This GMS Flash Alert reports that Finance Quebec has announced in a new bulletin that it will be eliminating the health contribution as of January 1, 2017, which is two years ahead of schedule.
Finance Quebec has announced in a new bulletin that it will be eliminating the health contribution as of January 1, 2017, which is two years ahead of schedule.1
According to the bulletin, which was published on October 25, 2016:
Assignees to Quebec subject to the health contribution and assignees from Quebec still subject to the health contribution will see a slight increase in their paychecks from January 1, 2017, as the health contribution will no longer be due. Payroll administrators should be planning for the appropriate adjustments to their procedures and systems. With assignees no longer subject to the health contribution, the costs of international assignments to and from Quebec should be lower.
Since January 1, 2013, a progressive health contribution has been in effect in Quebec, based on individual net income.
As it is currently applied, in general, an individual must pay a health contribution if:
The health contribution is deducted at source by employers when calculating employee source deductions. The amount of the health contribution is reported on the RL-1 slip and included with income tax withholdings. The contribution is calculated/applied as shown in the table below. (All dollar amounts show are Canadian dollars.)
|Individual Net Income||Contribution Amount 2016||Contribution Amount 2017|
|Up to $18,705
||no premium||no premium|
|over $18,705 up to $41,560||(income - $18,705) x 5%,to a maximum of $50||no premium|
|over $41,560 up to $135,060||$50 + (income - $41,560) x 5%,to a maximum of $175||
no premium –
prior to elimination it would have been:(income - $41,560) x 5%,to maximum of $70
|over $135,060||$175 + (income - $135,060) x 4%,to a maximum of $1,000||
no premium –
prior to elimination it would have been:$70 + (income - $135,060) x 4%,to maximum of $800
The health contribution reduction plan was originally announced as part of Quebec's 2015-2016 budget. The plan was then modified in the 2016 provincial budget to eliminate the health contribution in 2018, but with plans for a progressive elimination in 2016 and 2017 for lower-income taxpayers, and the 2018 date applying to all other taxpayers. With this bulletin, the process has been accelerated significantly.
Next Steps for Employers/Employees
According to Information Bulletin 2016-11, individuals in Quebec who pay their income tax in installments should consider adjusting payments that are due after December 31, 2016, in order to take into account the effects of the complete elimination of the health contribution in 2017.
What the Quebec Government Says About the Impact
According to the government’s press release, this measure is expected to benefit 4.5 million taxpayers, representing an annual reduction of the overall tax burden of almost $760 million.2
1 See (in French) Bulletin d’Information (PDF 110 KB) (2016-11, 25 Octobre 2016).
2 See (in French), Finances Quebec Web page, “Abolition Complete de la Contribution Santé dès le 1er janvier 2017” (25 Octobre 2016).
This article is excerpted, with permission, from “Finance Quebec Announces the Health Contribution Will End as of January 1, 2017” (8 November 2016), a publication of the KPMG International member firm in Canada.
For further information or assistance, please contact your local GMS or People Services professional or the following professional with the KPMG International member firm in Canada:
The information contained in this newsletter was submitted by the KPMG International member firm in Canada.
© 2019 KPMG LLP, a Canada limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss entity. All rights reserved.
KPMG International Cooperative (“KPMG International”) is a Swiss entity. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.