Increase your pay cheque by paying less tax!

Getting a tax refund is exciting, but what it means is that you’ve paid too much income tax. Letting the government take the extra tax all year is like providing them with an interest free loan. Wouldn’t you rather have this additional money at your disposal throughout the year?

The good news is that you can. If you have pre-authorized payments set up on your Registered Retirement Savings Plan (RRSP) you can request that your employer take off less income tax from your pay cheque.

To reduce the amount of income tax deducted from your pay cheque you’ll need to complete the following steps:

Ensure you have pre-authorized payments set up on your Equitable Life RRSP. To start pre-authorized payments, complete and submit the Pre-Authorized Debit form.

  1. Complete the “Request to Reduce Tax Deductions at Source” (CRA form # T1213). Note that you will have to file this request each year with the Canada Revenue Agency.
  2. Send the completed form to Canada Revenue Agency.
  3. Canada Revenue Agency will notify you within 4 – 6 weeks to let you know if they have approved your request.
  4. If your request is approved, submit the approval to your employer who can adjust the amount of income tax payable.

Case Study

Samantha has an Equitable Life RRSP and contributes $400 per month through pre-authorized payments. She typically receives about $1,680* as a tax refund when she files her taxes, but would prefer to have access to this money throughout the year.

Samantha decides to complete the “Request to Reduce Tax Deductions at Source” form, and as a result she sees her pay cheque increase by approximately $140 per month*. With the extra money in her bank account she has the freedom to choose how she wants to use it… whether that be to increase her monthly RRSP contribution, mortgage payment, or simply having access to the cash for her daily living expenses.

Talk to your financial advisor to find out if this strategy is right for you.


*Based on a 35% marginal tax rate.

The case study is for illustration purposes only. The information provided is for general information purposes only and is not intended as tax advice to an individual.