Employee or Person Not Resident in Québec
As a rule, you must make source deductions and pay employer contributions with respect to the salary or wages paid to an employee who is not resident in Québec. There may be special requirements.
You are not required to withhold income tax from the salary or wages (or a portion thereof) that you pay to:
- foreign employees entitled to a five-year tax exemption;
- foreign producers or foreign individuals holding a key position in a foreign production filmed in Québec;
- foreign farm workers;
- foreign employees who have filed an Application for a Reduction in Source Deductions of Income Tax (form TP-1016-V) and for whom we have given you authorization not to withhold income tax under a tax treaty or agreement between Québec and the employees' country of origin;
- employees of an international organization, of the government of a foreign country or of the office of a political division of a foreign state, if the employees' income is non-taxable or exempt from income tax under a regulation;
- non-resident employees recruited from outside Canada;
- foreign employees who do not hold employment in Canada, unless:
- an employee's salary or wages are reasonably attributable to employment duties that the employee performs or will perform in Québec,
- an employee ceased to be resident in Québec in the year or in a previous year (in which case you are not required to withhold income tax if the salary or wages are subject to income tax in a country other than Canada or if the salary or wages are paid with respect to the sale of goods, the negotiation of contracts or the provision of services for you, one of your foreign affiliates or another person with whom you are not dealing at arm's length, in the course of a business carried on by you, the foreign affiliate or that other person).
If an individual is not resident in Canada in the year or becomes a resident during the year, the deductions and personal tax credits that the individual can enter on the Source Deductions Return (form TP-1015.3-V) may be limited. For more information, see Source Deductions Return.
If a foreign employee whose country of origin has a social security agreement with Québec is temporarily posted to Québec, the employee's salary or wages are generally not subject to:
- QPP contributions;
- the contribution to the health services fund.
As a rule, an employee who is not resident in Québec at the end of the year is not required to pay QPIP premiums. Nevertheless, if you pay eligible salary or wages to an employee who is not resident in Québec, you must withhold and pay QPIP premiums on the salary or wages.
In addition, under the Taxation Act, an individual who is not resident in Québec but who spends more than 182 days in Québec in a year is deemed to be resident in Québec for the entire year. However, this rule does not apply for the purposes of the Act respecting parental insurance. Therefore, since the individual is not considered to be resident in Québec, they are not required to pay QPIP premiums.
Nevertheless, if you pay such an employee eligible salary or wages, you must withhold and pay QPIP premiums.
If the employee is not resident in Québec at the end of the year and their income is also subject to Employment Insurance, they may receive a refund of the excess contributions when filing their federal income tax return.