends it to CRA. You report the full $15,000 as income on your return.
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About this site
Every number on this site is sourced from CRA publications, the Income Tax Act, or provincial fiscal releases. We show the math, cite the sources, and never tell you what to do with your money.