Question

You have just been advised that your organization is opening an office in Québec. Describe the employer contributions that are specific to the province of Québec, their rates and thresholds where available. (Do not include the organization’s portion of the statutory deductions.)

Answer 1

EMPLOYER CONTRIBUTIONS
Income tax

Employers are required to make deductions at source from the earnings of their employees for taxes imposed under the federal and provincial income tax acts. They are also required to have employees complete separate TD1 and TP-1015.3 forms which provide the information that determines the status of an employee for income tax purposes.

Québec Pension Plan

The Québec Pension Plan Act provides retirement pensions for contributors as well as survivors' benefits for widows and dependent children of contributors who die. It also provides certain disability benefits. This pension plan is compulsory. Québec residents do not participate in the federal Canada Pension Plan. Employees, employers and self-employed individuals are required to contribute. For the year 2012, each employer must deduct and remit 5.025% of each employee's wages, to a maximum annual contribution of $2,341.65, and contribute an equal amount on its own behalf. The contribution rate and both the employer's and the employee's maximum contribution are subject to change on a yearly basis. The employer's contribution is deductible for income tax purposes as a normal business expense.

Québec Health Services Fund

Québec provides free, comprehensive health care to its residents. This includes coverage for doctors and hospital services. All employers in Québec are subject to an employer health tax. The employer health tax is levied at a rate between 2.7 and 4.26% on the gross amount of wages and benefits (i.e. the gross remuneration) received by employees who either report for work at a permanent establishment in Québec or are paid from a permanent establishment in Québec.

Employment Insurance

The Employment Insurance Act requires an employer to make contributions based on the earnings of all employees, subject to certain exceptions. The contributions are made to the Employment Insurance Account maintained by the Government of Canada, from which unemployed insured contributors may draw benefits. Generally, each employer must deduct and remit 1.47% of each employee's wages, up to a maximum annual premium of $674.73 (in 2012), and itself contribute an amount equal to 1.4 times the employee's premium for the pay period. The employer's contribution is deductible for income tax purposes as a normal business expense.

An employer's premium can be reduced when it maintains a wage-loss plan that reduces employment insurance benefits payable in respect of unemployment caused by illness or pregnancy.

MINIMUM LABOUR STANDARDS

The Act Respecting Labour Standards ("Labour Standards Act") sets out the minimum working conditions in Québec. Naturally, a collective agreement or individual contract of employment may provide for better working conditions. This law is of public order and any agreement contrary to the provisions of the Act or providing for inferior working conditions is null and void. To provide for the funding of the administration of the Act, every employer is required to pay the Minister of Revenue an annual contribution of 0.08% of all the wages subject to contribution which he pays or is deemed to pay in respect of a calendar year. The following is a summary of the minimum working conditions under the Labour Standards Act.

Minimum wage

The minimum hourly wage in Québec has been set at $9.65 effective May 1, 2011. It will increase at $9.90 effective May 1, 2012. Employees in the restaurant and hotel sector who usually receive gratuities are entitled to a minimum rate of $8.35 per hour, which will increase to $8.55 effective May 1, 2012. It should be noted that the minimum wage does not apply to an apprentice who participates in an apprenticeship program nor to an employee remunerated entirely on commission who works outside the employer's place of business and whose working hours cannot be controlled.

Equal wage rate and vacation benefit for part-time employees

Unless a part-time employee is paid more than twice the minimum wage, it is prohibited to remunerate him or her at a lower wage rate than that paid or granted to full-time employees performing the same tasks in the same establishment, for the sole reason that the employee works part-time.

Payment of salary

Wages must be paid in cash or by cheque in a sealed envelope. The payment may be made by bank transfer provided the employee agrees to it in writing. Wages must be paid at intervals of not more than 16 days, or one month in the case of managerial personnel.

However, any bonus or overtime earned during the week preceding payment of the wages may be paid with the subsequent payment.

Income tax rates and income thresholds

For 2016, the income tax rates applicable to the taxable income brackets remain unchanged and the income thresholds for these brackets have been indexed. Specifically:

the 16% rate applies to taxable income of $42,390 or less (previously $41,935);
the 20% rate applies to taxable income of more than $42,390, but not more than $84,780 (previously $83,865);
the 24% rate applies to taxable income of more than $84,780, but not more than $103,150 (previously $102,040);
the 25.75% rate applies to taxable income of more than $103,150.