Challenges include different pension plan, employment insurance and income tax
Payroll departments are kept very busy processing payroll within their own provinces, but their responsibilities are amplified if the organization has employees in Quebec.
There are many differences between paying employees who work in Quebec versus paying those in other jurisdictions. The first step to processing Quebec payroll successfully is to understand the major differences.
Quebec Pension Plan
Employees in Quebec contribute to the Quebec Pension Plan (QPP) instead of the Canadian Pension Plan but the rate is the same. Contributions are paid by workers aged 18 and over whose employment income is greater than the basic exemption of $3,500.
A person must continue contributing to the plan as long as his employment earnings are greater than the basic exemption, except if the person receives a disability pension.
Quebec Parental Insurance Plan
Employment insurance (EI) premiums are different inside and outside Quebec. Employees in Quebec pay EI premiums and Quebec Parental Insurance Plan (QPIP) premiums. The annual 2011 maximum insurable earnings for EI in Quebec are $44,200 and $64,000 for QPIP.
Provincial income tax
Quebec is the only jurisdiction that collects its own provincial income tax, therefore, there are two separate income tax deductions withheld from employees working in Quebec: one federal and one provincial.
Quebec provincial income tax is withheld from employees who report to work at an employer’s establishment in Quebec or do not report to an employer’s establishment but are paid from the employer’s establishment located in Quebec.
The remittance schedule is very similar to the federal schedule.
Payroll should remit QPP employee and employer portion, QPIP employee and employer portion, Quebec Health Services Fund (QHSF) employer contribution only and Quebec income tax to the Ministère du Revenu du Quebec (MRQ).
When the employer pays the cost of certain benefits, the cost and value of premiums, including applicable sales tax (nine per cent), may constitute a taxable benefit to the employee. This can include life, health, dental and accidental death and dismemberment insurance.
In addition to QPP contributions, QPIP premiums and Quebec provincial tax withholdings, the following employer contributions must be remitted to the MRQ:
Quebec Health Services Fund
The province of Quebec funds its health-care service through an employer contribution. Employers must contribute to the fund based on the amount of total wages paid to employees reporting to an establishment in Quebec or employees who do not report to any establishment but are paid from an establishment in Quebec.
The contribution rate varies from 2.7 per cent to 4.26 per cent. This rate is determined by the employer’s total worldwide payroll.
Compensation tax
Specified financial institutions operated by an individual or a partnership, a trust, an estate, an organization or an association are required to pay a compensation tax.
The tax is based on employment income at a rate of 1.5 per cent of the compensation subject to tax.
Commission de la santé et de la sécurité du travail (CSST)
As of 2011, employers are required to pay CSST insurance premiums by making periodic payments to Revenu Québec at the same time as source deductions and employer contributions are remitted, using the same remittance slip.
For that purpose, a new box will be added to the remittance slip issued by Revenu Québec.
The payment frequency of the CSST premium will therefore be the same as that established by Revenu Québec for paying source deductions and employer contributions, namely, weekly, twice-monthly, monthly, quarterly or yearly.
Even if source deductions and employer contributions are not made, Revenu Quebec will send a remittance slip showing only the box reserved for payment of the CSST insurance premium.
In that case, the employer is required to remit periodic payments on the monthly basis.
Payments to MRQ must be remitted no later than the 15th day of each month, for the wages paid in the previous month.
All insurable earnings paid in the previous year must still be indicated on the Statement of Wages form, but the estimated wages for the current year are not required.
Workforce Skills Development and Recognition Fund
All employers with annual Quebec payroll in excess of $1 million should invest an amount representing one per cent of the total annual Quebec payroll in eligible training expenditures to the fund. They must also file a return to that effect with the MRQ through the Summary of Source Deductions and Employer Contributions RLZ-1.S-V.
La commission des normes du travail labour standards
Revenues from these contributions are used to defray the cost administering the legislation associated with the labour standards act.
The contribution is calculated at a rate of 0.08 per cent of the total Quebec payroll to a maximum of $64,000 in earnings (2011) per employee. The contribution is due at the end of February with the MRQ summary filing.
Vacation pay
In Quebec, car allowance, clothing, moving, travel expenses and the value of gifts are included in the calculation of vacation pay.
Minimum wage
The minimum wage rate in Quebec will increase from $9.50 to $9.65 an hour effective May 1, 2011.
National Holiday
Employees covered under Quebec jurisdiction are entitled to a day off with pay in observance of the National Holiday, which falls on June 24.
Eligible employees who work on this day must either be paid the regular rate of pay for any hours worked in addition to statutory holiday pay, or be paid their regular rate for any hours worked plus be given a day off with pay on the working day that precedes or follows June 24.
If the holiday falls on a non-working day, eligible employees must be given another working day off with pay or be paid 1/20 of their average daily earnings, including tips and excluding overtime, earned during the four work weeks prior to the holiday.
For eligible employees paid wholly or partly by commission, the payment is equal to 1/60 of the wages earned during the 12 complete weeks of pay before the holiday.
If the National Holiday falls within an employee’s vacation, they are entitled to another day off mutually agreed upon by the employer and employee and paid at the specified statutory holiday pay calculation.
Marie Lyne Dion is a payroll co-ordinator at the Société de transport de Montréal and a payroll teacher at a local college. She can be reached at [email protected].
There are many differences between paying employees who work in Quebec versus paying those in other jurisdictions. The first step to processing Quebec payroll successfully is to understand the major differences.
Quebec Pension Plan
Employees in Quebec contribute to the Quebec Pension Plan (QPP) instead of the Canadian Pension Plan but the rate is the same. Contributions are paid by workers aged 18 and over whose employment income is greater than the basic exemption of $3,500.
A person must continue contributing to the plan as long as his employment earnings are greater than the basic exemption, except if the person receives a disability pension.
Quebec Parental Insurance Plan
Employment insurance (EI) premiums are different inside and outside Quebec. Employees in Quebec pay EI premiums and Quebec Parental Insurance Plan (QPIP) premiums. The annual 2011 maximum insurable earnings for EI in Quebec are $44,200 and $64,000 for QPIP.
Provincial income tax
Quebec is the only jurisdiction that collects its own provincial income tax, therefore, there are two separate income tax deductions withheld from employees working in Quebec: one federal and one provincial.
Quebec provincial income tax is withheld from employees who report to work at an employer’s establishment in Quebec or do not report to an employer’s establishment but are paid from the employer’s establishment located in Quebec.
The remittance schedule is very similar to the federal schedule.
Payroll should remit QPP employee and employer portion, QPIP employee and employer portion, Quebec Health Services Fund (QHSF) employer contribution only and Quebec income tax to the Ministère du Revenu du Quebec (MRQ).
When the employer pays the cost of certain benefits, the cost and value of premiums, including applicable sales tax (nine per cent), may constitute a taxable benefit to the employee. This can include life, health, dental and accidental death and dismemberment insurance.
In addition to QPP contributions, QPIP premiums and Quebec provincial tax withholdings, the following employer contributions must be remitted to the MRQ:
Quebec Health Services Fund
The province of Quebec funds its health-care service through an employer contribution. Employers must contribute to the fund based on the amount of total wages paid to employees reporting to an establishment in Quebec or employees who do not report to any establishment but are paid from an establishment in Quebec.
The contribution rate varies from 2.7 per cent to 4.26 per cent. This rate is determined by the employer’s total worldwide payroll.
Compensation tax
Specified financial institutions operated by an individual or a partnership, a trust, an estate, an organization or an association are required to pay a compensation tax.
The tax is based on employment income at a rate of 1.5 per cent of the compensation subject to tax.
Commission de la santé et de la sécurité du travail (CSST)
As of 2011, employers are required to pay CSST insurance premiums by making periodic payments to Revenu Québec at the same time as source deductions and employer contributions are remitted, using the same remittance slip.
For that purpose, a new box will be added to the remittance slip issued by Revenu Québec.
The payment frequency of the CSST premium will therefore be the same as that established by Revenu Québec for paying source deductions and employer contributions, namely, weekly, twice-monthly, monthly, quarterly or yearly.
Even if source deductions and employer contributions are not made, Revenu Quebec will send a remittance slip showing only the box reserved for payment of the CSST insurance premium.
In that case, the employer is required to remit periodic payments on the monthly basis.
Payments to MRQ must be remitted no later than the 15th day of each month, for the wages paid in the previous month.
All insurable earnings paid in the previous year must still be indicated on the Statement of Wages form, but the estimated wages for the current year are not required.
Workforce Skills Development and Recognition Fund
All employers with annual Quebec payroll in excess of $1 million should invest an amount representing one per cent of the total annual Quebec payroll in eligible training expenditures to the fund. They must also file a return to that effect with the MRQ through the Summary of Source Deductions and Employer Contributions RLZ-1.S-V.
La commission des normes du travail labour standards
Revenues from these contributions are used to defray the cost administering the legislation associated with the labour standards act.
The contribution is calculated at a rate of 0.08 per cent of the total Quebec payroll to a maximum of $64,000 in earnings (2011) per employee. The contribution is due at the end of February with the MRQ summary filing.
Vacation pay
In Quebec, car allowance, clothing, moving, travel expenses and the value of gifts are included in the calculation of vacation pay.
Minimum wage
The minimum wage rate in Quebec will increase from $9.50 to $9.65 an hour effective May 1, 2011.
National Holiday
Employees covered under Quebec jurisdiction are entitled to a day off with pay in observance of the National Holiday, which falls on June 24.
Eligible employees who work on this day must either be paid the regular rate of pay for any hours worked in addition to statutory holiday pay, or be paid their regular rate for any hours worked plus be given a day off with pay on the working day that precedes or follows June 24.
If the holiday falls on a non-working day, eligible employees must be given another working day off with pay or be paid 1/20 of their average daily earnings, including tips and excluding overtime, earned during the four work weeks prior to the holiday.
For eligible employees paid wholly or partly by commission, the payment is equal to 1/60 of the wages earned during the 12 complete weeks of pay before the holiday.
If the National Holiday falls within an employee’s vacation, they are entitled to another day off mutually agreed upon by the employer and employee and paid at the specified statutory holiday pay calculation.
Marie Lyne Dion is a payroll co-ordinator at the Société de transport de Montréal and a payroll teacher at a local college. She can be reached at [email protected].
