If you're living in Quebec as an expatriate, are you required to pay taxes? What steps do you need to take care of? Expat.com has some information that might help.
According to Revenu Quebec, taxes are described as “payments made by citizens and businesses to fund public services and social programs provided by the government”. In Quebec, there are two levels of taxation: federal and provincial. The Canada Revenue Agency (CRA) manages federal taxes, while Revenu Quebec oversees provincial taxes. Taxes are automatically taken from salaries, typically amounting to an average of 20 to 25% of Quebecers' income. For self-employed individuals, there may be a requirement to make tax and contribution payments in installments, also referred to as quarterly payments, throughout the year.
If you're employed in Quebec and have been a resident for over 183 days in the fiscal year, you'll have to pay taxes in the province. Additionally, if you earn income from sources outside Quebec while residing there, you'll need to report that as well. Fortunately, there are agreements between countries aimed at preventing double taxation.
The Quebec tax system
Quebec's tax system is based on self-assessment. Citizens, also known as taxpayers, are fully responsible for declaring their income and remitting the amounts owing to the government. Each year, taxpayers file a tax return to record their income, determine whether or not they are entitled to deductions and tax credits, establish their tax liability for the year, and determine whether they are entitled to a refund or have a balance to pay.
If you are an employee, you will receive an “R1” form and a “T4” form from your employer at the end of February or the beginning of March. These forms are summary sheets containing information on salaries and wages received throughout the tax year. You'll need to take these R1 and T4 forms with you so that you can enter the correct amounts on your tax return. You'll also need to enter your Social Insurance Number (SIN). Note that even if you have no income to declare, it could be very advantageous to file a tax return each year. This may enable you to benefit from certain tax credits and social programs for which you may be eligible.
Deductions are amounts deducted from your salary. They are used to reduce your taxable income, so they reduce the income on which you must calculate your tax liability. Some deductions are job-related, such as telecommuting expenses, while others are granted to encourage you to save for retirement, such as the registered retirement savings plan (RRSP) deduction. In all cases, you must meet certain eligibility requirements. There are two types of tax credits. The non-refundable tax credit reduces or eliminates your income tax liability in a given situation. Refundable tax credits are paid to you even if you have no tax to pay. You can consult the complete lists of deductions and tax credits for which you may be eligible! To obtain the deductions and tax credits to which you are entitled, apply directly on your tax return. Revenu Quebec notes that every year, more than half of all Quebecers receive a tax refund after filing their tax return.
The Quebec tax abatement represents the sum of the Alternative Payments for Standing Programs and the Youth Allowances Recovery. This abatement takes the form of a 16.5-percentage-point reduction in federal personal income tax for all Quebec tax filers. For example, if you have retirement savings (RRSPs) and are a tenant, your landlord is required to provide you with a tax certificate. Even your public transport passes can be deducted. You won't be asked to provide proof when you submit your tax return. On the other hand, you may be asked to provide proof at a later date.
Filing your Quebec income tax return
To complete your tax return, you can download specialized software recognized by ARC and Revenu Quebec. Software costs vary according to your profile. In general, they are free for low-income earners.
Caution:
It is very important to be aware of the main changes concerning the tax year for which you are filing your return.
To complete your tax return, gather various statements like Statement 1 (Employment Income and Miscellaneous Income), Statement 2 (Retirement Income and Annuities), Statement 3 (Investment Income), Statement 24 (Child Care Expenses), and so on. Collect supporting documents for items like registered retirement savings plans (RRSPs), medical expenses (drugs, dental expenses, eyeglasses, health care, etc.), or tuition fees. By the end of February, you should have received most of these statements. Review the instructions on the documents you receive. While you don't need to attach the documents to your tax return, it's advisable to keep them in case Revenu Québec requests them. For accurate filing, refer to the Guide to the income tax return (TP-1.G) and the Help by line sub-section.
If you find yourself in a unique situation, like being self-employed, you might consider hiring an accountant. This way, you can ensure that you take advantage of all the tax allowances available to you. However, a reliable software package should also provide these deductions. Many universities host tax clinics where tax students assist in completing your return for free or at a minimal cost. While some are open to low-income earners, others may be specifically reserved for students.
The final step is to print out the returns and send them by post. Sending your return online is only possible from your second Quebec tax return onwards. Not all software programs allow this, either. If you send your return by Internet, you will receive a message with a reference number confirming that your return has been sent. Make sure you receive this message after you've submitted your tax return. You can also complete your return by hand using the paper forms available online or at Desjardins bank branches, for example. If you use commercial software to complete your tax return, you will be able to file it over the Internet from February 20 using ImpôtNet Québec. The deadline for filing your tax return is generally April 30. If you or your spouse have operated a business or earned income as a manager of a family-type or intermediate resource, the deadline is extended to June 15. In all cases, you must pay your tax balance by April 30.
If you've paid too much tax, you'll receive a tax refund, either from the provincial or federal government or both. On the other hand, if you haven't paid enough, you'll have to pay the full amount. It takes a few days to process an online tax return. For a return sent by post, it can take up to a month. To receive your refund more quickly, you can sign up for direct deposit and provide your bank details. Without direct deposit, you will receive your refund by cheque. There are four ways to register for direct deposit. You can use the online services offered in My Account for Citizens. Alternatively, you can register online through your financial institution's website if it offers this service. You also have the option of attaching to your tax return a specimen cheque marked "Cancelled" on the front, along with your name and social insurance number. Alternatively, you can complete the Direct Deposit Enrollment Request form (LM-3) and submit it to Revenu Quebec (this form can be included with your tax return).
For information on the status of your tax return in Quebec, you can review My account for individuals, or use the Info-remboursement service. If you have a balance to pay, you can pay directly on your financial institution's website, at your financial institution's counter or ATM, or by post. If you wish to amend a previously filed tax return, you have several options. Under certain conditions, you can use the online service to modify tax return information, available in My account for individuals. Alternatively, you can complete the Request for adjustment of a tax return (TP-1.R) form and mail it to Revenu Québec, along with the documents supporting the request for change. The third option is to use the same authorized software used to complete the tax return for which you are requesting a change.
Good to know:
Beware of fraud! The Quebec tax filing season is ripe for fraud. Revenu Québec will never notify you of a payment by e-mail or text message. Nor will you be asked for your personal information by e-mail or text message. If you receive suspicious communication, please report it to the Canadian Anti-Fraud Centre and contact Revenu Quebec.
Taxes in Quebec
Similar to taxes, income taxes contribute to funding public services and social programs provided by the Quebec government. Most goods and services purchased incur taxes, with merchants collecting them on behalf of the government by adding them to the selling price. Subsequently, these collected taxes are remitted to the government. Quebec's value-added tax (VAT) comprises the federal Goods and Services Tax (GST) and the provincial Quebec Sales Tax (QST). The combined rate is approximately 13% on most goods. In-store prices are typically quoted before taxes, and you settle the tax amount at the checkout. It's worth noting that you may be eligible for a tax refund, which is distributed in three installments throughout the year.
Good to know:
Some goods and services are zero-rated or exempt, so you don't have to pay tax on them. See taxable, zero-rated, or exempt goods and services.
Business taxation in Quebec
Before launching your business in Quebec, it's crucial to understand the Goods and Services Tax (GST) and Quebec Sales Tax (QST) regulations. These are taxes imposed by the federal and provincial governments on the sale of goods and services. If your business generates revenues exceeding $30,000 over a 12-month period, you are required to register. Additionally, it's essential to remit these taxes to the government.
It's important to educate yourself about regulations, taxation, Quebec's business culture, and the potential of your industry. To achieve this, consider building connections with individuals and organizations that can assist you throughout your business's growth. Revenu Quebec's coaching program provides a personalized, free service to SMEs and self-employed individuals. Schedule an appointment to gain a better understanding of your tax rights and obligations. Additionally, focus on expanding your professional network and promoting your business through a well-thought-out communications and marketing plan.
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