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Changes to the Guide Entitled Formulas to Calculate Source Deductions and Contributions (TP-1015.F-V)

Below are the changes made to the guide entitled Formulas to Calculate Source Deductions and Contributions (TP-1015.F-V) for 2016.

Variable E

The indexation factor used to calculate the value of personal tax credits for 2016 is 1.09%.

Variables H, H1 and H2 – Deduction for employment income

The maximum deduction for employment income has been increased from $1,120 to $1,130 for 2016. Consequently, the maximum amount of variables H, H1 and H2 has been increased from $1,120 to $1,130.

Variable K – The constant for adjusting the income tax rate

For 2016, the income tax rates applicable to the taxable income brackets remain unchanged and the income thresholds for these brackets have been indexed. Specifically,

  • the 16% rate applies to taxable income of $42,390 or less (previously $41,935); 
  • the 20% rate applies to taxable income of more than $42,390, but not more than $84,780 (previously $83,865); 
  • the 24% rate applies to taxable income of more than $84,780, but not more than $103,150 (previously $102,040); 
  • the 25.75% rate applies to taxable income of more than $103,150. 

The values of variable K are therefore $1,695 (increased from $1,677), $5,086 (increased from $5,032) and $6,891 (increased from $6,817).

Variable M – Québec Pension Plan

The QPP contribution rate has been increased from 10.50% to 10.65% for 2016, which corresponds to a contribution rate of 5.325% for the employee and 5.325% for the employer.

In addition, the maximum pensionable earnings for the purposes of the QPP have been increased from $53,600 to $54,900. Variable M has therefore been increased from $2,630.25 to $2,737.05.

Variables N and N1 – Québec parental insurance plan

The maximum insurable earnings subject to QPIP premiums have been increased from $70,000 to $71,500 for 2016.The employee premium rate is reduced from 0.559% to 0.548%, and the employer premium rate is reduced from 0.782% to 0.767%. As a result, variable N is $391.82 (instead of $391.30) and variable N1 is $548.41 (instead of $547.40).

Variables Y, Y1 to Y4, Q and Q1 – Shares in Fondaction and in the Fonds de solidarité des travailleurs du Québec

Effective June 1, 2015, the rate of the tax credit for the acquisition of shares issued by Fondaction is 20%. On June 1, 2016, the rate will be reduced to 15%.

If your employee authorizes you to withhold an amount from his or her remuneration for the purchase, after May 31, 2016, of class A or class B shares issued by Fondaction, you must adjust the calculation of that employee's source deductions of income tax for each pay period in which such a share is purchased. See the table below for the changes to be made to certain formulas.

Calculation of the income tax for a pay period in which a share is acquired
A
Share acquired before June 1, 2016
B
Share acquired after May 31, 2016
Regular payments
Y = (T × I) − K − K1 − (0.20 × E) −
(0.15 × P × Q) − (0.20 × P × Q1) + Z
Y = (T × I) − K − K1 − (0.20 × E) −
(0.15 × P × Q) + Z
Gratuities, retroactive pay or similar lump-sum payments
Y1 = [T × (I1 + B1)] − K − K1 − (0.20 × E) −
(0.15 × P × Q) − (0.20 × P × Q1) + Z1
Y1 = [T × (I1 + B1)] − K − K1 − (0.20 × E) −
(0.15 × P × Q) + Z1
Y2 = [T × (I1 + B1 + B2)] − K − K1 − (0.20 × E) −
(0.15 × P × Q) − (0.20 × P × Q1) + Z2
Y2 = [T × (I1 + B1 + B2)] – K – K1 – (0.20 × E) −
(0.15 × P × Q) + Z2
Cumulative averageFirst method
Y = (T × I) − K − K1 − (0.20 × E) −
(0.15 × S1 × Q) − (0.20 × S1 × Q1) + Z
First method
Y = (T × I) − K − K1 − (0.20 × E) −
(0.15 × S1 × Q) + Z
Second Method
Y3 = (T × I3) − K − K1 − (0.20 × E) −
(0.15 × S1 × Q) − (0.20 × S1 × Q1) + Z3
Second Method
Y3 = (T × I3) − K − K1 − (0.20 × E) −
(0.15 × S1 × Q) + Z3
Y4 = (T × I4) − K − K1 − (0.20 × E) −
(0.15 × S1 × Q) − (0.20 × S1 × Q1) + Z4
Y4 = (T × I4) − K − K1 − (0.20 × E) −
(0.15 × S1 × Q) + Z4
DefinitionsQ = amount withheld for a pay period for the purchase of class A shares in the Fonds de solidarité FTQQ = amount withheld for a pay period for the purchase of class A shares in the Fonds de solidarité FTQ or amount withheld for the pay period for the purchase, after May 31, 2016, of class A or class B shares in Fondaction
Q1 = amount withheld for the pay period for the purchase, before June 1, 2016, of class A or class B shares in Fondaction
Note

The total value of variables Q and Q1 must not exceed $5,000 for the year. For the pay period in which the annual maximum is reached, the value of variables Q and Q1 must be zero.

Variable Z – Health contribution

For 2016, the rates and the amounts used to calculate the value of the health contribution (variable Z) remain unchanged. However, the net income thresholds have been indexed.

Estimated annual net income (R)
Health contribution (Z)
$18,570 or less$0
More than $18,570, no more than $41,265Whichever is less:
  • $100 
  • 5% × (R − $18,570) 
More than $41,265, no more than $134,095Whichever is less:
  • $200 
  • $100 + [5% × (R − $41,265)] 
More than $134,095Whichever is less:
  • $1,000 
  • $200 + [4% × (R − $134,095)] 

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