The province of Quebec is often considered as unique in Canada
The province of Quebec is often considered as unique in Canada not only because of its French official language and cultural specificity, but also for its complex tax structure especially for small businesses. This speaks to you if you are a small business owner as it’s not an easy task to navigate the tax obligations of your company in Quebec. After reading this blog you will have a better understanding of Quebec business tax’s structure and you will be equipped to fulfill your company obligation with peace of mind.
Firstable Quebec stands apart from other Canadian provinces with its distinct approach to taxation. It not only adheres to federal tax laws but also maintains its own set of provincial tax regulations. This dual taxation system requires businesses operating in Quebec to be well-versed in both federal and provincial tax codes. When it comes to Quebec tax regulations, there are basically three main taxes most companies will have to pay during the year to tax agency Revenue Quebec.
- GST/HST and QST also known as consumption taxes.
One of the basic rules is companies that expect to have more than $30,000 revenues during the year must register to GST/HST and QST. Generally, GST/HST and QST are applied when a company sells its products or services in Quebec. When selling to a customer in another province of Canada, it’s the sales taxes of the other provinces that is taken into consideration. Then, if the customer is outside Canada, there is no GST/HST and QST to apply. GST rate is 5% and QST rate is 14.975%. These are the basic rules of sales tax in Quebec.
- Payroll Source deductions
The second category of taxes are payroll source deductions. If you pay salary to your employees, your company should register and have a federal payroll account. This registration is automatically considered by Revenue Quebec to calculate the sources deductions which refer to the payroll taxes. The employee pays federal taxes that include, employment insurance, Canadian pension plan and federal income tax. The provincial tax consists of Quebec income tax, pension plan and parental insurance plan.
As a business owner, you need to contribute to payroll taxes for each of your employee for both federal and provincial level. Therefore, the contributions are made for federal employment insurance, Quebec pension plan and Quebec parental insurance plan. The payment will depend on your remittance frequency for federal and Quebec, which can be different.
- Corporate income tax
Corporate taxes are calculated once a year, at the end of the fiscal year. The taxes come from the profit made by the company, which is calculated in the company profit and loss statement. As per the other taxes there is a federal corporate tax to be filed also known as T2, and a Quebec one called CO-17.
Corporate income taxes are paid only if the company makes a profit. If the company has losses, there is no corporate tax to pay for that year. It is also important to mention that losses can be carried over to offset future profit therefore resulting in less taxes to be paid.
As a business owner it is very important you fulfill these tax obligations on time and get the proper advice on how to plan and reduce the tax burden. SJT CPA can help you better understand and complete you tax obligation with peace of mind. For more information, please visit www.cpainmontreal.com
