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Tax system in Montreal


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The Canada Revenue Agency (CRA) is responsible for the collection and administration of taxes in Canada - except for Québec. Revenue Québec / Revenu Québec operates Québec's tax administration.

Revenu Québec
Montréal Tel: 514 864-6299
Toll-free: 1 800 267-6299
Address: 3800, rue de Marly; Québec G1X 4A5
Hours: Monday to Friday (8:30 to 16:30)

Consumption Taxes

Goods and Services Tax (GST) is a VAT (value added tax) charged on most goods and services, such as food and entertainment. It is calculated at a rate of 5% on the selling price. Advertised and posted prices generally exclude taxes, which are calculated at time of payment; exceptions are motor fuels, the posted prices for which include sales and excise taxes, and items in vending machines. Basic groceries, prescription drugs, inward/outbound transportation and medical devices are exempt. Under an agreement between the federal and Québec governments, Revenu Québec is responsible for administering the GST/HST in Québec.

In addition there is the Québec sales tax (QST), which is calculated at a rate of 9.5% on the selling price plus GST. As of January 1, 2013, QST will be calculated directly on the selling price not including GST and increase from 9.5% to 9.975%. The cumulative rate is of about 13% on most goods.

    Sample Calculation
  • Sell price $100
  • GST ($100 × 5%) = $5
  • QST ([$100 + $5] × 9.5%) = 9.98
  • Total = $114.98

Income Tax

The federal and provincial governments impose income taxes on individuals. These provide the most significant source of revenue for the country. Income taxes throughout Canada are progressive with the high income residents paying a higher percentage than the low income residents. In Québec, income tax is deducted at source on salaries at an average rate of 20 to 25%.

There are different rates of income tax depending on how much you earn in one year. Not all income is taxable and you're only taxed on "taxable income" above a certain level. Where income is earned in the form of a capital gain, only half of the gain is included in income for tax purposes; the other half is not taxed. There are relief's and allowances that can reduce your Income Tax bill.

Personal income tax can be deferred in a Registered Retirement Savings Plan (RRSP) and tax sheltered savings accounts (which may include mutual funds and other financial instruments) that are intended to help individuals save for their retirement.

Rates

Generally, the more income you make, the higher your tax rate.

    Federal tax rates for 2012
  • 15% on the first $42,707 of taxable income
  • 22% on the next $42,707 of taxable income +
  • 26% on the next $46,992 of taxable income +
  • 29% of taxable income up to $132,406 CAD
    Québec Rates
  • Income over $0, but not over $40,100 - 16%
  • Income over $40,100, but not over $80,200 - 20%
  • Income over $80,200 - 24%

The latest individual and corporate federal and provincial tax rates can be found on the CRA's web site.

Social Insurance Number

Your Social Insurance Number (SIN) identifies you for tax purposes in Canada. This nine-digit number is necessary to work in Canada or to have access to government programs and benefits. Each SIN is issued to one person only. It cannot legally be used by anyone else. You are responsible for protecting your SIN. Store your SIN card in a safe place rather than keeping it on you.

How to Apply

You should apply for a SIN as soon as you arrive in Canada. Apply at a Service Canada Centre. If your application and documents are in order, you will get a Social Insurance Number in one visit and receive your card within 10 business days. You may also applying by mail by downloading the application, or calling 1-800-206-7218 (select option "3"). Send completed application, original documents and payment, if required, to:
Service Canada
Social Insurance Registration Office
PO Box 7000
Bathurst NB E2A 4T1
If you send your application by registered mail, documents and SIN card will be returned in the same way. If your SIN application meets the requirements, you will receive your SIN card by mail within 20 business days from the date we receive the application. The card is free, but replacement may incur a $10 fee.

    Documents:
  • Application
  • Primary document (official document that proves your identity and status in Canada). This can be a Certificate of Birth, Certificate of Canadian Citizenship, Permanent Resident Card issued by Citizenship and Immigration Canada, Confirmation of Permanent Residence AND visa counterfoil affixed to a foreign passport or a travel document, Confirmation of Permanent Residence AND foreign passport. Must be original. If the name on this document is different from the name you currently use, you will also need to provide a supporting document.

Reporting

In Québec, taxes must be filed with both to the federal and provincial governments. Canada Revenue Agency is the federal tax authority and Revenu Québec is the provincial tax authority.

Individuals who reside in Canada usually file one income tax return for the tax year (January 1st-December 31st). On an income tax return you must list your income and deductions, calculate federal and provincial/territorial tax, and determine if you have a balance owing for the year, or whether you are entitled to a refund for some or all of the tax that was deducted from your income by your employer during the year. Income tax returns in Canada must be filed on or before April 30th of the year after the tax year. Balances of taxes owing must be paid on or before April 30th of the year after the tax year, regardless of the due date of your tax return. You should keep all supporting documents and income tax records for six years. Receipts and supporting documentation should be ready to support your claims in case you are selected for tax review or audit.

If you are a resident of Canada, send your income tax return to your local Canada Revenue Agency Tax Centre.
Montréal Tax Services Office Address: 305 René-Lévesque Boulevard West; Montréal QC H2Z 1A6
Tel: 1-800-959-8281
Hours: Monday to Friday (8:15 to 16:30)

If you are not a resident of Canada, send your income tax return to:
International Tax Services Office
Post Office Box 9769, Station T
Ottawa ON K1G 3Y4 CANADA

You may collect tax forms from the tax office, hire a tax attorney, or fill them out online through programs like U-File or Quick Tax. Once you have installed the software and completed your tax return forms, simply print out the statements and send them to both tax authorities by mail. You can directly send your tax return forms online after two years in Québec (ie. once you have already filed a first tax return form in the Province).

Are you a taxable resident of Canada?

You become a taxable resident of Canada for income tax purposes when you establish significant residential ties in Canada. Residential ties include:

  • A home in Canada
  • A spouse or common-law partner and/or dependents who move to Canada with you
  • Personal property such as car or furniture
  • Social ties in Canada
  • a Canadian driver's license
  • Canadian bank accounts and credit cards
  • Health insurance with a Canadian province or territory
As a resident of Canada you must file a tax return if you owe tax or want to request a tax refund. If you work in Québec and have lived more than 183 days during the tax year, you'll have to pay income tax in Québec.

Tax Slips

If you are employed in Québec, your employer must give tax form "T1" and tax form "T4" in late February or early March. You can obtain your Old Age Security (OAS), Employment Insurance (EI), and Canadian Pension Plan (CPP) tax slips electronically from Service Canada. You can view sample tax slips here. You must collect and save these slips, as you will need them to file your income tax return. You should also save these slips for six years after they are issued, in case you are audited.

  • T4 - Statement of Remuneration Paid (from your employer)
  • T4A - Statement of Pension, Retirement, Annuity, and Other Income
  • T4A(OAS) - Old Age Security (from the government)
  • T4A(P) - Canadian Pension Plan (from the government)
  • T4E - Statement of Employment Insurance and Other Benefits (from the government)
  • T4RSP - Statement of Registered Retirement Savings Plan income
  • T2202A - Education Tax Receipts (from your university or college)

Deductions

Tax allowances and deductions are applicable for things ranging from a RRSP (Registered Retirement Savings Plan), if you are a tenant (your landlord will give you a tax certificate), moving expenses, or transportation to work, etc. WinRAS can help you calculate deductions and employer contributions.

Refunds

You may end up paying too much into the system and be due a refund. This will be determined by filing a tax return. Returns begin to be processed at the beginning of March. You should receive any refund to which you are entitled within 14 working days if you file your tax return online, or within four to six weeks if you file your tax return by mail. You can view your income tax return for the current year online.

Refunds may be paid by direct deposit. To take advantage of direct deposit, you must have an account at a financial institution with an establishment in Canada, and you must register for direct deposit.

International Tax Treaties

Tax treaties exist between Québec and a number of countries, such as France. The purpose of such treaties is to ensure that people do not pay income tax on the same income in two different countries. However, Québec is not a party to the tax treaties signed by Canada.

If Québec has not signed a tax treaty with the country in which you earned your income, you cannot claim a deduction for income exempt under a tax treaty on your income tax return. However, the foreign income tax you paid may entitle you to the foreign tax credit.

Listing of countries with agreements and statuses can be found at http://www.fin.gc.ca/treaties-conventions/treatystatus_-eng.asp.

Update 21/05/2013



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