A Primer on Payroll in Canada QUEBEC Employerpaid premiums Employeepaid premiums Quebec Subject to 9% Quebec tax Subject to 9% Quebec tax Quebec Subject to 9% Quebec tax Exempt from Quebec tax Quebec Outside Quebec Exempt from Quebec tax Subject to 9% Quebec tax Outside Quebec Outside Quebec Exempt from Quebec tax Exempt from Quebec tax Province of residence Province of Employment Quebec Outside Quebec NET TAXABLE INCOME The gross earnings represent the total money being paid to the employee and pensionable income is the sum of gross earnings plus the dollar value of any taxable benefits. The employee's net taxable income must be determined before income tax deductions can be calculated. To arrive at net taxable income, the employee's pensionable earnings must be reduced by the following: employee contributions to a registered pension plan (RPP) contributions to a registered retirement savings plan (RRSP) union dues (federally only) deduction for living in a prescribed zone (from TD1(federal)/TP1015.3-V) any other amounts the CRA or Revenu Québec authorize through a letter of authority Once you deduct the above amounts, you will be left with the net taxable income amount on which you will base federal and provincial income tax deductions. STATUTORY DEDUCTIONS An employer has a legal obligation to withhold statutory deductions. The statutory deductions are: Canada Pension Plan (CPP) contributions Quebec Pension Plan (QPP) contributions Employment Insurance (EI) premiums Quebec Parental Insurance Plan (QPIP) premiums Federal and Provincial income taxes © The Canadian Payroll Association/L'Association canadienne de la paie 2020 11-25