What are the tax requirements for corporations operating in Quebec?
Corporations operating in Quebec are required to pay federal and provincial corporate tax on taxable income. GST/QST registration is required unless the corporation qualifies as a small supplier and CNESST premiums must be paid by employers operating in non-exempt industries.
Separate corporate tax returns must be filed with CRA and Revenu Quebec for all corporations operating an establishment in Quebec at any point in a tax year. The combined federal and provincial corporate tax rates are calculated on worldwide active business income at the following rates:
- Income of a Canadian Controlled Private Corporation (CCPC) below $500,000 – 12.2%.
- Income of a CCPC above the small business limit – 26.50%.
- Income of non-CCPCs – 26.50%.
- Investment income – 50.20%.
Tax returns must be filed six months after year-end. However, taxes owing are due three months after year-end. In addition, if the total tax payable was greater than $3,000 in the prior-year installment payments are payable monthly or quarterly.
Corporations operating in Quebec with worldwide taxable income exceeding $30,000 are required to register for GST. Registrants charge 5% GST on taxable supplies and can claim input tax credits (ITCs) for GST paid on expenses used in commercial activities. Where taxable income is less than $30,000, registration is not required but can be done voluntarily.
GST returns must be filed with CRA annually, quarterly, or monthly with filing dates determined by annual taxable income.
Corporations operating in Quebec must also register for QST if worldwide taxable income exceeds $30,000. QST is charged on taxable supplies at a rate of 9.975%. Input tax refunds can be claimed for QST paid on business purchases and operating expenses.
QST returns are filed quarterly, and taxes must be paid one month following the end of the quarter.
CNESST premiums must be paid for most employers operating in Quebec. Premiums are determined using industry, prior claims, and other relevant historical information.
Health Services Fund
Employers in Quebec are required to make Health Services Fund (HSF) contributions. HSF contributions are calculated on remuneration paid to employees with rates from 1.65% to 4.26%, depending on the total size of payroll. Corporations operating in the manufacturing industry receive a reduced rate of 1.25%.
If you would like to discuss your corporate tax requirements as a business operating in Quebec, please contact a member of the EPR tax team by completing the contact form below. Our tax experts can advise on the best structure to reduce or minimize the impact of the taxes.
Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. EPR Maple Ridge Langley, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.