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

[ells]

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 ± factors and it is not as clear cut as it appears on your tax form.

In Gatineau,
Water is free
Municipal taxes are lower
Real Estate/Rent is lower
Electricity is lower
Vehicle insurance is lower
Labour rates are lower
Childcare is lower
Childcare allowance
More non-refundable tax credits

Just off the top of my head.

[Reignman]

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.

[ghostryder]

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/t4...tml#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 Québec on December 31, 2008, and your employer
(or payer) withheld income tax at source for a province or territory other
than Québec, you may obtain a credit for a portion of the total income tax
withheld. The credit represents the amount transferred to Québec 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.

[dux]

Calculate your taxes based on which province you live in.

http://lsminsurance.ca/calculators/canada/income-tax

On a 50k income, a Quebec resident will pay about 3k more in taxes compared to someone in Ontario.

[djino]

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/t4...tml#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 Québec on December 31, 2008, and your employer
(or payer) withheld income tax at source for a province or territory other
than Québec, you may obtain a credit for a portion of the total income tax
withheld. The credit represents the amount transferred to Québec 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.

So Does that mean I still have to pay 55% to Ontario? There is no way to get more of my tax money to Quebec?

It just seems that since 45% max only goes to Quebec that Quebec then needs to charge me the additional 55%.

I could be wrong, but to me it appears as if I'm paying more than even Quebecors that live/work within Quebec (just as I'm obviously paying more than people in Ontario who live/work in Ontario).

djino
"Is this true? sorry, I just dont understand"

[markj]

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

[Thalo]

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.

[Potsman]

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. Québec income tax are dramtically higher than other provinces, but the cost of things is much lower as previous posters have mentioned. (Housing, beer, car insurance, hydro to name a few)

Under the income tax act, the employer is required to deduct taxes on your pay for the province you work in and not the province you reside in. There is a form you complete and send to your employer (I can not recall the number but your employer will know) to have additonal tax withheld. Because I work in Ontario, I have requested an additional $100 be witheld from each paycheque.

[Potsman]

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 Québec based on the housing prices. I am single and I purchased a house for $198,000 that is 10 minutes from downtown Ottawa. The same comparible house in Ontario would be in the mid $400,000 range. That is a lot of paycheques to cover the difference which I could not justify.

[Thalo]

I chose Québec based on the housing prices. I am single and I purchased a house for $198,000 that is 10 minutes from downtown Ottawa. The same comparible house in Ontario would be in the mid $400,000 range. That is a lot of paycheques to cover the difference which I could not justify.

And during the next referendum exodus that Quebec house will be worth less than $100K, if you can sell it at all, whereas the Ottawa house would probably be worth the same (or slightly less due to the overall economy).

It's kinda like buying a house in a growing city vs. an old mining town that is gradually turning into a ghost town.

[dustie01]

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/t4...tml#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?

[Cypherus21]

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.

[cheapcanoehead]

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.

[guigz]

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.

[cheapcanoehead]

http://www.payworks.ca/Payroll-Legislation/CPPEI.asp

See link above:
Quebec EI rate 1.41% rest of country 1.78% however, they also pay QPIP premiums of 0.537% according to link above and Canada Revenue Agency site etc.