Published | Category: Source deductions and contributions

Rates, Thresholds and Amounts Related to Source Deductions and Contributions for 2018

The rates, thresholds and amounts that apply to source deductions and contributions for 2018 are given below.

Indexation for 2018

Every year, the personal income tax system is automatically indexed. The indexation rate for 2018 is 0.82%.

Income tax rates and income thresholds

For 2018, the income tax rate applicable to the first taxable income bracket, which includes taxable income of not more than $43,055, has been decreased from 16% to 15%. All other income tax rates remain unchanged. The income thresholds for all the brackets have been indexed. Specifically:

  • the 15% rate applies to taxable income of not more than $43,055 (previously $42,705);
  • the 20% rate applies to taxable income of more than $43,055, but not more than $86,105 (previously $85,405);
  • the 24% rate applies to taxable income of more than $86,105, but not more than $104,765 (previously $103,915);
  • the 25.75% rate applies to taxable income of more than $104,765.

Note that the fixed rate used to calculate the source deduction of income tax on certain payments and certain remuneration is also reduced because of the rate reduction applicable to the first taxable income bracket. For more information, see Reduction in the fixed tax rate applicable to certain payments and certain remuneration below.

Source Deductions Return (form TP-1015.3-V)

The amounts on the Source Deductions Return (form TP-1015.3-V) that are used to determine the deduction codes have been revised as follows for 2018:

  • the basic amount and the amount transferred from one spouse to the other have been increased from $11,635 to $14,890, and then to $15,012, after indexation for 2018;
  • the amount for a child under 18 enrolled in post-secondary studies has been increased from $2,145 to $2,861, and then to $2,884, after indexation for 2018;
  • the amount for other dependants who are 18 or older has been increased from $3,125 to $4,168, and then to $4,202, after indexation for 2018;
  • the other amounts have been multiplied by 1.25, and indexed for 2018;
  • the reduction threshold applicable to the age amount, the amount for a person living alone, the amount for retirement income and the amount for workers 62 or older has been indexed for 2018.

Employees and beneficiaries do not need to complete the 2018 version of form TP-1015.3-V to benefit from the changes because the deduction codes are not affected.

If you use the Source Deduction Table for Québec Income Tax (TP-1015.TI-V) to calculate source deductions of income tax, you do not have to make any adjustments because the changes are included in the table. 

If you use the formulas in guide TP-1015.F-V to calculate source deductions of income tax, you have to take the changes into account in the formulas.

Form TP-1015.3-V has also been revised to take into account the changes to the calculation of the amount for dependants, the age amount, the amount for a person living alone and the amount for retirement income. Moreover, the conditions for claiming the amount for workers have been revised.

The amounts used to determine the deduction codes for 2018 are shown in the table below. The amounts for 2017 are provided for information purposes.

2018 2017
Basic amount $15,012 $11,635
Amount transferred from one spouse to the other $15,012 $11,635
Amount for other dependants who are 18 or older $4,202 $3,125
Amount for a child under 18 enrolled in post-secondary studies (per term) $2,884 $2,145
Additional amount for a person living alone (single-parent family) $2,124 $1,685
Amount for a severe and prolonged impairment in mental or physical functions $3,334 $2,645
Amount for a person living alone $1,721 $1,365
Age amount $3,158 $2,505
Amount for retirement income $2,805 $2,225
Reduction threshold of the age amount, the amount for a person living alone, the amount for retirement income and the amount for workers 62 or older $34,030 $33,755

Gratuities and retroactive pay

The threshold to determine the method to be used to calculate the source deduction of income tax from gratuities and retroactive pay has been increased from $14,550 to $15,012 for 2018. 

Note that the rate for source deductions of income tax on gratuities and retroactive pay remains 8%.

Deduction for employment income

The maximum deduction for employment income has been increased from $1,140 to $1,150 for 2018.

Emergency services volunteer

The tax-exempt financial compensation paid to an emergency services volunteer has been increased from $1,140 to $1,150 for 2018. 

Disability assistance payments from an RDSP

For 2018, if you make disability assistance payments to a beneficiary of a registered disability savings plan (RDSP) who is resident in Canada, you must withhold income tax at a rate of 15% from the taxable portion of the payments that exceeds $18,346 (previously $14,280) for the year. 

Maximum pensionable earnings and QPP contributions

For 2018, the maximum pensionable earnings for the purpose of the Québec Pension Plan (QPP) have been increased from $55,300 to $55,900. The QPP contribution rate remains 10.80%, which corresponds to a contribution rate of 5.40% for the employee and 5.40% for the employer. The maximum annual contribution to be withheld for any employee has therefore been increased from $2,797.20 to $2,829.60. 

Maximum insurable earnings and QPIP premiums

For 2018, the maximum insurable earnings for the purpose of the Québec parental insurance plan (QPIP) have been increased from $72,500 to $74,000. The employee premium rate remains 0.548% and the employer premium rate 0.767%. As a result, the maximum annual employee premium is $405.52 (previously $397.30) and the maximum annual employer premium is $567.58 (previously $556.08).

Contribution related to labour standards

For 2018, the portion of the remuneration in excess of $74,000 (previously $72,500) is not subject to the contribution related to labour standards.

Reduction in the fixed tax rate applicable to certain payments and certain remuneration

The fixed rate used to calculate source deductions of income tax on certain payments and certain remuneration has been decreased from 16% to 15% because of the rate reduction applicable to the first taxable income bracket (see Income tax rates and income thresholds above). The 15% rate applies to:

  • the portion of a single payment from a registered retirement income fund (RRIF)  that exceeds the minimum amount;
  • single payments from a registered retirement savings plan (RRSP);
  • single payments from neither a RRIF or an RRSP, that do not exceed $5,000, such as: 
    • retiring allowances,
    • certain payments from a registered education savings plan (RESP) or a pension plan, including payments from a pooled registered pension plan (PRPP) or a voluntary retirement savings plan (VRSP),
    • payments made under a deferred profit-sharing plan (DPSP),
    • death benefits,
    • payments made to an employee or a former employee further to an order or a judgment, where a portion of the amount paid relates to a previous year;
  • disability assistance payments from a registered disability savings plan (RDSP);
  • income supplements paid under a government work-incentive project;
  • amounts paid to a fisher who has elected to have income tax deducted at source from his or her income derived from fishing by completing form TP-1015.N-V.

The amount of the source deduction of income tax from payments made or remuneration paid after December 31, 2017, is equal to 15% of the amount of the payment or remuneration.

For more information, see Single Payments.

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