Income Earned in Quebec Income Tax Remission Order, 1988 (SI/89-157)

Short Title

1 This Order may be cited as the Income Earned in Quebec Income Tax Remission Order, 1988.

Interpretation

2 In this Order,

Act

Act means the Income Tax Act; (Loi)

Regulations

Regulations means the Income Tax Regulations. (règlement)

Remission to Individuals Who Did Not Reside in Canada at Any Time in a Taxation Year

3 Remission is hereby granted to any individual who did not reside in Canada at any time in a taxation year of the amount, if any, by which

• (a) the tax, interest and penalties paid or payable under the Act by that individual in respect of that taxation year

exceeds

• (b) the tax, interest and penalties that would have been payable by that individual under the Act in respect of that taxation year if, for the purpose of determining that person’s income earned in that year in the Province of Quebec, section 2602 of the Regulations read as follows:

  • “2602 (1) Except as provided in subsection (2), where an individual did not reside in Canada at any time in a taxation year, his income earned in the taxation year in a particular province is the aggregate of

    • (a) that part of the amount of his income from an office or employment that is included in computing his taxable income earned in Canada for the year by virtue of subparagraph 115(1)(a)(i) of the Act that is reasonably attributable to the duties performed by him in the province,

    • (b) his income for that year earned in the province as determined in the manner set forth in section 4 of the Income Earned in Quebec Income Tax Remission Order, 1988,

    • (c) his income for that year from carrying on business earned in the province, determined as hereinafter set forth in this Part,

    • (d) the taxable capital gains in the province included in computing his taxable income earned in Canada for the year by virtue of subparagraph 115(1)(a)(iii) of the Act from dispositions of property, each of which was a disposition of a property or an interest therein that was

      • (i) real property situated in the province or an option in respect thereof, or

      • (ii) any other capital property used by him in carrying on a business in the province,

      determined as hereinafter set forth in this Part, and

    • (e) the income of the individual for that year from the disposition of a life insurance policy under which a person resident in the province is, at the time the policy was issued or effected, the person whose life was insured.

  • (2) Where the aggregate of the amount of an individual’s income as determined under subsection (1) for all provinces for a taxation year exceeds his income described in subsection 115(1) of the Act, the amount of his income earned in the taxation year in a particular province shall be that proportion of his income so described that the amount of his income earned in the taxation year in the province as determined under subsection (1) is of the aggregate of all those amounts.

  • (3) Where, in a taxation year, a non-resident individual has disposed of real property situated in a particular province or an interest therein, or an option in respect thereof, any taxable capital gain from that disposition shall be a taxable capital gain in that particular province.

  • (4) Except as provided in subsection (5), where, in a taxation year, a non-resident individual has disposed of any capital property, other than property referred to in subsection (3), used by him in carrying on a business in Canada, the proportion of any taxable capital gain from that disposition that

    • (a) his income for the year from carrying on that business in a particular province

    is of

    • (b) his income for the year from carrying on that business in Canada,

    shall be a taxable capital gain in that particular province.

  • (5) Where in a taxation year a non-resident individual

    • (a) had no permanent establishment in Canada, and

    • (b) disposed of any capital property, other than property referred to in subsection (3), used by him in a previous year in carrying on a business in Canada,

    the proportion of any taxable capital gain from that disposition that

    • (c) his income from carrying on that business in a particular province for the last preceding taxation year in which he had income from carrying on that business in a province

    is of

    • (d) his income for the year, referred to in paragraph (c), from carrying on that business in Canada,

    shall be a taxable capital gain in that particular province.”

4 Where an individual who did not reside in Canada at any time in a taxation year was

• (a) a student in full-time attendance at an educational institution in the Province of Quebec that is a university, college or other educational institution providing courses at a post-secondary school level,

• (b) a student attending, or a teacher teaching at, an educational institution outside Canada that is a university, college or other educational institution providing courses at a post-secondary school level who had, in any previous year, ceased to be resident in the Province of Quebec in the course of or subsequent to moving to attend or to teach at, as the case may be, that institution,

• (c) an individual who had, in any previous year, ceased to be resident in the Province of Quebec in the course of or subsequent to moving to carry on research or any similar work under a grant received by him to enable him to carry on that research or work, or

• (d) an individual who had, in any previous year, ceased to be resident in the Province of Quebec and who was, in the taxation year, in receipt of remuneration in respect of an office or employment that was paid to him directly or indirectly by

  • (i) the Province of Quebec,

  • (ii) any corporation, commission or association the shares, capital or property of which were at least 90 per cent owned by the Province of Quebec, or a wholly-owned subsidiary corporation to such a corporation, commission or association, on condition that no person other than Her Majesty in right of the Province of Quebec had any right to the shares, capital or property of that corporation, commission, association or subsidiary or a right to acquire the shares, capital or property,

  • (iii) an educational institution, other than an educational institution of the Government of Canada, in the Province of Quebec that was

    • (A) a university, college or other educational institution providing courses at a post-secondary school level that received or was entitled to receive financial support from the Province of Quebec,

    • (B) a school operated by the Province of Quebec, or by a municipality thereof or by a public body thereof performing a function of government, or a school operated on behalf of that Province, municipality or public body, or

    • (C) a secondary school providing courses leading to a certificate or diploma that is a requirement for entrance to a college or university, or

  • (iv) an institution in the Province of Quebec, other than an institution of the Government of Canada, supplying health services or social services, or both, that received or was entitled to receive financial support from the Province of Quebec,

there shall be included, for the purposes of this Order, in computing his income earned in the taxation year in the Province of Quebec, the aggregate of

• (e) the amount of any remuneration in respect of an office or employment that was paid to him directly or indirectly by the Province of Quebec or any corporation, commission, association or institution referred to in paragraph (d), other than an institution of the Government of Canada, or by a wholly-owned corporation subsidiary to such corporation, commission or association, and that was received by the individual who did not reside in Canada in the year, except to the extent that such remuneration was attributable to the duties of an office or employment performed by him outside Canada, and that is

  • (i) subject to an income or profits tax imposed by the government of a country other than Canada, or

  • (ii) paid in connection with the selling of property, the negotiating of contracts or the rendering of services for his employer, or a foreign affiliate of his employer, or any other person with whom his employer does not deal at arm’s length, in the ordinary course of a business carried on by his employer, that foreign affiliate or that other person,

• (f) amounts that would be required by paragraph 56(1)(n) or (o) of the Act to be included in computing the individual’s income for the year if

  • (i) the individual were resident in Canada throughout the year,

  • (ii) the references in subparagraph 56(1)(n)(i) and paragraph 56(1)(o) of the Act to “received by the taxpayer in the year” were read as references to “received by the taxpayer in the year from the Province of Quebec or any corporation, commission, association or institution referred to in paragraph 4(d) of the Income Earned in Quebec Income Tax Remission Order, 1988, other than an institution of the Government of Canada, or from a wholly-owned corporation subsidiary to such a corporation, commission or association”, and

  • (iii) the reference to “$500” in paragraph 56(1)(n) of the Act were read as a reference to “the proportion of $500 that the amount determined under subparagraph (i) is of the amount that would be so determined if the requirements of subparagraphs 4(f)(i) and (ii) of the Income Earned in Quebec Income Tax Remission Order, 1988 were not taken into account”,

• (g) amounts that would be required by subsection 56(8) of the Act to be included in computing the individual’s income for the year if the individual were resident in Canada throughout the year, and

• (h) amounts that would be required by paragraph 56(1)(q) of the Act to be included in computing his income for the year if he were resident in Canada throughout the year,

minus the amount that would be deductible in computing his income for the year by virtue of section 62 of the Act if

• (i) that section were read without reference to paragraph (1)(a) thereof,

• (j) that section were applicable in computing the taxable income of individuals who did not reside in Canada, and

• (k) the amounts described in subparagraph (1)(f)(ii) thereof were the amounts described in paragraph (f).

Remission to Individuals Who Did Not Reside in a Province, the Northwest Territories or the Yukon Territory on the Last Day of the Taxation Year

• 5 (1) Subject to subsection (2), remission is hereby granted to any individual who did not reside in a province on the last day of a taxation year of the amount, if any, by which

  • (a) income tax, interest and penalties paid or payable under the Act by that individual in respect of that taxation year

  exceeds

  • (b) the tax, interest and penalties that would have been payable by that individual under the Act in respect of that taxation year if the individual had resided in the Province of Quebec on the last day of the taxation year.

• (2) Subsection (1) is applicable to an individual who

  • (a) sojourned in the Province of Quebec for a period of, or periods the aggregate of which is, 183 days or more and was ordinarily resident outside Canada;

  • (b) was at any time in the year an agent-general, officer or servant of the Province of Quebec and was resident in that Province immediately prior to his appointment or employment by that Province;

  • (c) performed services at any time in the year under an international development assistance program prescribed under Part XXXIV of the Regulations and was at any time

    • (i) in the three month period preceding the day on which those services commenced, resident in the Province of Quebec, and

    • (ii) in the six month period preceding the day on which those services commenced, an officer or servant of

      • (A) the Province of Quebec,

      • (B) any corporation, commission or association the shares, capital or property of which were at least 90 per cent owned by the Province of Quebec, or a wholly-owned corporation subsidiary to such a corporation, commission or association, on condition that no person other than Her Majesty in right of the Province of Quebec had any right to those shares or that capital or property of such corporation, commission, association or subsidiary or a right to acquire those shares or that capital or property,

      • (C) an educational institution, other than an educational institution of the Government of Canada, in the Province of Quebec that was

        • (I) a university, college or other educational institution providing courses at a post-secondary school level that received or was entitled to receive financial support from the Province of Quebec,

        • (II) a school operated by the Province of Quebec, or by a municipality thereof or by a public body thereof performing a function of government, or a school operated on behalf of that Province, municipality or public body, or

        • (III) a secondary school providing courses leading to a certificate or diploma that is a requirement for entrance to a college or university, or

      • (D) an institution in the Province of Quebec, other than an institution of the Government of Canada, supplying health services or social services, or both, that received or was entitled to receive financial support from the Province of Quebec;

  • (d) was resident in Canada in any previous year and was, at any time in the year, the spouse of a person described in paragraph (b) or (c) living with that person; or

  • (e) was, at any time in the year, a child of a person described in paragraph (b) or (c) and was living with the person in a self-contained domestic establishment that the person, whether alone or jointly with one or more other persons, maintained and in which the person lived and actually supported the child who, at that time, was

    • (i) wholly dependent for support on the person, or the person and the other person or persons, and

    • (ii) either under 18 years of age or so dependent by reason of mental or physical infirmity.

• (3) Paragraph (2)(d) is not applicable where the spouse of an individual described in paragraph (2)(c) is also an individual described in paragraph (2)(c).

Remission to Individuals Who Resided in the Province of Quebec on the Last Day of a Taxation Year

• 6 (1) Remission is hereby granted to any individual who resided in the Province of Quebec on the last day of a taxation year of the amount, if any, by which

  • (a) the tax, interest and penalties payable under the Act by that individual in respect of that taxation year

  exceeds

  • (b) the tax, interest and penalties that would have been payable by that individual in respect of that taxation year if

    • (i) if subsections 2601(1) and (2) of the Regulations read as follows:

      • “2601 (1) Notwithstanding subsection (4) and section 2603, where an individual resided in a particular province on the last day of a taxation year and had no income for the year from a business with a permanent establishment in another province, his income earned in the taxation year in the province is his income for the year.

      • (2) Notwithstanding subsection (4) and section 2603, where an individual resided in a particular province on the last day of a taxation year and had income for the year from a business with a permanent establishment in any other province, his income earned in the taxation year in the province is the amount, if any, by which

        • (a) his income for the year

        exceeds

        • (b) the aggregate of his income for the year from carrying on business earned in each other province, determined as hereinafter set forth in this Part.”,

    • (ii) the definition business-income tax in subsection 126(7) of the Act read as follows:

      business-income tax

      “business-income tax paid by a taxpayer for a taxation year in respect of businesses carried on by the taxpayer in a country other than Canada (in this definition referred to as the “business country”) means such portion of 55 % of any income or profits tax paid by the taxpayer for the year to the government of any country other than Canada or to the government of a state, province or other political subdivision of any such country as can reasonably be regarded as tax in respect of the income of the taxpayer from any business carried on by the taxpayer in the business country, but does not include a tax, or the portion of a tax, that can reasonably be regarded as relating to an amount that

      • (a) any other person or partnership has received or is entitled to receive from that government, or

      • (b) was deductible under subparagraph 110(1)(f)(i) in computing the taxpayer’s taxable income for the year;”, and

    • (iii) the definition tax for the year otherwise payable under this Part in subsection 126(7) of the Act read as follows:

      tax for the year otherwise payable under this Part

      “tax for the year otherwise payable under this Part means the amount determined by the formula

      A - B

      where

      A

      is the tax payable under this Part for the year after taking into account the requirements of subparagraph 6(1)(b)(i) of the Income Earned in Quebec Income Tax Remission Order, 1988, but before making any deduction under any of sections 121, 122.3, 126.1, 127 and 127.2 to 127.4 and this section, and

      B

      is the amount, if any, deemed by subsection 120(2) to have been paid on account of tax payable under this Part for the year after taking into account the requirements of subparagraph 6(1)(b)(i) of the Income Earned in Quebec Income Tax Remission Order, 1988;”.

• (2) In subsection (1), a reference to the last day of a taxation year shall, in the case of an individual who resided in the Province of Quebec at any time in the year and ceased to reside in Canada before the end of the year, be deemed to be a reference to the last day in the year on which the individual resided in Canada.

Deductions and Remittances

7 Notwithstanding paragraph 102(1)(a), subsection 102(2), paragraph 103(1)(m) and subparagraphs 103(4)(a)(xiii), (b)(xiii) and (c)(xiii) of the Regulations, the amount to be deducted or withheld by an employer and remitted to the Receiver General pursuant to Part I of the Regulations shall, in the case of

• (a) an individual referred to in section 4 in respect of the remuneration referred to in paragraph 4(e), and

• (b) an individual referred to in paragraph 5(2)(b), (c), (d) or (e) in respect of remuneration received from the Province of Quebec or from any corporation, commission, association or institution referred to in paragraph 5(2)(c), other than an institution of the Government of Canada, or from a wholly-owned corporation subsidiary to such corporation, commission or association,

be determined as if the employee reported for work at an establishment of the employer in Quebec.

7.1 Every individual to whom an amount was remitted under section 5 for a taxation year shall reimburse that amount, plus interest thereon to the day of payment, to Her Majesty in right of Canada to the extent of the amount of tax payable under the Taxation Act, R.S.Q., c. I-3, for that year that the individual, as a result of an objection served on the Minister of Revenue of the Province of Quebec, a claim filed in any court or a complaint made to any tribunal, was declared not to be liable to pay on the ground that the individual was not subject to the tax levied under that Act because of the individual’s place of residence.

Application

• 8 (1) Sections 3 to 6 apply to the 1983 to 1996 taxation years.

• (2) Section 7 is applicable in respect of the 1989 and subsequent taxation years.