Payroll Chapter 8
Terms in this set (77)
- Responsible for:
- The collection of income tax and consumption taxes, while ensuring that each person pays a fair share of the financing of public services
- The administration of the support-payment collection program, Programme de perception des pensions alimentaires (PPPA), to ensure that the support to which children and custodial parents are entitled is received on a regular basis.
- the administration of taxation-related social programs, such as the shelter allowance program, the property tax refund and the work premium, as well as any other tax collection and redistribution program entrusted to it by the Quebec Government.
- making recommendation to the Quebec government concerning tax policy and other fiscal programs.
Primary Role of RQ
- to collect income and consumption taxes.
Amounts that are added to the purchase price of property or services. Ex: Quebec Sales tax
- Generates 80% of funding required for government operations.
Quebec Statutes with effect to payroll:
- Taxation Act
- Act respecting the application of the Taxation Act
- Act respecting the Agence du revenu du Quebec (RQ)
- Act respecting the Quebec sales tax
- Act to facilitate the payment of support
- Act respecting labour standards.
- Act respecting the Quebec Pension Plan
- Act respecting parental insurance
- Act to promote workforce skills development and recognition
- Act respecting income support, employment assistance and social solidarity.
RQ closely monitors the filing of personal and business taxes using methods that are similar in nature to the CRA
Most businesses are required to register with RQ and are assigned business number which cover all payroll-related remittances, including source deductions, goods and services tax, Quebec Sales Tax and Corporate Tax.
RQ ensures that both personal and business remittances are done in a timely fashion
RQ captures information from many sources and measures the level of compliance around reporting through areas such as year-end reporting of RL-1 and RL-2 information slips.
RQ administers the collection of the following payroll-related remittances:
- Quebec Pension Plan Contributions
- Quebec Parental Insurance Plan Premiums (QPIP)
- Quebec province income tax
- Contributions to the health services fund
- Commission de la sante et de la securite du travail (CSST) premiums
- Contributions to the Workforce skills development and recognition fund (WSDRF)
- Contribution for the Commission des normes du travail (CNT)
Failure to remit penalties for Quebec:
- the penalty rate is 7% of the late amount from the first to the seventh late day.
- Penalty rate is 11% of the late amount from eighth to the fourteenth late day
- Penalty rate is 15% of the late amount as of the fifteenth late day.
In quebec, an employee is defined as:
- An individual who, under a written or verbal agreement, undertakes to carry out work for an employer in exchange for a salary or wages. An employee may be hired on a full-time or part-time basis, for a specified or an undetermined period.
In Quebec, a self-employed person is defined as:
- An individual who, under a verbal or written agreement, undertakes to provide a service or perform a task for a client in exchange for an agreed amount. Such an individual may also own a business or be a commissioned salesperson.
Self employed persons in Quebec:
- Cover their own work-related expenses
- assume the financial risks associated with their work
- provide their own tools or equipment
- are not obliged to perform the work themselves
- May hire employees or other self-employed persons to do the job
- may determine the location at which the work is to be carried out and the hours of work.
Payments and benefits subject to QPP:
- Income from Employment
- Taxable Benefits
- Fees for Service
- Paid Leave
- Profit Sharing
Payments and Benefits not subject to QPP:
- Death Benefits
- Pension Benefits
- Certain payments at the end of employment
- insurance benefits payments
- payments linked to special conditions under the Taxation Act
the six criteria RQ uses to determine if a worker is an employee or a self-employed person.
- Performance of Work subordination
- Financial/Economic Criteria
- Tool Ownership
- Integration of tasks carried out by the worker
- Specific result of work
- Parties attitude reguarding the relationship.
1. QPP yearly basic exemption
2. CPP yearly basic exemption
1. QPP Rate
2. CPP Rate
1. Yearly maximum contribution to QPP
2. Yearly Maximum contribution to CPP
The source deduction tables for QPP contributions - TP-1015.TR.12-V
is used by employers with monthly pay period frequencies.
The source deduction tables for QPP contributions - TP-1015.TR-V
is used by employers with weekly,, bi-weekly or semi-monthly pay period frequences. (Table A) as well as employers who have employees in non-continuous employment (Table B)
refers to work performed for an employer that operates a business or has at least one full-0time employee, where the work performed by an employee whose pay period covers fewer than seven days or an employee who normally performs the same type of work for two or more employers in turn.
Tables are issued:
- January 1st each year.
A stand-alone computer application that is based on the mathematical formulas found in the Guide for employers: source deductions and contributions - TP-1015.G-V and the Formulas to calculate source deductions and contributions - TP-1015.F-V.
- Can be used to calculate QPP, QPIP, Quebec provincial income tax and Employer QPP contributions, QPIP and contributions to the health services fund.
-Available JAnuary 1st of each year, and updated as required.
Six main criteria for determining if an individual is an employee or self-employed person.
- Subordination in the performance of work
- Financial/Economic Criterion
- Ownership of Tools
- Integration of the tasks carried out by the worker
- specific result of work
- The parties attitudes regarding their relationship.
Subordination in the performance of work :
- Subordination exists if the person who provides the work is in a position of authority with regard to the worker.
- For example, the person who provides the work has the authority to:
- Determine the amount of work to be accomplished
- supervise the work
- Control the worker's activities.
- The most important criterion and may be the crucial factor in determining whether a worker is an employee or is self-employed
A worker generally has the status of employee, if the person who provides the work:
- Assigns the worker specific tasks
- Explains the work to be accomplished and the responsibilities to be assumed.
- Provides training/upgrading.
In an employee-Employer relationship:
- The employer covers the operating costs of the business and assumes the financial risks.
- The employee does not assume any financial risk.
- The financial performance of the employer's business does not directly affect the remuneration of the employee.
- A self-employed individual may make a profit or incur a loss and is responsible for operating costs.
Ownership of tools
- In an employee-employer relationship, the employer owns the tools, equipment and materials, provides everything necessary for the employee to carry out the work and covers the related operating costs.
- A self-employed worker ordinarily provides his/her own tools or equipment and covers the related costs.
Integration of the Tasks Carried Out by the Worker:
- If the tasks carried out by the worker form an integral part of the activities of the employer's business, there is probably an employee-employer relationship.
Specific Results of work:
- The services of a self-employed worker are retained for the purpose of accomplishing a specific task and the worker is free to determine the method that will be used to achieve results.
The parties attitude regarding their relationship
- Refers to the agreement that may exist between the two parties with regard to conditions of work. The following factors must be taken into consideration:
- The fact that the employer pays the contribution to the CSST on wages paid to the worker.
- The overall interpretation of the work contract and the terms governing its renewal.
- The worker's eligibility for the employer's group insurance plan
- The payment of severance pay.
The Employee-Employer Relationship must be determined by:
Both governments independently. That is, federal and provincial.
Who must contribute to QPP?
QPP must be withheld from all workers aged 18 or older. Including:
- employees in receipt of retirement pension under the QPP or CPP
- Employees who are 70 years of age or older
- Employees who are not deemed to be disabled by either the Regie des rentes du Quebec or Service Canada.
Payments and Benefits subject to QPP contributions:
- Income from employment
- Taxable benefits and allowances
- Fees for service
- Paid Leave
- Profit sharing
Payments and Benefits not subject to QPP
- Death benefits
- Pension benefits
- Certain payments at the end of employment
- Insurance benefits payments
- Payments linked to special conditions under the Taxation Act
Certain payments at the end of employment:
- retiring allowances
- Wages in lieu of notice
- A payment with respect to accumulated sick leave
Payments linked to special conditions under the Taxation Act:
- Benefits provided to a partner or shareholder who is not an employee or related person
- research grants and scholarships, bursaries or fellowships awarded to a person other than an employee or a child of an employee.
- patronage dividends
- benefits from a RRSP, a RRIF or a registered education savings plan.
Non-regular situations when calculating QPP:
- Prorating the annual QPP maximum contribution and basic QPP exemption
- Employees hired during the year
- Mergers and acquisitions
- The process of calculating QPP contributions based on pensionable employment for only part of the year.
- Must be prorated when an employee:
- turns 18
- is deemed to be disabled (determined by the RRQ)
If an employee is paid on an irregular basis, the pay period exemption is equal to the higher of the following:
- 3500 multiplied by the number of days since the last payment and divided by 365 (366 for a leap year)
QPIP came into effect on:
January 1, 2006
- Act to amend the Parental Insurance Plan Act
- Included clarifications which outlined the fact that the benefits would be calculated based on the provisions outlined in the Employment Insurance Act for Insurable earnings.
the payment of benefits to a Quebec resident who takes a maternity, paternity, adoption or parental leave during which he or she has an interruption of earnings.
QPIP differs from EI in several ways:
- The maximum earnings cap is higher under the QPIP rather than EI
- The benefit rate is based on a higher percentage of insurable earnings
- there is no waiting period to receive the first benefit payment
- fathers can receive FIVE weeks paternity leave in addition to regular parental leave, which may be taken by either parent or shared between them.
- claimants have the choice of receiving either higher benefits for a shorter period or lower benefits for a longer period.
Quebec Parental insurance plan is funded by:
- Employees who pay a premium through payroll deductions
- Employers who pay a premium based on the employees' QPIP insurable earnings
- premiums paid by self-employed persons.
Common payments and benefits subject to QPIP premiums
- Bonuses or retroactive pay
- director's fees paid to residents or non-residents
- wages in lieu of notice
- deferred salaries or wages when earned
- cash taxable benefits
- vacation pay
- taxable and non-taxable portions of municipal Councillor's allowances
- Taxable and non-taxable portions of emergency service volunteer programs.
Payroll's responsibility in respect to QPIP:
- To collect QPIP premiums and remit them along with the employer portion to RQ.
QPIP Maximum Insurable Earnings:
Employee's QPIP premium rate:
Employee's maximum QPIP premium:
Employer's QPIP Premium rate:
Employer's maximum QPIP premium per employee:
Maximum insurable earnings for EI (Quebec)
Employee's EI premium rate (Quebec)
Employee's maximum premium (Quebec)
Employer's EI rate (Quebec)
Still 1.4 times.
Employer's Maximum EI premium per employee (Quebec)
Quebec Provincial Income tax is withheld from employees who:
- Report to work at an establishment of the employer located in Quebec
- Do not report to an establishment of the employer but are paid from the employer's establishment located in Quebec.
Tax deductions at source are withheld from the following types of remuneration:
- Salary/wages, which may include:
- fees, commissions, overtime pay
- retroactive payments, advances, bonuses
- taxable benefits
- amounts paid after an employees death
- single payments such as a retirement allowance or the taxable portion of a death benefit
- an amount indicated by a self-employed fisher
Tax deductible amounts that are subtracted from gross pensionable/taxable income before Quebec income taxes are applied to an employee's remuneration:
- Employee contributions to a RPP
- Contributions to a RRSP
- A deduction for living in a prescribed zone as claimed on the employee's source deductions return
- An amount stated in a letter of authority from RQ.
Union Dues are NOT deducted from Quebec Provincial Tax
used by employees who work for more than one employer and who have already claimed the basic amount.
used by employees whose total income for the year will be less than their total deductions
Payroll Calculation template: Step 1
Determine Gross Earnings
Payroll Calculation Template: Step 2
Determine Non-Cash Taxable benefits
Payroll Calculation Template: Step 3
Determine Quebec Pension Plan Contribution
Payroll Calculation Template: Step 4
Determine EI premium
Payroll Calculation Template: Step 5
Determine QPIP premium
Payroll Calculation Template: Step 6
Determine Federal and Provincial income tax
Payroll Calculation Template: Step 7
Determine Northwest Territories and Nunavut Payroll Tax
Payroll Calculation Template: Step 8
Payroll Calculation Template: Step 9
The following employer contributions must be made in addition to QPP, QPIP and Quebec provincial tax:
-health services fund
-workforce skills development and recognition fund
The following types of remuneration are excluded from the Health Services Fund calculation:
- super annuation
- pension benefits
- non-taxable benefits
-remuneration paid to employees working at an International finance center
Health services fund
Varies from 2.7% to 4.26%
Rate is determined by the employers world wide payroll.
In the area of prevention the CSST:
-Promotes occupational health and safety.
-supports workers and employers in their efforts to achieve a healthier risk-free work environment
-inspects work premises
In the area of compensation the CSST:
- compensates workers who sustain an injury as a result of an industrial accident or occupational disease
- ensures that workers receive the medical assistance they require in light of their condition
- sees to it that workers who suffer permanent physical or mental impairment due to an employment injury benefit from rehabilitation services.