Canadian withholding tax
What are the withholding tax filing requirements?
Quarterly filing status is automatic unless you request otherwise or withhold $1,000 or more per month
Monthly filing is required if you withhold $1,000 or more per month
Annual filing is available if you:
report household employment taxes on Schedule H of your federal income tax return (federal Form 1040), or
you withhold less than $1,000 in a calendar year
Electronic Funds Transfer (EFT) is available for making tax payment for withholding tax accounts. EFT is not required and is a voluntary method of payment. Taxpayers who choose to make payments via EFT do not submit paper return coupons.
An application form must be completed and approved to remit withholding tax payments via EFT. Applications, procedures, and transfer formatting requirements are coordinated through the Electronic Data Specialist of the Tax Commission. To inquire about EFT payments, phone (801) 297-7626. For payments by EFT, complete the authorization form found in Pub 43, Withholding Tax EFT
Employers who submit paper return coupons may use the online PaymentExpress system for making tax payments. Please note that this is a payment portal only and you must still submit the tax return for the filing period. Payment for amounts due may be made online by direct debit (electronic check) against a checking account or savings account, or by credit card using the PaymentExpress system. A convenience fee is assessed for electronic payments ; a complete list of convenience fee amount is available in the PaymentExpress
What form should I use to file my employee withholding tax?
The Tax Commission requires filing on preprinted return forms. You will receive a set of return coupons by the beginning of each calendar year.
If you change your account number, do not use the preprinted forms with your old account number. If you need the Tax Commission to send forms to you, call our automated service line (801) 297-2200 or 1-(800) 662-4335. The following forms are used for employee withholding tax:
TC-96 M - Monthly Income Withholding Return
TC-96 Q - Quarterly Income Withholding Return
TC-96 Y - Annual Income Withholding Return
TC-96 A - Amended Income Withholding Return to report overpayments and refund claims.
TC-96 C - Canadian Employer\\'s Notice of Change to notify the Tax Commission of any changes in your business name, address, mailing address, or ownership status; or to close the account.
TC-96 R - Annual Withholding Reconciliation Return
TC-96 RC - Corrected Annual Withholding Reconciliation Return
What is the difference between an employee and an independent contractor?
The right to control and the relationship of the parties are primary factors that determine whether a worker is an independent contractor or an employee. The relevant facts used to make the determination fall into three main categories. It is very important that you consider the facts in all categories before making a determination.
1. Behavioral Control
These facts show whether there is a right to direct and control how the worker does the work. For example:
Instructions - If the worker receives extensive instructions on how the work is to be done, employee status is indicated.
how, who, or where to do the work
what tools or equipment to use
what assistants to hire to help with the work
where to purchase supplies and services
Training - If the worker receives training about required procedures and methods, this indicates that the business wants the work done in a certain way, and this suggests employee status.
2. Financial Control
These facts show whether there is a right to direct or control the business part of the work. For example:
Significant Investment - If the worker has a significant investment, the worker may be a independent contractor. While there is no precise dollar test, the investment must have substance. However, a significant investment is not necessary to be an independent contractor.
Expenses - If the worker is not reimbursed for some or all business expenses, then the worker may be an independent contractor, especially if the worker\\'s unreimbursed expenses are high.
Opportunity for Profit or Loss - If the worker can realize a profit or incur a loss, this suggests that the worker is in business for him or herself and that the worker may be an independent contractor.
3. Relationship of the Parties
These are facts that illustrate how the business and the worker perceive their relationship. For example:
Employee Benefits - If the worker receives benefits, such as insurance, pension, or paid leave, this is an indication that the worker may be an employee. If the worker does not receive benefits, however, the worker could be either an employee or an independent contractor.
Written Contracts - A written contract may show what both the worker and the business intend. This may be very significant if it is difficult, if not impossible, to determine status based on other facts.
There is no fee to obtain a withholding tax account. However, granting a withholding license is conditional. Applicants with a history of filing and/or paying Canadian taxes late will be required to pay any tax delinquency and may be required to post a surety bond.