Wednesday, March 29, 2023

Demystifying the economy Why is the income tax not the same in Quebec and Ottawa?

Every week you send your questions about the economy, finance, markets, etc. Our journalists try to answer them with the help of experts.

Hello, A problem that has been bugging me for several years is with the receipt of my tax return. Why is the labor income so different on my federal T4 slip and my provincial RL 1 slip? How can our governments not agree on the same definition of labor income? FREE

Francis Chouinard, La Prairie

It is simply Maurice’s fault.

In fact, Prime Minister Maurice Duplessis took a provincial personal income tax of 15% on February 24, 1954.

“Leader” on the occasion of the 50th anniversary of the Law recalled the historian Robert Comeau, having the fiscal resources of the province to exercise his powers was important.

The difference between the labor income appearing in the federal T4 and the Quebec RL-1 is a consequence of Quebec’s tax autonomy, explains Tommy Gagné-Dubé, professor of taxation at the University of Sherbrooke.

“It has a fiscal autonomy that other provinces do not have,” continues the academic. The Quebec tax council can make different decisions than the federal one. All provinces except Quebec have, at some level, a tax agreement with the federal government. Under these agreements, the provinces must have the same definition of income tax as the federal government. »

In summary, Quebec and Ottawa each have their own definition of income tax, hence the different amounts appearing on the T4 and RL-1 slip.

EXPLAINING A BIG BLOCK GAP: Quebec considers employer contributions to a private health insurance plan taxable, unlike the federal government.

“For Canada as a whole, approximately 13 million people received benefits from an employer health or dental plan in 2018,” says Professor Gagné-Dubé.

There are other minor differences that arise in the tax calculation, such as extra food. It is not a tax at the federal level, but it is in Quebec.

On the other hand, the budget allocations of elected municipal officials have recently been at the federal tax level, Mr. Gagné-Dubé tells us, but they are not yet in Quebec.

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Nation World News Desk
Nation World News Desk
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