Employee Not Resident in Québec
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 if one or more of the basic conditions are met. However, special rules may apply in some cases.
If you make a payment, other than in the course of regular and continuous employment, to a person (including a corporation) not resident in Canada for services the person provided to you in Québec, see Payments Made to Persons Not Resident in Canada That Perform Services for You in Québec.
You are not required to withhold income tax from the salary or wages (or a portion thereof) that you pay to any of the following:
- 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 employee's country of origin;
- foreign employees who do not hold employment in Canada;
- employees of an international organization, a government of a foreign country or an office of a political subdivision of a foreign State, where the employment income is non-taxable or is tax-exempt under a regulation.
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.
You must withhold income tax from the salary or wages paid to an employee who is not resident in Canada and who does not hold employment in Canada in the following cases:
- The salary or wages are reasonably attributable to employment duties that are or will be performed in Québec by the employee.
- The employee ceased to reside 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 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:
- employee and employer QPP contributions;
- the employer 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 Québec parental insurance plan (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 respecting the salary or wages if one or more of the basic conditions are met. However, special rules may apply.
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 such an individual is not considered to be resident in Québec, he or she is 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 his or her income is also subject to Employment Insurance, the employee may receive a refund of the excess contributions when filing his or her federal income tax return.