The tax implications of moving to Québec
If you are relocating to Québec from elsewhere in Canada or another country, there are several key tax considerations to be aware of.
Two tax systems
Unlike other parts of Canada where you file a combined federal and provincial/territorial tax return with the Canada Revenue Agency (CRA), you file two tax returns when you live in Québec: a T1 federal income tax and benefit return with the CRA and a TP1 provincial income tax return with Revenu Québec.
This alone can add complexity and, in many cases, higher tax-preparation costs, especially if you have a business, significant investment income or multiple sources of income.
Québec tax rates
The tax rates in Québec are relatively high compared to other provinces. This is noticeable particularly at lower- and middle-income levels. The gap tends to narrow at higher incomes, but taxpayers can expect to pay more in Québec than the rates payable in Ontario or western provinces.
For example, at a taxable income of $75,000, a Québec resident would pay approximately $17,300 in tax, assuming no tax deductions or credits. In Ontario, the same taxpayer would pay approximately $14,200 in tax. In Alberta, the cost would be approximately $13,900.
Tax credits and social programs for families
Like other parts of Canada, there are province/territory-specific credits and programs that apply. Two appealing ones for families are the Québec Parental Insurance Plan (QPIP) and subsidized daycare program.
The QPIP replaces federal employment insurance (EI) parental leave benefits by providing income to parents after the birth or adoption of a child. It is more generous and flexible, and administered through payroll.
Licensed daycare centres offer heavily subsidized care with a flat fee of approximately $10 per day.
Child benefits are available in Québec, such as L’Allocation famille (the Family Allowance), is addition to the federal Canada Child Benefit (CCB).
Québec Pension Plan for retirees
The Québec Pension Plan (QPP) is similar to the Canada Pension Plan (CPP) which applies in all other provinces and territories for retiree pension benefits. Just like an employee or self-employed person in other parts of Canada makes CPP contributions, a Québec worker makes QPP contributions.
The two programs coordinate benefits, including retirement pensions. If you worked in both Québec and elsewhere in Canada and apply for your retirement pension while living outside Québec, you apply for CPP with Service Canada. If you always worked in Québec but live outside of Québec in retirement, you apply for QPP with Retraite Québec.
Expatriates who retire outside of Canada apply for QPP with Retraite Québec if the last province they lived in was Québec; otherwise, they apply for CPP with Service Canada.
Sales tax
Québec sales tax includes both the federal Goods and Services Tax (GST) and the Québec Sales Tax (QST), as opposed to the Harmonized Sales Tax (HST) that applies in some other provinces.
QST may apply to some goods and services that are exempt from GST, resulting in some differences compared to other provinces.
Companies providing services or selling goods in the province of Québec may need to register for and charge QST, despite generally operating outside of Québec.
Language requirements
The provincial government and Revenu Québec primarily operate in French, although some English options may be available. This can result in complexity for taxpayers who are not bilingual.
Timing rule
Like other provinces, your province of residence is determined by where you live on December 31 of the tax year. So, even if you move to or from Québec on December 30, the final day of the calendar year is what determines your tax filing requirements for the entire taxation year.
Bottom line
Québec’s tax system is different from the rest of Canada. The biggest impacts tend to be administrative complexity, payroll differences, and Québec-specific credits and programs.
If you are moving to Québec, you will have to familiarize yourself with the rules and processes and file tax returns both federally and provincially.
This article was written by Jason Heath and Cfp from MoneySense and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
