Tax terms

Definitions of the following tax terms are provided to help you better understand taxation in Québec.

Agent

An employer or a business that, on behalf of the government, has the mandate to collect consumption taxes and duties, and to make source deductions. The agent must calculate the amounts payable and remit them to Revenu Québec within the time prescribed.

Business expenses

Any reasonable expenses made to earn business income, such as the cost of renting business premises or an office, the cost of certain property and services purchased for the operation of a business, motor-vehicle expenses and meal expenses. If certain conditions are met, you may be entitled to a tax deduction for such expenses.

Business income

Annual income that includes the proceeds from sales and services rendered, commissions, the value of property and services involved in barter transactions, and all the amounts and benefits relating to a business received in the year.

Consumption tax

An amount that is added to the purchase price of property or services, and sent to the government.

Contribution

An amount that a taxpayer remits to Revenu Québec for a specific purpose, such as a contribution to the Québec Pension Plan.

Customs duty

The amount of money collected on foreign goods imported into our country.

Goods and services tax (GST)

The 6% goods and services tax that applies to the sale of property and services in Canada. The GST collected is sent to the Government of Canada.

Government

The people wielding the political and administrative power in a country or province.

Income tax

The amount of money, calculated according to the income and situation of an individual or a business, to be remitted to the government for a particular year.

Income tax return

The form that taxpayers use each year to report their income to the government, for the purpose of calculating and paying their fair share of income tax.

Non-refundable tax credit

An amount granted to a taxpayer which is based on the taxpayer's situation and reduces or cancels out the amount of income tax payable by the taxpayer at the time the latter files an income tax return.

Notice of assessment

An official document sent by Revenu Québec to a taxpayer, after the taxpayer's income tax return has been examined, to confirm or amend the amount of income tax payable by the taxpayer for the year.

Québec sales tax (QST)

The 7.5% sales tax that applies to the sale of property and services in Québec. The QST collected is sent to the Québec government.

Refundable tax credit

An amount granted to a taxpayer which is based on the taxpayer's situation and remitted to the taxpayer even if no income tax is payable by the taxpayer at the time the latter files an income tax return.

Remuneration

Any salary or wages, commissions, allowances, tips or benefits (freebies or gifts) that an employee receives from his or her employer.

RL-1 slip

The form on which an employer enters an employee's annual salary or wages and any other remuneration, where applicable, as well as the source deductions that were made. The employee uses the RL-1 slip in filing his or her income tax return. The equivalent form issued by an employer for filing a federal income tax return is the T4 slip.

Self-assessment

The foundation for the tax system, which means that taxpayers are required to report their income and calculate their income tax payable, without the government having to formally request that they do so.

Self-employed worker

An individual who operates a for-profit business. A self-employed worker is also called an "individual in business."

Source deductions

The income tax and contributions withheld from an employee's salary or wages, or from another income source, such as a retiring allowance. These amounts are remitted to Revenu Québec by the employer or the person that made the source deductions. In this way, the income tax to be paid is remitted on a regular basis over the course of the year.

Tax evasion

A scheme by which an individual or a business avoids paying, collecting or remitting, in whole or in part, the consumption taxes, income tax or source deductions payable, or claims deductions to which the individual or business is not entitled.

Tax instalments

Partial payments of income tax made to Revenu Québec during the year. For example, an individual in business who has income from which no income tax is withheld at source pays income tax in quarterly instalments (due March 15, June 15, September 15 and December 15).

Taxation

The legislation (laws and regulations) concerning consumption taxes and income tax. It is interesting to note that the word "fiscal" comes from the Latin word "fiscus," which means "basket." A basket was used to transport to the ruler the money collected from taxpayers. That was the public treasury.

Taxation system

All the laws prescribing the income tax, consumption taxes and duties that taxpayers are required to pay to the government.

Taxation year

Usually the calendar year, that is, the year that begins on January 1 and ends on December 31.

Taxpayer

An individual or a business that is required to pay tax.

Unreported work

An activity in return for which an individual or a business receives money that is not reported to Revenu Québec as required. However, baby-sitting a neighbourhood child from time to time does not constitute unreported work.