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%).

Requirements

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.

Foreign employee who spends more than 182 days in Québec before taking up his or her employment duties

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.

Example
If a foreign employee was in Québec from March 1 to September 1 of a given year (a period of more than 182 days) and started to work on October 1 of that year, the employee is not deemed to have been resident in Québec since January 1 of that year. Consequently, the employee was not resident in Canada before taking up employment duties on October 1.

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