Financial Literacy for Everyone
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Paperwork

When you first get a job, start-up paperwork can be overwhelming. Take the paperwork a piece at a time and the task will make sense.

TD1

All new employees who receive salary, wages, commissions, pension or other remuneration must complete a federal, provincial or territorial TD1 Personal Tax Credits Return form. The TD1 form is used to determine the amount of tax to be deducted from a paycheque. On the TD1 form, employees can request to have additional tax deducted from their pay. They simply have to indicate the additional tax they want to have deducted from each remuneration. If an employee wants a reduction in tax, they should complete Form T1213, Request to Reduce Tax Deductions at Source.

Social Insurance Number

The Social Insurance Number (SIN) program was introduced by Parliament in 1964 to register people with the Unemployment Insurance Commission (now known as Employment Insurance) and the Canada Pension Plan (CPP). In 1967, the SIN also became a file identifier for Revenue Canada (now known as the Canada Revenue Agency).

Since 1976, the Proof of Identity Program requires SIN applicants to present documentation to prove their identity and legal status in Canada. This is required for a first-time SIN request, as well as for a SIN card replacement, and an amendment to a SIN card or record.

To apply for a SIN card, you need to produce certain documents. All of them must be originals. For Canadian citizens born in Canada, you need a Certificate of Birth or Birth certificate (issued in Canada by the Vital Statistics branch of the province or territory of your birth).

Health insurance

If your employer offers supplemental dental and drug insurance, you will be required to complete a form detailing your personal information. This is a very thorough form in which you may need to provide a complete medical history, including hospitalizations, injuries, pre-existing condictions and other details. It may seem like a lot of trouble to go through, but itís worth the extra effort to ensure that your benefits program is set up and administered correctly.

Life insurance

Life insurance can be difficult to think about. It forces us to contemplate our own death, an eventuality many of us would rather not face. Of course, it will happen but we don't know when. That's where life insurance comes in. If family members are depending on your salary, and you suddenly die, not only do they have to deal with the emotional impact of losing someone they love, but they also have to deal with the loss of financial support that you provide.

Some employers offer their employees life insurance. You will need to be thoughtful in filling out of these administrative documents. So think about who would be financially affected by your death the most. This should be your beneficiary - the person who receives payments from your life insurance policy if you should die. If you have a spouse, the law states that that person must be your beneficiary or sign a waiver of that right. Otherwise, you're free to choose. Boyfriends, girlfriends and roommates do not usually make good beneficiaries because those relationships can change quickly. If you don't have a spouse and kids, you may want to list a parent as your beneficiary.

Employee Handbook

An employee handbook is created for two main purposes: to let new employees know what is expected of them and to clarify company rules and policies so that all employees are treated fairly. Read over your employee handbook and make sure you understand your employer's expectations. You will be expected to adhere to the policies detailed in the handbook, so ask your supervisor or the human resources manager if you have any questions.

Group RRSP

If your company has a Group RRSP program, you will get paperwork for that, too. A Group RRSP is a retirement savings plan designed for a group of employees for their retirement through pretax deductions. Among the pieces of paper you'll likely have to review is the "letter of agreement." This document contains all the core issues of the plan that must be addressed and understood by all parties prior to setting up a group plan.

Salary

Just about the only downside to making more money is that you have to pay more taxes. That salary that you've been promised is before tax. What you get after tax seems like some kind of practical joke. It's actually practical life.

The federal government withholds various deductions from every single paycheque. For one, Employment Insurance (EI) premiums are withheld from each dollar of insurable earnings up to a yearly maximum. In 2009, the maximum annual insurable earnings was $42,300. There is no age limit for deducting EI premiums, but some employment types do not have EI premiums deducted from them. These include casual employment that's not in a person's usual trade or business, and situations in which a corporation employs a person who controls more than 40% of the corporation's voting shares.

Employees also have Canada Pension Plan (or Quebec Pension Plan) deductions taken from their paycheque. The amount for this varies, but in 2009 it was calculated as 4.95% of pensionable earnings. Add to that federal and provincial tax deductions, health premiums (if applicable) union dues (if applicable) and you're not left with a whole lot of paycheque for yourself, so you'll need to make every dollar count.

T4

Your employer has one more form for you. You will receive a T4 form sometime in January. A T4 slip reports wages, salary or commission income from an employer. It also shows employer-paid taxable allowances and benefits such as low-interest or interest-free loans, health-care premiums, stock option benefits and profit-sharing. You need the T4 slip to file your tax return.

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