Gradual Reduction of the Health Contribution
In the Budget Speech delivered on March 17, 2016, the Minister of Finance of Québec announced that the health contribution would be reduced gradually beginning in 2016 and ultimately eliminated in 2018. More specifically, for 2016, the maximum amount of the health contribution has been reduced as follows:
- from $100 to $50, for income greater than $18,570 but not greater than $41,265; and
- from $200 to $175, for income greater than $41,265 but not greater than $134,095.
Accordingly, you must take the reduction into account when calculating source deductions as of July 1, 2016. In addition, the amounts used to calculate the health contribution included in calculating source deductions of income tax have been reduced (from $50 to $0 and from $175 to $150) so that individuals can benefit from the reduction retroactively to January 1, 2016. The Source Deduction Table for Québec Income Tax (TP-1015.TI-V), the guide entitled Formulas to Calculate Source Deductions and Contributions (TP-1015.F-V) and the WinRAS application have all been updated to reflect the changes. As a result, be sure to use the 2016-07 version of the table, guide or application for any pay period beginning after June 30, 2016.
Individuals who are required to pay their income tax in instalments may adjust any instalment payment due after March 31, 2016, in accordance with the usual rules, to take into account the effects of the new reduction plan leading to the elimination of the health contribution.