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Two tax systems
Unlike other parts of Canada, you file two tax returns when you live in Québec: a federal tax return with the Canada Revenue Agency (CRA) and a provincial tax return with Revenu Québec.
In addition to a federal T1 tax return, you file a provincial TP1 tax return. This alone can add complexity and, in many cases, higher accounting 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 $75,000 of taxable income, a Québec resident would pay about $17,000 of tax, ignoring tax deductions or credits. In Ontario, that same taxpayer would pay about $13,600 of tax. In Alberta, it would be roughly $14,100.
Tax credits and social programs for families
Like other parts of Canada, there are province-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) parent benefits by providing income to parents after the birth or adoption of a child. It is more generous and flexible, and administered through payroll.
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Licensed daycare centres offer heavily subsidized care with a flat fee of about $10 per day.
Child benefits—the Allocation familiale (Québec Family Allowance)—is integrated with the Canada Child Benefit (CCB). Québec residents receive a lower CCB in recognition of the provincial benefits provided in that province. The combined total is comparable to what a parent would receive in other provinces.
Québec Pension Plan for retirees
The Québec Pension Plan (QPP) complements the Canada Pension Plan (CPP) for retiree pension benefits. Just like an employee or self-employed person in other parts of Canada pays CPP premiums, a Québec worker pays QPP premiums. The two programs coordinate benefits, including retirement pensions.
If you worked in both Québec and elsewhere in Canada, and apply for your pension while living outside Québec, you apply to the CPP. If you always worked in Québec but live outside of Québec in retirement, you apply to the QPP with Retraite Québec.
Expatriates who retire outside of Canada apply to the 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, so there can be some differences versus other provinces.
Companies providing services or selling goods in the province of Québec may need to register for and charge QST, despite living and generally operating outside of Québec.
Language requirements
The provincial government and Revenu Québec operate primarily in French, though some English options may be available. This can result in another layer of administration for some taxpayers who are not bilingual.
Timing rule
Like other provinces, your province of residency 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. There is no proration for the year.
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Jason Heath, CFP
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