Starting a New Job in Canada — TD1, T4 Continuity, EI Hours, and RRSP Rollover (2025)

The first month at a new Canadian employer locks in tax withholding for the rest of the year. The paperwork is mostly two forms — federal TD1 and provincial TD1 — but the choices on those forms decide how much CRA collects from each paycheque and whether you owe at filing. Add in EI insurable-hours continuity, CPP overcontribution risk when you have two employers in the same year, and rolling over an old employer’s pension or group RRSP, and you have a checklist worth doing carefully.

This guide walks through the four highest-impact decisions in order: TD1 (federal + provincial), pension/RRSP rollover, EI/CPP carry-over checks, and the first-paycheque sanity check.

TD1 Forms — Federal and Provincial

Within your first day or two, your employer hands you (or e-sends) two forms:

• TD1 Federal — sets federal tax credits used to calculate federal income tax withholding
• TD1 Provincial / Territorial — same logic for provincial tax (or use Quebec’s TP-1015.3-V if you work in Quebec)

The most common error is claiming the basic personal amount on both employers when you have two concurrent jobs — leading to under-withholding and a surprise bill at filing.

Situation	TD1 line 1 (basic personal amount)	Effect
This is your only job	Claim the federal/provincial BPA	Standard withholding
You have a second concurrent job (this is the second)	Tick “More than one employer” at the bottom; do NOT claim BPA	All income from this employer taxed without the basic credit, approximating the marginal rate
You’re returning to work after parental leave / unemployment	Claim BPA (assuming this is now your main / only job)	Standard withholding

Beyond the basic amount, line-by-line credits to consider claiming on TD1:

• Age amount (line 2) if you’re 65+
• Pension income amount (line 3) if you’ll receive eligible pension during the year
• Tuition amount (line 5) if you’re taking eligible post-secondary courses
• Caregiver / disability amounts if applicable
• Provincial credits vary by province — Ontario, BC, and Quebec each have unique credit lines

If your circumstances don’t match the standard form, the TD1-WS worksheet gives a more accurate calculation. Common cases needing the worksheet: lower expected total income (claim less than the full BPA to avoid over-withholding refunds), additional employment income to declare for withholding adjustment.

Estimate your projected withholding on the income tax calculator before signing — if the after-tax pay doesn’t roughly match the offer, the form is wrong.

T4 Continuity — Two Employers, One Year

If you change jobs mid-year, you’ll receive two T4 slips for that tax year — one from each employer. Both are filed together on your T1 General the following spring. This is normal and doesn’t trigger any extra tax in itself; it’s the CPP and EI overcontribution risk below that’s the catch.

The old employer must issue your T4 by end of February the following year, the same as if you’d stayed. Your final paycheque from the old employer also includes any unused vacation pay payout, taxable in the year paid.

CPP and EI — The Two-Employer Overcontribution Trap

CPP and EI both have annual maximum employee contributions:

• CPP 2025 max contribution: $4,034.10 (employee), at max pensionable earnings of $71,300 (YMPE) on contribution rate 5.95% above the $3,500 basic exemption
• CPP2 (enhanced, 2025): $396 max additional contribution on pensionable earnings between $71,300 and $81,200 (YAMPE), at 4%
• EI 2025 max contribution: $1,077.48 (employee outside Quebec) at insurable maximum $65,700 × 1.64%; Quebec rates are lower because QPIP separately funds parental insurance

Each employer independently calculates and deducts CPP and EI as if you’d worked there all year. So if you earn $50k at the first employer and $50k at the second, both employers deduct CPP and EI assuming you’d cross the maximums on their watch alone — meaning you over-pay both contributions.

The good news: CRA reconciles this on your T1 the following spring. You claim the over-contribution back on Schedule 8 (CPP) and lines 312/375 (EI), and the excess is refunded. Use the CPP / EI calculator to estimate how much over-contribution you’ll have at year-end.

The annoying news: the cash sits with CRA for up to a year before you can recover it. Some employers will adjust mid-year if you ask, but most won’t. Plan for the cash-flow gap.

Rolling Over an Employer Pension or Group RRSP

If your old job had a defined contribution (DC) pension or group RRSP, you have decisions to make about what to do with the accumulated balance. The default — leaving it where it is — is sometimes fine but often costs you in fees or restricts your investment choices.

Options for a DC pension:

Option	Tax effect	When it makes sense
Leave with old employer’s plan	None today	If the plan has good performance + low fees
Transfer to new employer’s plan	None today (Form T2151 direct transfer)	If new plan accepts and has better terms
Transfer to a LIRA (Locked-In Retirement Account)	None today (T2151 direct transfer)	Most common — gives you full investment control while preserving locked-in status
Cash out	Fully taxable as income, plus 10–30% withholding	Almost never the right call before retirement

Options for a group RRSP (not locked-in):

• Transfer to your personal RRSP (Form T2033 direct transfer). No tax. This unlocks full investment choice + lower fees.
• Cash out — fully taxable. Same advice: rarely worth it.
• Leave it — fine if the plan is strong, costly if it isn’t.

For both options, the key is direct transfer (T2151 / T2033) — the funds move custodian-to-custodian without ever touching your hands, so no withholding tax is triggered. If you withdraw to your bank account first and then redeposit, the original withdrawal is taxable income and the redeposit eats RRSP contribution room.

Defined-benefit (DB) pensions are more complex — you typically choose between leaving the entitlement (deferred pension) or taking the commuted value (a lump-sum transfer, with limits on what’s tax-deferred). Get advice for any DB transfer worth more than ~$50,000.

EI Insurable Hours — Continuity for Future Claims

EI eligibility for benefits (regular, parental, sickness, etc.) depends on accumulated insurable hours in the qualifying period (usually the 52 weeks before a claim). Hours from the old job and the new job both count, provided both employments are insurable (most are; some commission-only or owner-direction roles may not be).

You don’t need to do anything to “transfer” hours — Service Canada queries EI records directly when you file a claim. The old employer issues a Record of Employment (ROE) within 5 business days of your last day; the new employer issues a fresh ROE if and when you next leave. Together, ROEs prove your hours.

If you’re considering parental leave or other EI claims in the next year, use the EI benefits calculator to confirm your hours qualify under the regional minimum (variable by region — typically 420–700 hours, see the unemployment-rate table for your area).

Your First Paycheque — The Sanity Check

Within 1–2 weeks, you’ll get your first pay stub. Five minutes to verify:

Item	What to check
Gross pay	Matches the offer letter / contract for the pay period
Federal tax	Roughly matches the income tax calculator at your salary level + TD1 status
Provincial tax	Matches your province’s rates as withheld by the employer
CPP / CPP2	5.95% on pensionable earnings above $3,500 / 4% on YAMPE band
EI	1.64% (rest of Canada) or 1.31% (Quebec) on insurable earnings up to maximum
RPP / group RRSP	Pre-tax deduction at the percentage you elected
Vacation accrual	Typically 4% (2 weeks) or 6% (3 weeks) of gross — varies by province + tenure
Net pay	Gross − deductions = take-home

If federal/provincial tax is significantly off your projection, the most likely cause is a wrong tick on the TD1 (basic personal amount issue, missing credit you should have claimed, or a credit you claimed but shouldn’t have). Email payroll within the first two pay cycles — corrections at week 2 are simple, corrections in November after 9 months of wrong withholding produce a tax-time mismatch.

Quebec Special Rules

If you work in Quebec:

• Use TP-1015.3-V instead of provincial TD1
• File RQ tax separately on a TP-1.D-V return
• QPP instead of CPP (similar mechanics, slightly different rates)
• QPIP funds parental leave separately, so federal EI rate is lower for Quebec workers
• Quebec also has its own drug insurance plan (RAMQ) payroll deduction if you don’t have private coverage

The mechanics are otherwise identical — a TP-1015.3-V wrong tick has the same withholding consequences as a TD1 wrong tick.

Frequently Asked Questions

Q: I started mid-year and only worked half the year — am I eligible for the full federal Basic Personal Amount?

Yes, if you’re a Canadian resident for tax purposes for the full year and your income comes from one source. The BPA is annual, not pro-rated by employment date. Filing your T1 the following spring will reconcile any over-withholding (refund) or under-withholding (balance owing).

Q: I’m starting a contract role on a T4A (self-employed). Does this guide apply?

Mostly no. T4A contractors don’t fill out a TD1 (no employment relationship) and pay their own CPP and income tax via quarterly instalments. See your tax accountant about T2125 self-employment income reporting, and use our self-employment tax calculator to estimate what you’ll owe.

Q: My new employer asked if I want to participate in their group RRSP / DC pension — should I?

Almost always yes if there’s an employer match. A typical match is 50% of contributions up to 4–5% of salary — that’s an immediate ~2% pay rise you’d otherwise leave on the table. Even without match, group plans often have lower fees than retail RRSPs.

Q: My old employer paid into a group RRSP for me. Can I leave that money there?

Yes, in most cases. The money continues to be invested per the plan’s options. Common reasons to transfer it out: high admin fees (>0.5% on top of investment fees), restricted investment choice, the plan provider’s customer service is poor. Transfer is via Form T2033 direct rollover — no tax.

Q: I just got a signing bonus — how is it taxed?

Bonuses are taxable employment income, subject to standard CRA withholding. CRA’s bonus tax method projects the bonus’s marginal rate impact and withholds accordingly — usually 30% federal + provincial. The end-of-year T1 reconciles to your actual marginal rate. See how bonus tax works in Canada for the full breakdown.

Q: My new salary pushes me into a higher tax bracket — does the whole salary get taxed at the higher rate?

No. Canada uses marginal tax brackets. Only the income above each threshold is taxed at the higher rate. The portion below stays at the lower rates. Use the income tax calculator to see the band-by-band breakdown.

Q: My TD1 changed mid-year (got married, had a child). Do I need to refile?

Yes — submit a new TD1 to your employer reflecting the changed circumstances. Common life events that change credits: marriage / common-law (eligible dependant amount may change), birth / adoption (caregiver amounts), starting eligible post-secondary education (tuition credit), turning 65 (age amount).

Sources

• CRA — TD1 Personal Tax Credits Return (federal)
• CRA — Working in two or more jobs (T1 reconciliation, CPP/EI overcontribution)
• CRA — Direct transfer of an RPP or DPSP (Form T2151)
• CRA — Direct transfer of an RRSP / RRIF (Form T2033)
• Service Canada — Record of Employment (ROE) and EI eligibility

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Set up your new job for tax success

Project your new salary’s after-tax pay with the income tax calculator. Cross-check the CPP / EI deductions on your first paystub against the CPP / EI calculator. If you’re keeping a second job concurrently, model the combined-income marginal rate before deciding whether to top up RRSP or wait. And if you’re rolling over a DC pension, file the T2151 direct-transfer paperwork before the old plan auto-defaults you into a non-optimal LIRA — most plans give 60–90 days from termination.