Payments Made to Persons Not Resident in Canada That Perform Services for You in Québec
If you make a payment, other than in the course of regular and continuous employment, to a person (including a corporation) that is not resident in Canada for services the person performed for you in Québec, you must withhold 9% income tax from the payment. Do not withhold 9% income tax from payments made:
- to a person in the course of regular and continuous employment;
- to a non-resident corporation that is authorized to operate a business in Canada under the Insurance Companies Act;
- to an authorized foreign bank for its Canadian banking business.
If the person performing the services in Québec is an individual who holds a certificate from the Société de développement des entreprises culturelles (SODEC) attesting that he or she works during the year as a foreign producer or as a foreign individual holding a decision-making or key position in a foreign production filmed in Québec and recognized by SODEC, you are not required to withhold income tax from the amounts (including salary or wages) that you pay to him or her with regard to the film production.
You must remit the income tax withheld from this payment no later than the 15th day of the month following the month in which the payment was made, if your remittance frequency is monthly, twice-monthly or weekly. If your remittance frequency is quarterly or annual, then your usual payment deadline applies.
If you are required to withhold 9% income tax from a payment but fail to do so, you become a debtor of the State for the total amount that should have been withheld and you are liable to a penalty equal to 15% of that amount. However, you may recover the amount that should have been withheld from the person that received the payment, either by bringing an action in a court of competent jurisdiction or by deducting the amount from any amount that you are required to pay or credit to the person.
If the person to whom you make a payment is an employee, the payment may be subject to:
- employee and employer Québec Pension Plan (QPP) contributions;
- employee and employer Québec parental insurance plan (QPIP) premiums.
The payment may also be subject to the employer contribution to the health services fund.