In Quebec, employers who decide to pay their employees with a salary rather than dividends are responsible for remitting payroll taxes.
What payroll taxes are employers in Quebec responsible for in 2021? Find out in this article.
The Québec Pension Plan (QPP)
Both employers and employees are required to contribute to the Québec Pension Plan (QPP). The QPP is a public insurance plan that provides basic financial protection to people who are retired, disabled or have lost a loved one.
Employers are required to contribute to the QPP if their employee’s annual revenue exceeds $3,500. The maximum income eligible for the contribution rate is $61,600.
In 2021, the QPP contribution rate is 11.8%. This includes the contribution to the base plan and the additional plan. Each employee pays half of the rate (5.9%) and the employer pays the other half.
The Québec Parental Insurance Plan (QPIP)
The Québec Parental Insurance Plan (QPIP) is an income replacement plan for eligible workers who take maternity, paternity, parental or adoption leave. The plan provides regular payments to replace the worker’s salary. People must have earned income from work in order to be eligible.
In 2021, the employer’s QPIP contribution rate is 0.692%, with a maximum contribution of $577.82 per employee.
Employment insurance (EI) premiums
Employment insurance (EI) is a federal payroll tax. EI provides financial support to unemployed individuals who are seeking employment or learning new skills. Unlike self-employed workers, employers are required to contribute to EI.
The EI premium rate for Quebecers in 2021 is 1.18% (Quebecers pay less than other Canadians because they contribute to QPIP). The maximum annual insurable earnings are $56,300, and the maximum annual employer premium is $930.08.
The health services fund (HSF)
The health services fund (HSF) is used to fund the healthcare system and social services. The HSF is unique in that the contribution rate varies from 1.25% to 4.26% based on the total payroll for the year.
In 2021, the contribution rates for employers are as follows:
- Total payroll of $1,000,000 or less: 1,65%
- Total payroll of $1,000,000 to $6,500,000: 1.1755% + (0.4745% × payroll/$1,000,000) (rounded to the second decimal place)
- Total payroll of $6,500,000 or more: 4,26%
Employers with more than 50% of their total payroll in the primary and manufacturing sectors and employers in the public sector do not have to contribute to the HSF.
Commission des normes du travail, de l’équité, de la santé et de la sécurité du travail (CNESST)
Employers are also required to contribute to the Commission des normes du travail, de l’équité, de la santé et de la sécurité du travail (CNESST). This year, the maximum insurable earnings are $83,500.
Employers must pay a contribution related to labour standards. The contribution rate in 2021 is $0.07 for every $100 of insurable payroll.
They must also contribute to the occupational health and safety plan. In 2021, the average premium rate for the plan is $1.77 for every $100 of payroll. The specific rate varies between $0.24 and $16.23 per $100 of payroll depending on the employer’s classification unit.
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In Quebec, employers must contribute to several plans that ensure workers’ financial security and well-being.