Some taxpayers may not be aware that there are key differences between the taxation rules and compliance obligations imposed by Canada’s federal government and implemented by the Canada Revenue Agency (CRA) and those of Revenue Quebec on globally mobile employees, including expatriates and remote workers.
The following is a comprehensive comparison of the two sets of rules.
Inbound Assignees (Foreign Employees Assigned to Canada)
Outbound Assignees (Canadians Working Abroad)
Quebec operates its own tax system, distinct from the rest of Canada, and requires separate compliance.
For inbound expatriates, employers must register and remit separately to Revenue Quebec if the employee works in Quebec.
Outbound Quebec residents must assess residency departure for both CRA and Revenue Quebec.
Remote work in Quebec, even for an out-of-province or foreign company, may create payroll obligations for the employer under Quebec law. Need to analyse establishment of the corporation.
Quebec has unique social security, parental insurance, and tax credit systems that don’t align perfectly with federal programs.
It is important to determine whether or not the employer or employee would be subject to Quebec taxation. The province of Quebec follows the Civil Code, whereas the rest of Canada has a legal system based on common law.
For any questions, please contact your BDO advisor or the authors of this article.
Debra Moses
Midiam Garcia
BDO in Canada
The following is a comprehensive comparison of the two sets of rules.
Tax Agencies and Payroll Accounts
| Aspect | Federal (CRA) | Quebec (Revenue Quebec) |
| Tax Agency | Canada Revenue Agency (CRA) | Revenue Quebec |
| Payroll Registration | One payroll account for federal and all provinces except for Quebec | Separate payroll account required |
| Returns | One federal tax return | Separate Quebec return |
Expatriates (Inbound to Canada or Outbound)
Inbound Assignees (Foreign Employees Assigned to Canada)| Area | Federal (CRA) | Quebec (Revenue Quebec) |
| Residency Rules | Based on 183 days and ties to Canada. The rules are not black and white; an analysis of the facts and circumstances is necessary | Evaluated independently; same general principles |
| Taxable Income | Worldwide income, if resident | Worldwide income if Quebec resident |
| Withholding Obligations | Income tax, Canada Pension Plan (CPP), employment insurance | Quebec income tax, Quebec Pension Plan (QPP), QPIP, CNESST, HSF |
| Payroll Registration | Required | Separate registration required |
| Treaty Waivers | Use R102-R, T1213, or RC 473 (if applicable) | Use TP-1015.3-V for waivers or adjusted withholdings |
| Tax Returns | File federal T1 return, includes all provinces except for Quebec | Must also file Quebec TP-1 return |
Outbound Assignees (Canadians Working Abroad)
| Area | Federal (CRA) | Quebec (Revenue Quebec) |
| Departure Tax Return | Required if departing resident (T1161 for assets), potentially T1243 and T1244 | Quebec has separate departure criteria and forms |
| Worldwide Taxation | Continues until nonresidence is established, normally a part year in year of departure | Same – provincial taxes stop if Quebec residency ends |
| Foreign Tax Credits | FTCs available for foreign income tax | Separate FTC for Quebec return |
| Social Security | May remain in CPP via agreements, if available | QPP coverage may continue if bilateral agreement exists with Quebec |
Remote Workers (Inbound, Outbound, and Interprovincial)
| Remote Worker Type | Federal (CRA) | Quebec (Revenue Quebec) |
| Foreign worker for Canadian employer | May trigger Canadian tax and payroll withholding | If working in Quebec, employer must register and withhold |
| Canadian living abroad | May still be taxed on worldwide income if resident, payroll taxes to be determined (if working days in Canada) | If still a Quebec resident, would be taxed on worldwide income and payroll withholdings would be required to be determined |
| Quebec resident working for non-Quebec employer (foreign) | Employee still subject to worldwide taxation; however, employer federal payroll withholding is required, determination of provincial or surtax if required | Employee will still be subject to Quebec income tax; however, the employer provincial payroll withholdings need to be determined. |
| Interprovincial worker (e.g., lives in Quebec, works remotely for Ontario company) | Employee subject to worldwide federal tax Employer to determine federal and provincial tax withholding required |
Employee subject to worldwide Quebec tax Employer to determine whether not the employee is subject to Quebec income tax withholding |
Social Security Contributions
| Plan | Federal (all provinces except Quebec) | Quebec (Revenue Quebec) |
| Pension | CPP | QPP (separate rates, contribution limits) |
| Employment Insurance | EI | QPIP (parental insurance) |
| Workers’ Compensation/Health | Not collected by CRA | CNESST, Health Services Fund (HSF) |
Key Takeaways
Quebec operates its own tax system, distinct from the rest of Canada, and requires separate compliance.For inbound expatriates, employers must register and remit separately to Revenue Quebec if the employee works in Quebec.
Outbound Quebec residents must assess residency departure for both CRA and Revenue Quebec.
Remote work in Quebec, even for an out-of-province or foreign company, may create payroll obligations for the employer under Quebec law. Need to analyse establishment of the corporation.
Quebec has unique social security, parental insurance, and tax credit systems that don’t align perfectly with federal programs.
How BDO Can Help
It is important to determine whether or not the employer or employee would be subject to Quebec taxation. The province of Quebec follows the Civil Code, whereas the rest of Canada has a legal system based on common law.For any questions, please contact your BDO advisor or the authors of this article.
Debra Moses
Midiam Garcia
BDO in Canada