Tax System in Quebec
Quebec is one of the thirteen states in Canada, which is the second-most populous state. It is believed that the tax in Quebec is higher than any other region. It follows the graduated income tax policy and collects its significant revenues through it.
The Quebec Taxation System is pretty similar to Canada or that of any other country. A person or any business entity residing in this province is required to pay Federal tax as well as the province tax. The taxable income does have some deductions and exceptions, and based on that, there are different tax slabs, and the tax rate increases with the increased revenue.
How to Calculate your Taxable Income
- Your taxes commences with all the income earned during the year by you. This covers income from your employment, business, interest income, capital gains, investment income, and dividends.
- You are then required to find out whether you qualify for any deductions that can decrease your overall taxable income. These deductions or write-off helps in reducing your taxable income, which is used to calculate your federal taxes.
- Once your taxable income is determined, your federal tax is calculated based on the current rates and the bracket under which your income falls. The tax rates are applied for each tax-bracket of your income. As your income goes higher, a higher amount is levied on the next bracket of income.
- From the federal amount calculated, various federal and non-refundable tax credits are applied to give you the net federal tax balance that is owed by you.
- Here, territorial or provincial credits are applied, as well as other individual adjustments, such as health care level, self-employment CPP or provincial surtax.
The following tax rates are to be paid by the residents of Quebec:
Federal Tax Rates for the year 2020
|Taxable Income*||Marginal Tax Rate|
|Less than or equal to $48,535||12.525%|
|More than 48,535 up to $97,069||17.1175%|
|More than $97,069 up to $150,473||21.71%|
|More than 150,473 up to $214,368||24.215%|
|More than $214,368||27.555%|
Note: * Represents the Taxable Income which is your total income minus allowable deductions or exemptions.
Provincial Income Tax Rates for the year 2020
|Less than or equal to $44,545||15%|
|More than $44,545 but less than $89,080||20%|
|More than $89,080 but less than $108,390||24%|
|More than $108,390||25.75%|
Note: * Represents the Taxable Income which is your total income minus allowable deductions or exemptions
An effective tax planning is essential to help you cope with paying more taxes, which results in lesser income left with an individual. A study indicated that "Quebec companies pay 26% more in taxes than the whole Canadian average." At the same time, another report suggests that "Relative to its size, Quebec is the most indebted state in Canada by a wide margin."