Employees who take vacation

Source deductions of income tax and Québec Pension Plan contributions 

Where vacation pay is calculated on a percentage basis and paid to an employee who is taking holidays, you must use the applicable schedule of the Source Deduction Table for Québec Income Tax (document TP-1015.TI-V) to calculate the income tax deductions and of the Source Deduction Tables for QPP Contributions (TP-1015.TR-V) to calculate Québec Pension Plan (QPP) contributions, as indicated below:

• 2% – Use Schedule A (53 pay periods) or Schedule B (52 pay periods).
• 4% – Use Schedule C (27 pay periods) or Schedule D (26 pay periods).
• 6% – Divide the vacation pay by 3. Use Schedule B (52 pay periods) and multiply the weekly source deduction by 3.
• 8% – Divide the vacation pay by 4. Use Schedule B (52 pay periods) and multiply the weekly source deduction by 4.

Québec parental insurance plan premiums and other employer contributions

If you pay an employee vacation pay during a pay period, the amount is subject to:

• Québec parental insurance plan (QPIP) premiums
• the contribution to the health services fund
• the contribution related to labour standards
• the contribution to the Workforce Skills Development and Recognition Fund (WSDRF) (if applicable)

You must include this amount in your total payroll used to calculate your health services fund contribution rate and your participation in workforce skills development.

Employees who do not take vacation

If you give vacation pay to an employee who is not taking holidays, use the method applicable to gratuities to calculate the source deductions and employer contributions on the amount.

Payments made to a trust as credits for accumulated vacation

Payments that you make to a trust as credits for vacation accumulated by an employee must be included in the employee's income for the year in which the payments are made as though they had been made directly to the employee. The payments are subject to:

• source deductions of income tax
• Québec Pension Plan (QPP) contributions
• Québec parental insurance plan (QPIP) premiums
• the contribution to the health services fund
• the contribution related to labour standards;
• the contribution to the Workforce Skills Development and Recognition Fund (WSDRF) (if applicable)

You must include these amounts in your total payroll used to calculate your health services fund contribution rate and your participation in workforce skills development.