Chapter 8 – Québec Legislation: Key Payroll Vocabulary

Introduction

• Payroll departments must ensure accurate, on-time pay for a complete annual cycle, meeting BOTH federal and Québec requirements.
• Québec alone collects its own: provincial income tax, Québec Pension Plan (QPP) contributions, and Québec Parental Insurance Plan (QPIP) premiums directly from employers.

Key Government Bodies

Revenu Québec (RQ)

• Provincial tax authority; collects ~80 % of provincial operating revenue.
• Administers:
– Québec Income Tax Act (Taxation Act)
– QPP & QPIP collections
– Health Services Fund (HSF) contributions
– CNESST premiums & Workforce Skills Development and Recognition Fund (WSDRF)
– Consumption taxes (QST, GST for QC registrants)
• Compliance focus: filing, registration, remittance & reporting.
• Late-remittance penalties on tax/QPP/QPIP/HSF/CNESST: 7 % (1-7 days), 11 % (8-14), 15 % (15+).

Retraite Québec

• Formed 2016 by merging CARRA & RRQ.
• Administers QPP, public-sector plans, Supplemental Pension Plans Act, Voluntary Retirement Savings Plans Act.

Ministère du Travail, de l’Emploi et de la Solidarité sociale (MTESS)

• Oversees employment services, labour standards & manages QPIP through Conseil de gestion de l’assurance parentale.

CNESST

• Integrated agency (since 2016) for labour standards, pay equity & occupational health/safety. Manages workers’ comp premiums + 0.06 % labour-standards levy on QC payroll (to QPIP max).

Employee vs. Self-Employed (Determinations)

Revenu Québec – 6 Criteria (all inter-related)

1. Subordination (most important).

2. Financial/Economic risk.

3. Ownership of tools.

4. Integration of tasks.

5. Specific work results.

6. Attitude of parties (contracts, benefits, CNESST premiums, etc.).
   • CRA uses 3-step test for QC: intent; apply Civil Code definitions (work, remuneration, subordination); compare intent to facts.
   • Forms: IN-301-V guide, RR-65 & RR-65.A questionnaires.

Québec Pension Plan (QPP)

Coverage

• Mandatory for employees age 18-72 in pensionable employment for QC employers (remote employees outside QC exempt only if employer outside QC).
• Must continue until Dec 31 of year employee turns 72 OR disability date approved by Retraite QC/Service Canada.
• Self-employed contribute both shares; employees over 65 may file RR-50 to stop.
• Non-pensionable employments (13 listed): e.g., <$250 farm wages, family unpaid, RCMP/CAF, foreign gov’t, ministers, certain casual circus/election work, tax-exempt Indigenous wages unless RR-2 election, etc.

Pensionable Earnings

Subject to QPP:
• Salary/wages, OT, commissions, vacation, bonuses, paid leave, tips, profit sharing, cash taxable benefits, non-cash benefits (e.g., GTLI premiums, subsidized meals).
• Excluded: death benefits, pension payments, retiring allowances & wages in lieu of notice, insurance wage-loss benefits, RRSP/RRIF/RESP income.

Enhancement (2019-2025)

• Phase 1: rate on YMPE increased from 5.40 % to 6.40 % (complete 2023).
• Phase 2: 4 % second contribution on earnings between YMPE and YAMPE (AYME) begins 2024.

2025 Parameters

• YMPE = 71\,300
• YAMPE = 81\,200
• Annual Basic Exemption = 3\,500
• First Contribution Rate =6.40\% ; max/employee =4\,339.20
• Second Contribution Rate =4\% ; max/employee =396.00
• Employer matches dollar-for-dollar (both tiers).

Manual Calculation (1st Contribution)

1. Identify pensionable earnings (PE).

2. Subtract pay-period exemption (basic ÷ pay-frequency).

3. Contributory earnings × 6.40 %.
   • Weekly exemption =3\,500/52 = 67.30 (use 66.03 in 53-pay year).
   • Example: Bi-wk PE 4\,000 ⇒ 4,000-134.61=3,865.39 ×6.4 % = 247.38.
   • Only ONE exemption per pay period regardless of multiple cheques.

Manual Calculation (2nd Contribution)

• No exemption; PE × 4 % once first max reached.

Proration (age 18, disability, death)

• Prorated\ Max = Annual\ Max \times (Months\ of\ coverage /12)
• Example: Turn 18 in Sept ⇒ 4 months coverage: 4,339.20/12×4=1,446.40.

Successive Employers

• New employer must continue QPP if amalgamation/asset purchase with no service break; otherwise restart and employee claims refund at tax-time.

Employment Insurance for Québec Employees

• 2025 MIE =65\,700 ; QC employee rate =1.31\% (lower due to QPIP); employer = 1.4 × employee unless reduced.

Québec Parental Insurance Plan (QPIP)

Overview

• Replaced EI maternity/parental in 2006.
• Higher earnings cap 98\,000 (2025) & no waiting period.
• Benefit schedules: maternity 18 w @70 % or 15 w @75 %; paternity 5 w @70 % (or3 w@75 %); parental shareable 32 w (7 w70 %+25 w55 %) or 25 w @75 %; plus multiple/adoption supplements.

Premium Calculation 2025

• Employee rate 0.494\% ; max 484.12.
• Employer rate 0.692\% ; max 678.16.
• No exemption; withhold IE × rate.

Insurable Earnings – Generally follow EI rules

• Subject: salaries, wages, commissions, bonuses, cash taxable benefits, vacation, wages in lieu, director fees, etc.
• Not subject: non-cash benefits, allocated tips, self