Source deductions of income tax

As a rule, a foreign farm worker who does not, in fact, reside in Canada and who has a valid work permit exclusively for seasonal farm work issued by the Canadian immigration authorities under a recognized federal program can claim a deduction in respect of income from such work.

If you employ such a worker, you do not have to withhold income tax on the gross remuneration you pay them, provided they meet both the following requirements:

• The worker obtained, under the Temporary Foreign Worker Program administered by the federal government, form TD1, Personal Tax Credits Return, duly certified by a designated government official by means of an official stamp affixed to the form.
• The worker's estimated income for the year from all sources is less than $34,366.

If the worker does not meet these requirements, you must use deduction code “O” to withhold income tax from a portion of the gross remuneration you pay them.

To calculate the remuneration subject to source deductions of income tax for such an employee, you must subtract from the gross remuneration you pay the worker for a pay period the portion of the remuneration that gives entitlement to the deduction for foreign farm workers.

To calculate the portion of the remuneration that gives entitlement to the deduction, you must first subtract from the gross remuneration that you pay to the worker for a pay period certain expenses that the worker is required to assume in carrying out work duties for the pay period (for example, expenses for supplies used directly by the worker in carrying out work duties, such as work gloves or a hatchet). Then multiply the result by 50%. The amount thus determined is the portion of the worker's remuneration that gives entitlement to the deduction.

QPP contributions, QPIP premiums and other employer contributions

All of the salaries or wages paid to foreign farm workers entitled to a deduction in the calculation of their taxable income are subject to the following:

• 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 total of such remuneration must also be included in your total payroll used to calculate your health services fund contribution rate, your participation in workforce skills development and, if applicable, your contribution to the Workforce Skills Development and Recognition Fund (WSDRF).