Foreign Employees Entitled to a Five-Year Tax Exemption
A person (hereinafter referred to as an “employee”) who is not resident in Canada and who comes to Québec to work as a foreign researcher, a foreign expert, a foreign professor or a foreign researcher on a post-doctoral internship is entitled to a full or partial tax exemption for a continuous period of five calendar years. The exemption consists in a deduction in the calculation of taxable income.
An employee is entitled to only one five-year exemption period, even if he or she holds more than one type of employment giving entitlement to the exemption.
The exemption rate is:
- 100%, if the employee is in the first two years of his or her five-year exemption period;
- 75%, if the employee is in the third year of his or her five-year exemption period;
- 50%, if the employee is in the fourth year of his or her five-year exemption period; and
- 25%, if the employee is in the fifth year of his or her five-year exemption period (if the employee works for a corporation that operates an IFC, the rate is 37.5% instead of 25%).
An employee must meet certain requirements to claim the tax exemption. You must apply for a certificate or qualification certificate for the employee for the year before the last day of February of the following year. You must give the employee a copy of the certificate or qualification certificate.
See Eligibility Requirements for the Five-Year Tax Exemption for Foreign Employees for the eligibility requirements and the list of bodies responsible for issuing the certificate or qualification certificate.
A foreign employee who spends more than 182 days in Québec in a year is deemed to be resident in Québec throughout the year. However, this rule does not apply for the purposes of determining whether a foreign employee was resident in Canada immediately before taking up his or her employment duties.