Quebec Income Tax Guide for New Residents

Last updated on August 16th, 2024 at 03:32 pm

Quebec is a province known for its strong economy and unique tax advantages. Even if you have relocated to the province from inside Canada, you’ll encounter a new tax system in Quebec. This Remitly guide will provide you with an overview of it and help you discover tax credits that you may benefit from.

Introduction to Quebec’s Tax System

In most places in Canada, the Canadian Revenue Agency (CRA) administers both federal, provincial, and territorial taxes. Quebec is the exception and has its own tax agency called the Revenu Quebec.

Both long-time Canadian residents and those who recently moved to the country will pay two main types of personal taxes in the province: income tax and sales tax. Let’s take a closer look at these two taxes.

Income tax in Quebec

The Canadian Revenue Agency (CRA) requires Canadian residents to pay Canadian Income Taxes on their world income. Residence for Canadian income tax purposes does not equal immigration status, but generally speaking, if you are a resident who primarily lives in Canada or maintains a home or family in Canada, you are considered a resident for Canadian income tax purposes. 

Income tax is a tax based on income received from various sources, including employment, self-employment, and investments. Typically, Quebec residents must file a federal income tax return with the CRA and a provincial income tax return with Revenu Quebec once per year.

Sales tax in Quebec

Sales taxes are imposed on certain goods and services you purchase in Quebec. 

As an individual, you don’t pay sales tax directly to the government. Instead, the seller collects sales tax at the time of the sale and then remits payment to government agencies. It is the seller’s responsibility to file the Sales Taxes returns. 

For a newcomer to Quebec, the important thing is to know that the prices labeled by sellers or merchants in stores are usually pre-tax, and sales taxes are added at the time of payment. The payment price will be the total of the labeled prices plus the calculated sales tax on some or all of your purchased items. 

In Quebec, there are two types of sales tax:

• Goods and Services Tax (GST): A 5% tax that goes to the federal government
• Provincial Sales Tax (PST or QST): A tax paid to Quebec, which was 9.975% as of April 2024

Sales tax is a tax that you’ll pay on most goods and services, except for things like:

• Basic groceries
• Agricultural products
• Most farm livestock
• Most fishery products
• Prescription drugs and drug-dispensing services
• Some medical devices
• Feminine hygiene products
• International transportation services 

Other types of supplies/services might be tax-exempt. For more information, please refer to the related CRA website. 

Key tax considerations when moving to Quebec

To be considered a resident of Quebec for tax purposes, you must have been living in the province as of December 31st of the tax year. Consequently, you’ll file 2024 federal and Quebec provincial income tax returns if you were living there on December 31, 2024, regardless of the month you relocated.

If you moved to Canada from another country, you may still have tax obligations abroad during your first year of residence in Quebec. A knowledgeable tax professional can help you determine if you need to pay taxes in your country of origin as well as Canada.

Understanding income tax rates in Quebec

At the federal and Quebec provincial levels, your income, tax rate, and eligibility for tax credits and deductions determine your income tax liability. Read on to learn more about each component.

Calculating income for federal and Quebec provincial taxes

Most forms of personal income are taxable at the federal and Quebec provincial levels, including all the following types of income.

Employment income

What you earn for performing your job or profession is employment income. Some common types of employment income include:

• Wages
• Commissions
• Research grants
• Clergy housing allowance
• Foreign employment income
• Royalties
• Self-employment income

Investment income

Investment income is money you receive from investments you own. Interest and dividends are the most common types, as are capital gains from the sale of properties.

Generally, interest, foreign interest and dividend income, foreign income, foreign non-business income, and certain other income are all amounts that you report on your return as interest and other investment income. They are usually shown on a T5 slip, T3 slip, and T5013 slip.

You may not receive a T5 slip if your investment income is less than $50, but you must still report it.

You’ll typically include 100% of your interest income on both your federal and Quebec income tax calculations unless the interest is earned on a Tax-Free Savings Account (TSFA). 

For dividends, tax slips like T3, T4PS, T5, and T5013 are usually issued so you can report dividend income on your tax return. If no tax slips are issued, depending on whether the dividends are eligible or non-eligible, there are different rules for the calculation:

• Eligible dividends: Dividends taxed at a higher rate at the corporate level are eligible dividends. To calculate your income, multiply eligible dividends by 138%. 
• Non-eligible dividends: Dividends taxed at a lower rate at the corporate level are non-eligible dividends. To calculate your income, multiply non-eligible dividends by 115%.

If you sell an investment, property, or other asset for more than you initially paid or invested, you are required to pay tax on the capital gain. For federal and Quebec individual income tax purposes, you’ll most likely add 50% of capital gains to your income.

One exception is gains made from the sale of your principal residence. Generally, these are exempt from income calculations.

Other income

As you calculate your income, you’ll also need to include other types of income, such as:

• Pension plan income
• Savings plan income
• EI benefit income
• Worker’s compensation
• Social assistance payments
• Rental income

Federal and provincial tax rates

Although they have separate tax systems, Canada and Quebec both establish graduated tax rates, meaning that the amount you are taxed increases as your income increases. 

The table below provides a summary of 2023 federal and Quebec provincial tax rates. These rates reflect a 1% reduction of the federal income tax rates for the lowest two brackets, which is given to Quebec residents to offset higher provincial tax rates.

To calculate your tax obligation, you move through each bracket, applying the tax rate to the portion of your income specified. The tax rate associated with the highest bracket that applies to your income is your marginal tax rate.

Let’s work through an example, assuming that your taxable income was $100,000 in 2023. Your federal and provincial marginal tax rates would be 19.5% and 24%, respectively.

To calculate your federal taxes, you would take these steps:

• Calculate 14% of $55,867: $55,867 x .14 = $7,821.38
• Calculate 19.5% of the remainder of your salary
  • Calculate the remainder: $100,000 – $55,867 = $44,133
  • Calculate 19.5% of $44,133: $44,133 x .195 = $8,605.94 
• Add the two amounts together: $7,821.38 + $8,605.94 = $16,427.32

Based on this example, your federal income tax obligation would be $16,427.32.

Now, let’s calculate your provincial income tax obligation.

• Calculate 14% of $49,275: $49,275 x .14 = $6,898.50 

• Calculate 19% of up to $98,540
  • Subtract $49,275 from $98,540: $98,540 – $49,275 = $49,265
  • Calculate 19% of $49,265 = $9,360.35

• Calculate 24% of the remainder of your salary

• • Calculate the remainder: $100,000 – $98,540 = $1,460
  • Calculate 24% of $1,460: $1,460 x .24 = $350.40
• Add the three amounts together: $6,898.50 + $9,360.35 + $350.40 = $16,609.25

In this example, your provincial income tax obligation would be $16,609.25.

So, in total, for $100,000 taxable income earned in Quebec, you would pay about $33,036.57 in income tax. It is worth noting that taxable income is not equal to total income.

Taxable income is calculated as the total of all income minus all of the tax deductions that an individual is entitled to. In our example above, the calculation is performed on a taxable income of $100,000, which is all income combined less the entitled deductions. 

Furthermore, even though the $33,036.57 is the calculated income tax, it might not be the amount you would actually owe. There are also tax credits that you might be entitled to to reduce the income tax owed. 

We will explain more about tax credits and deductions next.

Tax credits and deductions for Quebec

Canada and Quebec both allow you to save money on your taxes through:

• Tax deductions: A tax deduction is an amount that you subtract from your total income to arrive at your taxable income before applying tax rates.
• Tax credits: A tax credit is an amount you subtract from your tax obligation after applying tax rates to your income. It directly reduces your tax amount owed. There are two kinds:
  • Refundable tax credits: If the amount of a refundable tax credit exceeds your tax obligation, you may qualify for a refund.
  • Non-refundable tax credits: If the amount of a non-refundable tax credit exceeds your tax obligation, you won’t qualify for a refund. The credit will simply reduce your tax obligation to zero.

To help you begin to explore federal and Quebec tax credits and deductions that you may qualify for, we created this roundup and a summary table of common deductions and credits. A tax professional can help you determine if you’re eligible for these and other credits and deductions.

Basic personal amount

The federal and Quebec basic personal amount is a non-refundable tax credit that most taxpayers can claim. At the federal level, your income determines the amount of the credit.

Spousal amount

Taxpayers who financially support their spouses or common-law partners may be eligible for the non-refundable spousal amount tax credit at the federal and provincial levels if their spouse’s net income is less than their basic personal amount.

Canada child benefit

Taxpayers with children under the age of 18 who meet eligibility requirements may qualify for monthly tax-free payments through the Canada Child Benefit program.

You don’t need to claim this federal benefit on your income tax return to receive it. To sign up, complete an online application through the CRA website.

Disability tax credit

The federal and Quebec disability tax credits are non-refundable tax credits for individuals with eligible disabilities.

Dividend tax credit

The non-refundable federal and Quebec dividend tax credits are available for taxpayers who received dividends from Canadian companies and meet other eligibility requirements.

Canada workers benefit

The federal Canada Workers Benefit is a refundable tax credit for working taxpayers who meet eligibility requirements, such as:

• Living in Canada during the entire tax year
• Being required to pay income taxes in Canada
• Being at least 19 years old or under 19 but living with a spouse or common-law partner
• Earning less than established income limits

Incarcerated individuals and full-time students generally aren’t eligible for the program.

RRSP tax deduction

The RRSP tax deduction is a federal tax deduction available to qualified individuals who contributed to registered retirement savings plans (RRSPs) during the tax year.

Family allowance

The Quebec family allowance provides tax-free monthly payments to eligible families that include children under the age of 18. Rather than claiming the allowance on your taxes, you must apply for the program through the Quebec government.

Solidarity tax credit

The Quebec Solidarity tax credit is a refundable provincial tax credit available to low- and moderate-income taxpayers who meet a set of eligibility requirements.

Tax Credit for Home-Support Services for Seniors

Seniors aged 70 and older may qualify for the Quebec Tax Credit for Home-Support Services for seniors. This refundable tax credit covers eligible expenses that enable seniors to age in place in their residences.

Tax credit for children’s activities

Through the refundable provincial tax credit for children’s activities, Quebec makes it more affordable for qualified children to participate in eligible physical, recreational, artistic, and cultural activities.

Work Premium Tax Credit

The Work Premium Tax Credit is a refundable Quebec tax credit available to low- and moderate-income taxpayers who meet eligibility requirements.

Special considerations for tax filers in Quebec

If you’re self-employed or a recent immigrant to Canada, you have a unique tax situation that requires additional considerations.

Self-employment

People who receive their primary income from self-employment or are self-employed as a side hustle typically need to complete additional forms when filing taxes and may be eligible for business expense deductions.

Read the federal and Quebec guides to self-employment for more information.

Recent immigrants

When filing your first tax returns in Quebec and Canada as a recent immigrant, you may not be eligible for certain deductions and credits. The federal and provincial tax guides for newcomers share what you need to know about filing your first returns.

How to file your Quebec taxes

The 2023 tax return filing deadlines for both Quebec and Canada are April 30, 2024.

If you or your spouse receives self-employment income, you may qualify for an extension, making the due date June 15, 2024. Remember that any taxes you owe may still be due on April 30th, even if you qualify for an extension.

Gather required documents

To simplify the process of filling out your tax returns, gather documents and receipts ahead of time. Examples of paperwork that you may need include:

• Social Security number
• T4 Statement of Remuneration Paid
• T5 Statement of Investment Income
• T3 Statement of Trust Income Allocations and Designations
• T5008 Statement of Securities Transactions
• T4A Statement of Pension, Retirement, Annuity, and Other Income
• T4A(P) Statement of Canada Pension Plan Benefits
• T4RSP Statement of RRSP Income
• T4RIF Statement of Income from a Registered Retirement Income Fund
• T4E Statement of Employment Insurance and Other Benefits
• T5007 Statement of Benefits–Workers Compensation or Social Assistance benefits
• T2200 Employment expenses
• Last year’s notice of assessment from the CRA, if applicable
• RRSP deduction limit and unused amounts
• Any other income slips or income documentation received
• Receipts for childcare expenses
• Receipts for adoption expenses
• Receipts for support payments made
• Receipts for moving expenses
• Receipts for tuition
• Receipts for student loan interest paid
• Receipts for charitable donations
• Receipts for medical expenses
• Payment information for taxes owed
• Bank account information for direct deposit of refunds

Complete your tax returns online or on paper

Once you have everything gathered, start by completing Form T1, your federal tax return. You can do this in one of four ways:

• Using certified tax software: Free and fee-based tax software guides you through the tax return, asking questions and performing calculations for you.
• Through an authorized representative: A family member, friend, or tax professional that you name as an authorized representative can complete your return on your behalf.
• Attending a tax clinic: If you qualify as low- or moderate-income, you may be able to receive free professional tax help at tax clinics.
• Completing a paper return: You can print out Form T1 and complete it on your own, performing calculations yourself.

Certified tax software typically allows you to file your returns electronically, and some tax professionals offer this service as well. If you don’t e-file, you can mail your return to the appropriate CRA address.

After you have completed your federal tax return, start on your Quebec tax return. You have the same basic options available:

• Approved tax software
• Accredited tax professional or other authorized representative
• Free tax clinics available through the Quebec volunteer program
• Paper return

As with federal returns, Quebec income tax returns, completed with tax software and through some accredited tax professionals, may be filed electronically. For other methods, you’ll typically need to mail your return to Revenu Quebec.

Options for paying taxes or getting a refund in Quebec

If you owe income taxes to the federal government, the CRA allows you to pay by:

• Direct debit from a Canadian bank account
• Cash
• Cheque, debit, or credit card
• Money transfer platforms, such as PayPal or Interac
• Wire transfer

Visit the CRA website for specific instructions on how to use each of these payment methods.

For income tax due to Quebec, you can pay electronically or by mail. The Revenu Quebec website offers specific guidance on how to pay your tax bill.

If you’re due a federal and/or Quebec tax refund, the CRA and/or Revenu Quebec will mail you a paper cheque unless you sign up for direct deposit into a Canadian bank account. Check out the CRA or Revenu Quebec website to learn how to set up direct deposit.

Taxes in Quebec vs. other provinces

As previously explained, Quebec is unique among other provinces because it has its own tax system separate from the CRA. Although tax rates do tend to be higher in Quebec, residents do enjoy some tax advantages, such as:

• Lower federal tax rates: The CRA provides a 1% discount to the tax rate for the lowest two income brackets

• Unique tax benefits for seniors: Seniors can qualify for tax credits that make medical expenses and aging in place more affordable.

• Unique tax benefits for families: The Family allowance and tax credits for things like children’s activities make living in Quebec more affordable for families.

• Unique tax benefits for low-income residents: Low-income taxpayers may qualify for a number of tax credits, such as the Work Premium tax credit and the Solidarity tax credit.

Additional Resources and Tools

For additional assistance completing your federal and Quebec provincial tax returns, check out these resources.

Quebec Tax Calculator

Tax calculators simplify tax time and can lower the likelihood of arithmetic errors. Check out Wealthsimple’s federal and Quebec income tax calculators.

Contact Information for Quebec’s Tax Services and CRA

The CRA handles inquiries and concerns related to federal taxes in Canada. You can contact the agency here.

For questions or assistance with your Quebec provincial tax return, get in touch with Revenu Quebec. You can access the agency’s Contact Us page here.

We hope that this guide has helped you begin to think about managing your federal and Quebec provincial taxes. Whether you relocated from another province or are a recent immigrant, understanding your tax obligations will help you plan for tax time and comply with federal and provincial laws. 

Keep in mind that the information provided in this guide is for general educational purposes. A qualified tax professional can provide you with expert advice based on your personal financial situation.