Published | Category : Source deductions and contributions
Reduction of the Health Services Fund Contribution Rate for SMBs
In the Budget Speech of March 27, 2018, the Minister of Finance of Québec announced a new plan to gradually reduce the health services fund contribution rate between 2018 and 2022. In addition, the total payroll threshold for the reduced contribution rate will be increased between 2019 and 2022 and then indexed annually as of 2023.
For 2018, if you are an employer other than a public-sector employer and your total payroll is less than $5 million, you can qualify for the reduced contribution rate, subject to certain conditions. You must use the contribution rate for your sector of activity to calculate your health services fund contribution for the year.
See the table below for the health services fund contribution rates for 2018 for each sector of activity.
| Contribution rate for 2018 | ||
|---|---|---|
| Total payroll (TP) | Salaries or wages paid before March 28, 2018 | Salaries or wages paid after March 27, 2018 |
| $1,000,000 or less | 1.50% | 1.45% |
| $1,000,001 to $4,999,999 | 0.81% + (0.69% × TP/1,000,000) | 0.7475% + (0.7025% × TP/1,000,000) |
| $5,000,000 or more | 4.26% | 4.26% |
| Contribution rate for 2018 | ||
|---|---|---|
| Total payroll (TP) | Salaries or wages paid before March 28, 2018 | Salaries or wages paid after March 27, 2018 |
| $1,000,000 or less | 2.30% | 1.95% |
| $1,000,001 to $4,999,999 | 1.81% + (0.49% × TP/1,000,000) | 1.3725% + (0.5775% × TP/1,000,000) |
| $5,000,000 or more | 4.26% | 4.26% |
If you stop carrying on a business or making payments in the year, you must calculate your health services fund contribution rate for 2018 as shown in the example below.
Example
You are an employer in the primary and manufacturing sectors and you stop carrying on your business on June 29, 2018. Your total payroll for the period from January 1 to June 29, 2018, is less than $1 million.
| Salaries or wages paid before March 28, 2018 | Salaries or wages paid after March 27, 2018 | |
|---|---|---|
| Keep your calculations in case we ask for them. | ||
| Salaries or wages subject to the contribution | $600,000 | $300,000 |
| Contribution rate | 1.50% | 1.45% |
| Contribution to the health services fund | $9,000 | $4,350 |
| Contribution for the period from January 1 to June 29, 2018: $9,000 + $4,350 | $13,350 | |
Form LE-34.1.12-V, Reduction of the Contribution to the Health Services Fund: Creation of Specialized Jobs, will be updated to incorporate the new rates for 2018.