Personal Finance

Why do people who work in one province, but live in another pay more in taxes?

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  • Sep 25th, 2014 11:57 pm
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Member
May 8, 2003
246 posts
21 upvotes
djino I am in the same employment/tax situation as you. I typically max out my RRSPs and still pay out a few grand each year (just for comparing). I have not requested my employer take an extra $100 off since I prefer to keep my money (and its associated interest) until April. I have looked at the various
Sr. Member
User avatar
Dec 28, 2008
563 posts
100 upvotes
Rural Ontario
For me, its the opposite. I live/work in Ontario but my employer is based in Quebec. So I get dinged with the Quebec based income tax but when I file here in Ontario, I usually get a good chunk of that back because I have technically overpaid throughout the year.
Deal Addict
Dec 28, 2006
2374 posts
52 upvotes
Saskatoon
Generally employers calculate withholding based on the province of employement but you pay taxes based on province of residence.



http://www.cra-arc.gc.ca/E/pub/tg/t4001 ... P303_22490

Which tax tables should you use?

When you pay employment income such as salaries, wages, or commissions, you have to determine your employee's province or territory of employment. This depends on whether or not you require your employee to report for work at your place of business.

If the employee reports for work at your place of business, the province or territory of employment is the province or territory where your business is located. To deduct payroll deductions, use the tax tables for that province or territory of employment.

Example 1
Your head office is in Ontario, but you require your employee to report to your place of business in Manitoba. In this case, use the Manitoba Payroll Deductions Tables.

Example 2
Your employee lives in Quebec, but you require your employee to report to your place of business in New Brunswick. In this case, use the New Brunswick Payroll Deductions Tables.



Since your employer is in ON they are not obligated to withhold or remit payroll deductions to Revenu Quebec. All other provinces have their portion remitted by the employer to the Feds and then the Feds send the province their portion. QC has a separate provincial system. QC employers have to withhold and remit separately to the Feds and to RQ.

So your employer is withholding based on ON but you are resident in QC.

From the QC income tax return guide:

line 454 Transferable portion of the income
tax withheld for another province

If you were resident in Qu
[OP]
Deal Guru
User avatar
Feb 24, 2008
12455 posts
3564 upvotes
Gatineau
ghostryder wrote:
Jan 30th, 2009 10:39 am
Generally employers calculate withholding based on the province of employement but you pay taxes based on province of residence.



http://www.cra-arc.gc.ca/E/pub/tg/t4001 ... P303_22490

Which tax tables should you use?

When you pay employment income such as salaries, wages, or commissions, you have to determine your employee's province or territory of employment. This depends on whether or not you require your employee to report for work at your place of business.

If the employee reports for work at your place of business, the province or territory of employment is the province or territory where your business is located. To deduct payroll deductions, use the tax tables for that province or territory of employment.

Example 1
Your head office is in Ontario, but you require your employee to report to your place of business in Manitoba. In this case, use the Manitoba Payroll Deductions Tables.

Example 2
Your employee lives in Quebec, but you require your employee to report to your place of business in New Brunswick. In this case, use the New Brunswick Payroll Deductions Tables.



Since your employer is in ON they are not obligated to withhold or remit payroll deductions to Revenu Quebec. All other provinces have their portion remitted by the employer to the Feds and then the Feds send the province their portion. QC has a separate provincial system. QC employers have to withhold and remit separately to the Feds and to RQ.

So your employer is withholding based on ON but you are resident in QC.

From the QC income tax return guide:

line 454 Transferable portion of the income
tax withheld for another province

If you were resident in Qu
Deal Fanatic
Oct 13, 2002
5223 posts
185 upvotes
Calgary
djino wrote:
Jan 30th, 2009 9:00 am
Yes agreed, I know I'm saving more when it becomes to living (whether owning or renting)... but my question is more on the lines of income tax.

Due Quebecers pay more taxes generally or is it because I dont live/work in the same province?

djino
quebec has the highest tax rate in canada...its crazy high here...also dont forget you have to pay the special quebec qpp pension too
Deal Fanatic
Jul 1, 2007
7675 posts
547 upvotes
markj wrote:
Jan 30th, 2009 11:35 am
quebec has the highest tax rate in canada...its crazy high here...also dont forget you have to pay the special quebec qpp pension too
Ditto. I would never in a million years choose to live in Quebec if I had the option of living in Ontario, even if costs there are higher and there are fewer social programs. It's no wonder Quebec is a perpetual "have not" province. Until their government gets some sense smacked into them and moves to the right they will continue to be a have not province.

You only need to make about $40,000 in Quebec to be paying tax in a marginal tax bracket as high as Alberta's highest MTR for income over $120K (39%). In Ont, your highest MTR would be 31.15%. The high rates kick in really early in Quebec and in my opinion this is the government telling you that if you make more than $40K you're making too much money. So they punish the somewhat successful, not the rich, just those who are successful enough to move up from entry level positions. They punish you more the more successful you are and as a result the economy suffers.
Member
User avatar
Sep 20, 2005
403 posts
12 upvotes
I also moved from BC to Gatineau in 2007. The bottom line is that you pay provincial for the entire year tax based on the province you reside in on December 31 each year. Qu
Member
User avatar
Sep 20, 2005
403 posts
12 upvotes
Thalo wrote:
Jan 31st, 2009 2:22 am
Ditto. I would never in a million years choose to live in Quebec if I had the option of living in Ontario, even if costs there are higher and there are fewer social programs. It's no wonder Quebec is a perpetual "have not" province. Until their government gets some sense smacked into them and moves to the right they will continue to be a have not province.

You only need to make about $40,000 in Quebec to be paying tax in a marginal tax bracket as high as Alberta's highest MTR for income over $120K (39%). In Ont, your highest MTR would be 31.15%. The high rates kick in really early in Quebec and in my opinion this is the government telling you that if you make more than $40K you're making too much money. So they punish the somewhat successful, not the rich, just those who are successful enough to move up from entry level positions. They punish you more the more successful you are and as a result the economy suffers.
I chose Qu
Newbie
Oct 18, 2011
1 posts
KINGSTON
ghostryder wrote:
Jan 30th, 2009 10:39 am
Generally employers calculate withholding based on the province of employement but you pay taxes based on province of residence.



http://www.cra-arc.gc.ca/E/pub/tg/t4001 ... P303_22490

Which tax tables should you use?

When you pay employment income such as salaries, wages, or commissions, you have to determine your employee's province or territory of employment. This depends on whether or not you require your employee to report for work at your place of business.

If the employee reports for work at your place of business, the province or territory of employment is the province or territory where your business is located. To deduct payroll deductions, use the tax tables for that province or territory of employment.

Example 1
Your head office is in Ontario, but you require your employee to report to your place of business in Manitoba. In this case, use the Manitoba Payroll Deductions Tables.

Example 2
Your employee lives in Quebec, but you require your employee to report to your place of business in New Brunswick. In this case, use the New Brunswick Payroll Deductions Tables.



Since your employer is in ON they are not obligated to withhold or remit payroll deductions to Revenu Quebec. All other provinces have their portion remitted by the employer to the Feds and then the Feds send the province their portion. QC has a separate provincial system. QC employers have to withhold and remit separately to the Feds and to RQ.

So your employer is withholding based on ON but you are resident in QC.

From the QC income tax return guide:

line 454 Transferable portion of the income
tax withheld for another province

If you were resident in Qu�bec on December 31, 2008, and your employer
(or payer) withheld income tax at source for a province or territory other
than Qu�bec, you may obtain a credit for a portion of the total income tax
withheld. The credit represents the amount transferred to Qu�bec by the
Government of Canada under a federal-provincial agreement. To be entitled to this credit, you must have requested a tax transfer on line 438 of your federal income tax return. Enter the amount of this transfer.


And from the Federal :

Line 438 - Tax transfer for residents of Quebec

If you were a resident of Quebec on December 31, 2008, you may have earned income, such as employment income, outside Quebec during 2008. In that case, tax may have been deducted for a province or territory other than Quebec.

You can transfer, to the Province of Quebec, up to 45% of the income tax shown on information slips issued to you by payers outside Quebec.


Enter on line 438 of your federal return and on line 454 of your provincial income tax return for Quebec the amount you want to transfer (up to the maximum). If the taxable income on your provincial income tax return for Quebec is zero, no transfer is necessary.


My husband lives and his territory is all of Ontario and works from home, the company that he works for is based in Quebec, he is being charged outrageous taxes including specific taxes only for the province on quebec. Is it possible to have the company take Ontario taxes off his paycheck rather than quebec taxes?
Sr. Member
User avatar
Jan 1, 2009
748 posts
118 upvotes
Vancouver
dustie01 wrote:
Oct 19th, 2011 11:13 am
My husband lives and his territory is all of Ontario and works from home, the company that he works for is based in Quebec, he is being charged outrageous taxes including specific taxes only for the province on quebec. Is it possible to have the company take Ontario taxes off his paycheck rather than quebec taxes?

It was indicated in ghostryder's post that payroll deductions are withheld from source based on the province for which the employee reports for work. In your husband's case, which I am assuming he is a commissioned employee, then his province for which he carries on employment is Ontario. If he doesn't have to report into the Quebec office, which most likely he doesn't, then his source deductions should be withheld using Ontario tax tables as the province he actively carries on his employment contract. He should contact his payroll department for further details on this manner and seek clarification. He should print out a copy Appendix 1, listed here, on page 45 of the employer's guide that indicates his source deductions should be based off Ontario tax tables if he doesn't require reporting for work in the Quebec establishment.
Jr. Member
May 17, 2009
162 posts
14 upvotes
Thunder Bay
I'm with a company in Northern Ontario and we've had employees that work for us that reside in Manitoba, Sask etc. Our payroll program can take any provinces provincial taxes and provincial personal exemptions so the cross border employee is not an issue for us. I've never encountered Quebec employees, however, so I found the bit about having to remit the provincial taxes to Revenu Quebec interesting. For Man, Sask, Alberta etc. when we remit the source deduction withholdings it's one cheque to Receiver General. I guess they must pass on a portion of the total taxes to the Ontario government but I have no idea what the mechanism is to do this. How do they know how much to remit on to Ontario? How do they know if I have employees from Man, Sask. I assume none of the money goes to the other provincial governments at the time but somehow the governments must reconcile all this. Would be interesting to know inner workings if there are any government people out there. I realize by law I can just take Ontario taxes on everyone, but we usually ask the guy if he's cross border and if they want the Manitoba provincial tax etc taken off our payroll program has the capability to do that for each province. Quebec sounds like it's an added hassle. I think there Employment Insurance rate is different as well.
Sr. Member
Dec 6, 2006
674 posts
28 upvotes
cheapcanoehead wrote:
Oct 19th, 2011 10:57 pm
I think there Employment Insurance rate is different as well.

This is false.

EI rates are set by the CRA and are the same for everybody, regardless of province of residence or work.
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