Revenu Québec is pleased to include on its Web site a section designed especially for students and their teachers. In this section, you can find basic information on taxation in Québec, such as information about the income tax return, consumption taxes, income tax and work. Do some words have you stumped? Click on "Tax terms" for definitions of the most complicated terms. Happy surfing!

• Tax terms
• The income tax return
• Information about consumption taxes and income tax
• Activities for 10- to 12-year-olds
• Joining the work force
• Revenu Québec online
• Statistics
• Useful publications
• Educational material

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.

The income tax return

Maybe you're puzzled about filing an income tax return. The information in this section will assist you. Also, you can check out Lulu's income tax return, as an example.

• Should you file an income tax return?
• The deadline for filing your income tax return
• How to complete your income tax return
• What happens after you file your income tax return
• As a student, are you entitled to the tax credit for tuition and examination fees?
• Lulu's income tax return (an example)

Should you file an income tax return?

Generally speaking, you must file an income tax return if you have income tax payable. You may be required to file a return due to certain personal circumstances, such as the following:

• You received tips while working in the hotel and restaurant industry. 
• You are required to pay a premium under the Québec prescription drug insurance plan.

It is also to your advantage to file an income tax return

• if, due to source deductions from your salary or wages, you overpaid income tax or contributions over the course of the year and are entitled to a refund; or 
• if you are entitled to tax credits, such as the QST credit or the credit respecting the work premium.

QST credit

The purpose of the QST credit is to refund a portion of the Québec sales tax to low-income individuals who are 19 years of age or older and to low-income families, under certain conditions. This tax credit must be claimed when completing your income tax return. The tax credit is paid out twice a year (in August and December).

Credit respecting the work premium

The work premium is a refundable tax credit. If you have earned income and your parents no longer claim any tax credit with respect to you on their income tax return, you may claim the credit by completing Schedule P when you file your income tax return. The work premium is calculated on the basis of your earned income and family situation. The following is an example of a typical young person:

Vinny

• is single; 
• has no children; and 
• earned more than $2,400 but less than $14,810 during the year.

For 2005, Vinny is entitled to a work premium of up to $511, provided he meets certain requirements. For further information, see the instructions for line 456 in the income tax guide.

The deadline for filing your income tax return

Your income tax return must be filed with Revenu Québec by April 30 each year. Before filing, make sure you have all the documents required (RL slips, receipts, etc.). Persons required to provide RL slips typically have until the last day of February to submit or mail them to you.

How to complete your income tax return

Gather together all the documents you will need to complete your income tax return (RL-1 slip, receipt for tuition fees, supporting documents, etc.).

You may file your return by using Revenu Québec's paper return, commercial software or, under certain conditions, the electronic income tax return available on Revenu Québec's Web site.

Paper income tax return

• Obtain an income tax return (form TP-1-V) and the income tax guide (TP-1.G-V) at any Revenu Québec office or Caisse populaire Desjardins.
• Refer to the guide in completing your return. Information in the guide is organized according to the line numbers of the return.
• Write in ink (preferably blue or black).
• Look on the back of your RL slips for references to the lines of the return.
• Don't forget to sign and date your return and indicate your telephone numbers.
• Be sure to enclose all the required schedules with your return.
• Make sure that all the documents required (RL-slips, forms, supporting documents) are enclosed with your return.
• Use the return envelope provided in the "Forms" booklet.

Revenu Québec will send you an income tax return the year after you file your first return.

For complete information on this subject, see the Income tax return section.

Commercial software

You may complete your income tax return using commercial software. However, if you are filing for the first time, you must print out your return and mail it to Revenu Québec.

For subsequent years, you may file your return by Internet using the NetFile Québec service. Revenu Québec will provide you with an access code that will confirm your identity and allow you to file your return by Internet.

For complete information on this subject, see the NetFile Québec section.

Revenu Québec's electronic income tax return

You may complete your income tax return onscreen and file it electronically with Revenu Québec free of charge. You may use this service if you do not have a spouse or dependant and you have, as applicable:

• employment income
• retirement income 
• investment income
• income from benefits

For complete information on this subject, see the Electronic income tax return section.

What happens after you file your income tax return

Your return is processed by Revenu Québec. Then you will receive a notice of assessment and, where applicable, your income tax refund. One of the objectives Revenu Québec lists in its service statement is to send out a notice of assessment

• within 28 days, if a paper return was filed; or
• within 14 days, if the return was filed electronically.

You may use our Refund Info-Line to obtain information concerning the processing of your income tax return. In addition, you may consult your notice of assessment online by registering for our Electronic notice of assessment service.

Are you required to pay income tax even if you have only a small income?

Many mistakenly believe that students don't pay income tax. Whether or not you pay income tax depends on your annual income, not the fact that you're a student. Furthermore, the dollar amount below which an individual does not pay income tax varies from year to year.

For example, for the year 2005, an individual who earned less than $11,662.50 in the year generally did not pay income tax. However, different amounts applied in certain special cases.

^* Since January 2005, Québec's personal income tax no longer includes a credit for dependent children younger than 18 years of age. Instead, the government has implemented a child assistance measure intended for families with one or more dependent children younger than 18. The child assistance payment is financial assistance from the Régie des rentes du Québec.

For 2005, the maximum amount of child assistance that a family could receive was $2,000 for the first child, $1,000 for the second child, $1,000 for the third child, and $1,500 for each additional child. Single-parent families received an additional amount of up to $700. A $1,452 supplement was granted to families with a disabled child.

As a student, are you entitled to the tax credit for tuition and examination fees?

When you file your income tax return, you may claim a tax credit for tuition and examination fees if they total more than $100 for the year.

You may also carry forward to another year the amount of your tuition fees giving entitlement to the tax credit. It may, in fact, be advantageous to claim this tax credit when your income is higher. The carry forward is not limited. Tuition fees paid any time since January 1, 1997, may give entitlement to the tax credit in the year they are paid or in any subsequent year.

Lulu's income tax return (an example)

Would you like to try to complete Lulu's income tax return? The following will help you:

• her RL-1 slip
• her receipt for tuition fees
• the Québec income tax return
• the work chart for calculating income tax on taxable income
• Schedule M for the tax credit for tuition or examination fees
• Schedule P for the tax credit respecting the work premium
• excerpts from the guide to the income tax return

Lulu's completed Québec income tax return, work chart, Schedule M and Schedule P may be of even more help to you! And that's not all; check out her notice of assessment.

Information about consumption taxes and income tax

Sometimes the world of taxation may seem very complicated. This section should help you to understand it better.

• The history of consumption taxes and income tax
  Discover the history of various taxes and how they have evolved worldwide.
• A few notable dates in history
  Follow the evolution of consumption taxes and income tax from the time they were first introduced in Québec and Canada.
• Sales in Québec: taxable, zero-rated or exempt
  Learn about the fundamentals of this form of taxation in Québec.
• Taxable or not?
  Quebecers pay two different consumption taxes, the GST and the QST. Find out which types of property and services are subject to these taxes.
• Advertising relating to consumption taxes
  See examples of wording that may be used and wording that may not be used.
• The origins of certain consumption taxes
  Find out about consumption taxes other than the GST and the QST.

The history of consumption taxes and income tax

Written by Claire Gourdeau, historian
Translated by C.J. MacDonald

• Introduction: ancient times
• Medieval Europe
• 16th- to 18th-century France
• Dealers in fur and taxation in New France
• Taxation and the seigneurial system
• 1763: the start of British rule
• Confederation
• 20th-century Canada
• Conclusion: the present-day situation
• Glossary
• Bibliography

Introduction: ancient times

Since ancient times, tax has been defined as a mandatory contribution, accepted willingly or unwillingly by the members, known as "taxpayers," that make up a state. Taxes fund the public expenditure of the state, for such things as roads, bridges, railroads, hospitals and schools. In order for citizens to spontaneously accept paying income tax and consumption taxes, they must perceive that the taxes are necessary, fair and reasonable, and help to ensure their well-being and security.

More than 3,000 years ago, the inhabitants of ancient Egypt and Greece paid income tax, consumption taxes and customs duties. These payments were made in various forms, such as goods, days of unpaid labour (corvées) and fines. In ancient India, a tax was levied on livestock and precious stones. In Athens, grain was taxed. The Emperor Augustus (27 B.C.) introduced an excise tax on goods, including slaves, sold in the public markets of Rome. The salt tax, or gabelle, dates back to the start of the Roman period, that is, to the 8th century B.C.

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Medieval Europe

In Europe, during the Medieval period (500 to 1500), days of unpaid labour were required of inhabitants, who had to maintain the lords' castles, the roads and bridges leading to the castles, and the moats surrounding them. However, the masses tolerated this tax, remitted in the form of unpaid work, because these same castles served as fortresses and shelters for them in wartime.

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16th- to 18th-century France

From the 16th to the 18th century, during the reigns of the French kings Henry IV, Louis XIII and Louis XIV, soldiers pillaged the food reserves of the inhabitants of the cities and towns they passed through, to compensate for being so poorly paid. They spread terror, which touched off peasant revolts. These disruptions gradually decreased around 1690, after Louis XIV and Louvois, his Minister, created a system of barracks for quartering the soldiers and levied a tax to pay the troops. After this, the inhabitants felt secure and more willingly accepted the tax. They had not given their consent for the levy, but understood the need for it.

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Dealers in fur and taxation in New France

Upon the arrival of the first European explorers, such as Christopher Columbus in 1492 and Jacques Cartier in 1534, North America was populated by Amerindian nations that had their own "taxation" system. Certain Native groups that served as intermediaries in the fur trade claimed a toll or a tax in kind when they conveyed pelt bales from one place to another. The Algonquins on the Ottawa River, for example, collected a percentage on furs, cornmeal, sunflower oil and medicinal herbs, in exchange for which they allowed travellers to portage in peace around the rapids. In 1636, the Jesuit Paul Le Jeune observed that this system, which he referred to as the "Law of the Land," was strictly observed by all Amerindian nations.

When Samuel de Champlain died in 1635, there were only about a hundred habitants from France living in the colony; among them were the families of Louis Hébert and Abraham Martin. At that time, Québec served primarily as a trading post and warehouse for the fur trade. Every year, merchant ships arrived from France to load their cargoes of beaver, marten and otter pelts collected by the Amerindians and transported by the coureurs de bois. In France, the mercantile companies resold the pelts to hatters and furriers, and had to pay the king a 25% tax (the "droit du quart") on their profits.

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Taxation and the seigneurial system

Around 1637, to encourage French immigrants to settle in the St. Lawrence Valley, then known as "Canada," the king implemented the seigneurial system, by distributing large tracts of land to settlement agents called "seigneurs." These agents had to subdivide the tracts of land into lots or pieces of land, each measuring approximately three arpents of frontage by 30 arpents in depth. These lots were granted at no cost to new arrivals.

In return for this "free" land, a habitant was required to pay certain (admittedly minimal) annual fees, which constituted the income tax and consumption taxes of that era. These included not only the cens, which ranged from two to six sols per arpent, and the rente, which was usually 20 sols per arpent of frontage, but also, in many cases, goods in kind, such as a rooster or bag of wheat. In addition, a habitant wanting to graze farm animals on the common had to pay a few sols. To have wheat ground at the mill, a habitant paid the seigneur every 14th bushel of grain to amortize the cost of the building and pay the miller's salary or wages. Similarly, a habitant was required to give every 14th fish to the seigneur in exchange for permission to fish the waters bordering the habitant's land grant.

Beginning in 1670, tenants under the seigneurial system were required to remit a tax, or tithe, to the Church. The tithe, equal to 1/26th of the wheat crop, was used to maintain the religious buildings and property that the tenants used, such as the chapel, the rectory and the cemetery. Finally, the obligation to provide days of unpaid labour, dating back to the Middle Ages, remained in effect. A habitant was required to provide three to five days of unpaid labour each year to the seigneur for the maintenance of bridges and roads and for the construction of various buildings or structures, such as the manor house, the mill, barns, stables and fences. In return, the habitant had access to the seigneury's services and conveniences, and benefited from the security provided by the seigneury.

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1763: the start of British rule

New France was turned over to England under the Treaty of Paris in 1763. At that time, and more specifically from 1791 on, the primary source of revenue for Lower Canada (Québec) was customs and excise duties on manufactured goods, wine, spirits and tobacco. In Upper Canada (Ontario), which has no seaports, revenue was derived from land (or property) taxes. Around 1835-36, members of the Patriot Party, including Louis-Joseph Papineau, arrived at the House of Assembly of Lower Canada dressed in "homespun" suits. Their intention was to boycott imported English fabric on which the customs tariffs continued to increase.

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Confederation

Beginning with Confederation in 1867, the federal government paid the greater share of the new country's expenditures for railroad construction, roads, canals, bridges and ports. It also claimed for itself the primary source of revenue, that is, customs duties. In addition, it created its own department of inland revenue, thereby becoming the first country in the world to have a separate department for the collection of revenue. The provinces obtained the power to levy direct taxes. Initially, however, they did not use that power, funding their meagre budgets with amounts remitted by the federal government, which were always found to be insufficient.

In the 1880s, faced with an urgent need to bail out its finances, Québec exercised its right of direct taxation, not on inhabitants but on business corporations, such as banks and insurance companies.

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20th-century Canada

Personal income tax and sales tax were introduced in Canada in 1917, as temporary measures, due to the "extraordinary expenditures" related to World War I (1914-18). However, the end of armed conflict did not lead to their expected disappearance, because Canada's war debt totalled $2 billion. The economic crisis of 1929 and World War II (1939-45) did nothing to help Canadian finances recover and the history of "temporary" taxes repeated itself. All Canadians, including Quebecers, have therefore paid federal income tax since 1917.

In Québec, Premier Maurice Duplessis, a staunch defender of provincial autonomy, had the Québec National Assembly enact the Provincial Income Tax Act in 1954, to retain more spending power for the province. Since then, Quebecers have been required to complete two income tax returns, one federal and one provincial.

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Conclusion: the present-day situation

By law, all taxpayers are equal when it comes to taxation. This does not mean that all are subject to the same tax rate, but rather that everyone that owes tax must pay it. The income tax rates are graduated according to taxpayers' different levels of income.

Tax evasion and the underground economy have replaced the salt smugglers (faux-sauniers) and pirate-smugglers of yesteryear. These offences call into question the fairness of direct taxation because the amounts not remitted by tax evaders must be borne by other taxpayers. The government has legal remedies to enforce tax legislation but these differ, fortunately, from the sanctions imposed in 1565 by the Parliament of London. The latter included cutting off the left hand of a person guilty of tax fraud and nailing it to the most visible place in Market Square!

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Glossary

Arpent

Unit of land measurement, that is, unit of length. An arpent equals 192 feet or 58.5 metres.

Bushel

Unit for measuring the volume of grain and other dry things. A bushel equals about 39 litres.

Cens

A nominal tax or land tax that replaced the "taille," which was a direct tax levied on individuals in France. New France settlers were also called "censitaires," derived from this word, which also relates to the word "census." The register in which the seigneur wrote the date and the amount paid each year by the censitaires was known as the "censier."

Common

Part of the seigneury belonging to the seigneur and including land reserved as pasture for animals.

Confederation

Under the British North America Act, 1867, previously separate British colonies became provinces united in a "dominion" called "Canada." Québec, Ontario, Nova Scotia and New Brunswick were Canada's first four provinces.

Excise

From the Latin word "accisia," means "tax." Originally, sales tax on wine, spirits and tobacco, which covered many Canadian and imported commodities.

Land

That which relates to land (property) and, by extension, to buildings. The land (or property) tax is an annual tax on land and property.

Portage

Carry a boat when navigation is impossible. Portage is required when travellers arrive at a watercourse that is impassable due to rapids, falls or dried-up areas, and bypass the watercourse on foot, through the woods, carrying all their baggage and their canoe on their backs.

Rente

Duty, royalty or tax paid in cash and, in many cases, with goods in kind.

Salt smugglers (faux-sauniers)

Individuals who smuggled salt to avoid paying the salt tax, or gabelle. As punishment, an estimated 500 of them were deported from France to New France in the 18th century.

Salt tax (gabelle)

The Latin noun "gabelum" means "salt tax." Before heading out to sea, every fishing boat had to load an enormous quantity of salt, since this condiment was the only means of preserving fish.

Seigneur

Any individual, whether nobleman or commoner, or any religious community to which the king granted a seigneury and which, in return, was required to pay the cost of bringing in settlers to clear the land for farming.

Sols

French money in the colony.

Tariff

Amount of duties and taxes payable. This word comes from the name of a Spanish fortress, Tarifa, from which the Moors set out to exact tribute from ships transporting goods through the Straits of Gibraltar.

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Bibliography

Ardant, Gabriel. Histoire de l'impôt. 2 vols. Paris: Fayard, 1971 & 1973.

Dessert, Daniel. Argent, pouvoir et société au Grand Siècle. Paris: Éditions Fayard, 1984.

Linteau, Paul-André, et al. Histoire du Québec contemporain: Le Québec depuis 1930. Vol. II. Montréal: Les Éditions du Boréal, 1989.

Maitrot, Jean-Claude. "Impôt." Encyclopaedia Universalis. 2002.

Mathieu, Jacques. La Nouvelle-France: Les Français en Amérique du Nord, XVI^e-XVIII^e siècle. Québec: Les Presses de l'Université Laval, 2001.

McIntosh, Dave. The Collectors: A History of Canadian Customs and Excise / Les receveurs: Histoire des Douanes et de l'Accise au Canada. Toronto: NC Press and Ministry of Supply and Services Canada, 1984.

Milton Moore, Albert, et al. The Financing of Canadian Federation: The First Hundred Years / Le financement de la fédération canadienne: Le premier siècle. 2nd ed. Canadian Tax Paper No. 43. Toronto: Canadian Tax Foundation, 1966.

Neurisse, André. Histoire de l'Impôt. Que sais-je? No. 651. Paris: Presses Universitaires de France, 1978.

Provencher, Jean. Chronologie du Québec, 1534-2000. Montréal: Les Éditions du Boréal, 2000.

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A few notable dates in history

"The history of taxation is interwoven with not only general history and, admittedly, economic history, but also political history, to an even greater extent than one might think. Few institutions have more profoundly affected the lives of people, their relations and their progress." [translation]

Gabriel Ardant
Histoire de l'impôt. Vol. 1. Paris: Fayard, 1971.

Around 1880, Québec introduced a taxation system to levy certain direct taxes (for example, tax on capital) on business corporations, such as banks and insurance companies. Until 1917, Québec received all of that revenue. The federal government basically derived its tax revenue from excise taxes (taxes on certain consumer goods) and customs duties.

In 1917, Canadians were asked to contribute to the war effort. The federal government introduced a direct tax on personal income and corporate profits. Up to that point, only the provinces had occupied this field of taxation. Although introduced as a temporary measure, the income tax has become a permanent source of revenue for the federal government. Québec taxpayers have therefore paid federal income tax since 1917.

In 1932, Québec began taxing the income of corporations. From 1941 to 1946, in order to help the war effort, the provinces withdrew from that field of taxation, leaving it solely to the federal government.

Then, in 1947, Ontario and Québec reclaimed their power to levy corporation income tax and, in return, obtained a reduction in the federal income tax.

In 1954, the Québec government, headed by Maurice Duplessis, announced its intention to tax personal income. As a result, the Government of Canada, headed by Louis Saint-Laurent, reduced federal income tax by 10%, which corresponded to the provincial tax rate. The Québec income tax return was introduced once the Provincial Income Tax Act came into force in 1954.

Today, three provinces administer their income tax–Québec, which administers personal and corporation income tax, and Ontario and Alberta, which administer corporation income tax.

You may read more about this subject in The history of consumption taxes and income tax, written by a historian.

Sales in Québec: taxable, zero-rated or exempt

In Québec, goods and services tax (GST) and Québec sales tax (QST) apply to most purchases or leases of property or services. GST is calculated at the rate of 6% on the selling price. QST is calculated at the rate of 7.5% on the price including GST.

There are three types of sales: taxable, zero-rated and exempt.

Taxable sale

Any sale to which a consumption tax applies is a taxable sale. Most sales are taxable. Generally speaking, GST and QST apply when a purchase is made.

Zero-rated sale

A sale is referred to as zero-rated because it is taxable at the rate of 0%. GST and QST are not payable when a purchase is made of property or a service that is zero-rated.

The following are examples of zero-rated property and services:

• basic groceries
• prescription drugs
• certain medical devices, such as crutches and eyeglasses with corrective lenses

Exempt sale

An exempt sale is a sale that is not taxable. GST and QST are not payable when a purchase is made of property or a service that is exempt.

The following are examples of exempt property and services:

• most health care services (such as dental services, provided that they are not performed for cosmetic purposes), educational services and legal aid services
• the lease of a residential unit, such as a room for a student or an apartment, for a minimum of one month
• municipal recreational services intended for children 14 years of age or younger
• most child-care services

Taxable or not?

By applying certain general principles, it is possible to distinguish between taxable and zero-rated purchases.

The following property is typically taxable, and the consumer pays the taxes at the time of purchase:

• clothing and shoes
• cleaning supplies
• tools, electric appliances and household appliances
• soft drinks, confections and chips

On the other hand, the following property is typically zero-rated, so that the consumer pays neither GST nor QST at the time of purchase:

• basic groceries, such as unflavoured dairy products, cheese, butter, cream, sour cream, yogurt, meat, fish, bread, cereals, fruit, vegetables and eggs
• prescription drugs, purchased at a drug store

The tables that follow indicate in greater detail whether consumption taxes apply to certain property and services.

Advertising relating to consumption taxes

In advertising, merchants must avoid giving consumers the impression that consumption taxes do not apply to property that is in fact taxable, or that it is possible not to pay the taxes on taxable property.

The following are examples of wording that may be used and wording that may not be used.

Allowed:

• We pay the taxes.
• Taxes included
• Taxes not included

Prohibited:

• Tax holiday
• No GST or QST
• Tax free

The origins of certain consumption taxes

In Québec, consumers pay GST and QST on most of the goods and services they purchase. Are you aware that other consumption taxes exist?

Tax on lodging

In certain tourism regions in Québec, an amount of money, known as the "tax on lodging," is collected each time an accommodation unit (bed, apartment, cottage, room or house) is rented for more than six hours a day at a prescribed establishment (hotel, tourist home, bed and breakfast establishment, hospitality village or outfitting operation).

This tax applies in the tourism regions in Québec which, through their tourism association, have requested that it apply. In other words, tourism regions are entitled, but not required, to apply the tax on lodging. Those that elect to apply the tax may choose to collect $2 per overnight stay or 3% of the rental price (which does not include the value of any other services provided with the lodging). The tax is not collected on:

• campsites
• accommodation units in educational institutions, youth hostels or resorts
• accommodation units rented for less than six hours or for more than 31 consecutive days

The tax on lodging finances the Fond de partenariat touristique (tourism partnership fund), set up to support and promote the Québec tourism industry. This fund makes it easier for tourism associations to run advertising campaigns throughout Québec and elsewhere to promote their attractions.

Specific duty on new tires

Before 1996, our old tires were sent to one of the scrap-tire storage sites in Québec for disposal. These facilities posed a real danger. If a fire broke out, contamination of water, air and land might occur, not to mention the significant health risks and the staggering land-decontamination costs.

Therefore, since October 1, 1999, the Québec government has imposed an environmental duty of $3 per new tire on the purchase of new tires and on the retail sale or long-term leasing (for 12 months or more) of a road vehicle equipped with new tires. This duty finances the Programme québécois de gestion intégrée des pneus hors d'usage (Québec program for the integrated management of scrap tires) and the Programme de vidage des lieux d'entreposage de pneus hors d'usage au Québec (program for the emptying of scrap-tire storage sites in Québec).

In Québec, recycled tires are used to make many products, such as:

• rubberized asphalt
• remoulded tires
• blasting mats
• stable mats
• doormats
• splash guards
• flooring material
• industrial, commercial and residential tiles
• bases for road signs
• acoustic panels
• safe surfaces for sports or recreational facilities

Activities for 10- to 12-year-olds

If you're in this age group, here are two activities that will help you better understand the world of consumption taxes and income tax. Read the texts and answer the questions provided to test your comprehension.

• Luna and the leaden hooves
• Thoughts on the way to school

Luna and the leaden hooves

A scorching wind swept across the planet Luna, melting the leaden hooves of almost every creature. "How dreadful!" "What a catastrophe!" "What can we do?" The situation was all the more serious as most Lunians were soon floating in the sky like helium balloons that had been cut loose and would at any moment be blown away into interstellar space.

"It's Eola the Witch!" cried Great Orion. "She must be peeved with us again!"

Great Orion, Supreme Ruler of Luna and of all Lunians, was not amused. "Everyone must have new leaden hooves at once! Our people's survival is at stake!"

Silver Star, the People's Treasurer, had already done the math. "Great Orion," she said, "the cost of replacing the leaden hooves will be very high. We must levy a tax immediately."

The Supreme Ruler then called out to all the floating Lunians, asking them to drift toward the Sea of Clouds to hear him speak. Everyone agreed with the idea of a tax. Everyone, that is, except Cosmic Heel, the cobbler-blacksmith. Cosmic Heel was one of the very few whose hooves had not melted in the burning wind. "Put yourself in my shoes," Cosmic Heel protested. "My hooves are fine. Why should I pay for the hooves of others? I won't get anything for my money!"

The Supreme Ruler answered: "Cosmic Heel, was it not thanks to the taxes paid by all Lunians that you received care at the hospital when you broke your ankle? And was it not thanks to everyone's contribution that you were able to learn your trade at the High School of Luna? And what have you to say about the FST? Without the family security tax, your wife Crescent-Moon could never have taken maternity leave to care for tiny Crinkle-Dipper, your newborn child. Think, Cosmic Heel! Yesterday, you needed the help of your fellow-creatures. Today, they need your help. Is this not a question of justice? And solidarity?"

Cosmic Heel did indeed think. And his thoughts told him that the Supreme Ruler was right. "Great Orion," he said, "I have no wish to be a deadbeat Lunian! Here is my contribution."

This, then, is the story of how the creatures of Luna came down from the sky and escaped the horrible fate of weightlessness. Of how Cosmic Heel came to invent a new type of hoof that neither sun, nor wind, nor microwave could destroy. And of how all the Lunians recovered their peace of mind.

All the Lunians, that is, except the Supreme Ruler. Having been burned once, Great Orion forever after felt his toes tingle when the warm winds blew.

Questions for students

Now that you have read the story, perhaps you can answer the following questions.

Questionnaire for teachers

The following questions can be used to guide class discussion.

• In your opinion, were the Lunians in a desperate situation? 
• Was Silver Star right to suggest that the Supreme Ruler should levy a new tax? 
• What do you think of Cosmic Heel's protests? Was he right? 
• Great Orion gave several reasons to convince Cosmic Heel that he should pay his share. Do you think the reasons were good? 
• Could the Supreme Ruler of Luna have saved his people without creating a new tax? 
• Explain what taxes are (in your own words). 
• On planet Earth, you have direct access to services that the government provides in exchange for taxes. Name as many of these services as you can!
  

Thoughts on the way to school

Megan dashed out of the house as fast as she could. There'd been a power failure and her parents' alarm clock hadn't gone off! Gasping, she ran to the corner of the street, barely making it in time for the waiting school bus. As soon as she sat down, Megan took a hairbrush out of her pocket and, lickety-split, had her hair half-tamed in no time.

Gazing sleepily out the window, she was suddenly startled by the screaming of fire trucks, police cars and ambulances as they hurtled past. She sat back, nursing her broken arm in its cast. Oh, that awful fall the other day. She had slipped and fallen right in the middle of the municipal skating rink, red-faced, with all the other skaters stopping to stare.

Megan looked down at the cast (it had taken forever to apply the miles of wet tape at the hospital). She smiled at the colourful messages her friends had written. She especially loved the note from her best friend: "Megan and Kim–buddies for life!" and wondered if the doctor would allow her to keep the cast as a souvenir.

As the bus passed the pharmacy, she remembered Grandma's birthday card. She would have to go to the postal outlet after school to mail it. The bus pulled up in front of Megan's school. "Bye, kids! See you later!" the driver called, as his passengers rushed off for class.

Activity for students

Indicate which level of government is responsible for providing the goods and services that Megan can use.

Joining the work force

You have two options when you decide to join the work force. The most popular option is to become an employee, that is, to work for an employer who pays you a salary or wages. Or you may decide to start a small business and be self-employed.

In either case, you should find out as much information as possible. Feel free to surf the information in this section for a few minutes. It's a good start!

• You have a boss!
  You're working for someone in return for remuneration; you're an employee.
• You are your own boss!
  You've started your own business; you're self-employed.

You have a boss!

Are you a student working part time during the school year? Are you a student with a full-time summer job? Have you finished school and now have a job?

When you're part of the work force, you and the person you work for have certain responsibilities.

• Your employer's responsibility
  This section describes your employer's obligations toward you.
• Your responsibility as an employee
  This section describes your obligations.

If you don't find answers to some of your questions, check out the rest of Revenu Québec's Web site. It's chock-full of useful information and publications.

You may also contact an office of Revenu Québec; the employees there will be happy to answer your questions.

Your employer's responsibility

For things to go like clockwork, your employer must assume a number of responsibilities that directly involve you.

First, when you are hired, your employer must have you complete the Source Deductions Return (form TP-1015.3-V). From the information you provide on this form, your employer will be able to determine the amounts to be withheld from your pay for income tax and various contributions.

Next, your employer must:

• pay you a salary or wages (otherwise, you'd quit!)
• produce a pay sheet so that you can understand and verify the computation of your wages. The sheet contains information such as:
  • the date of the payment and the work period corresponding to the payment
  • your hourly rate
  • your gross wages (before source deductions)
  • your net wages (after source deductions)
  • the nature and the amount of the source deductions
• remit to Revenu Québec (or to the Canada Revenue Agency, as applicable) the source deductions made from your pay for:
  • Québec Pension Plan contributions
  • Québec parental insurance plan premiums
  • Québec and federal income tax
  • employment insurance premiums (so-called "unemployment insurance" premiums)

  Sometimes there are additional source deductions, for example, if you have a group insurance plan, are unionized or are a member of a social club. However, you must consent to such deductions in writing.

• submit to you each year an RL-1 slip for filing your Québec income tax return and a T4 slip for filing your federal income tax return

^* This is just an example. The information may vary depending on the employer.

If you would like to understand more about how your wages are calculated, you can create a sample pay sheet, adapted to your situation, by using a tool developed by the Commission des normes du travail.

Your responsibility as an employee

When you receive your first pay sheet, you will note that certain amounts (contributions to the Québec Pension Plan, income tax, etc.) have been withheld from your wages. These are known as source deductions. It's up to your employer, not you, to make these deductions. But you should be aware that they exist.

Your duty is to prepare (or have prepared) and file an income tax return by April 30 each year to determine whether you have tax payable or can receive a refund. In completing your return, you may claim the tax credits to which you are entitled, such as:

• the QST credit (and the GST credit, on your federal income tax return)
• the credit for tuition fees
• the work premium (line 456 in the income tax guide)

If you earn tips, you must report all of them to your employer at the end of each pay period. Note that your duty is to report them, not to remit them to your employer. Your tips belong to you. You should simply give your employer a written statement of the tips you earned in the pay period. For further information on this subject, see the publication Tax Measures Respecting Tips (IN-250-V).

You are your own boss!

Upon joining the work force, many follow an employer's orders, in return for remuneration. That makes them "employees."

However, maybe you would rather pursue a dream or a project you have had in mind for some time. If that's the case, you have another option–starting your own business!

If you choose this path, there are three possibilities–a sole proprietorship, a partnership or a corporation. Your obligations toward Revenu Québec and the extent of your liability for business debts will vary, depending on which type of business you choose.

• Starting a sole proprietorship
  It is very likely that you will create a sole proprietorship since it has the most simple structure–one owner, you!
• Starting a partnership
  However, if you wish to start a business with one or more other persons, you may create a partnership instead. A partnership, unlike a sole proprietorship, allows you to have partners.

It is not very likely that you will start a corporation (also known as a "legal person" or "company") because it is very complex. Nevertheless, if you believe that this type of business suits you, visit the Starting a business section.

You should find out about the various assistance programs available for business start-ups. Also, see the publication New Businesses and Taxation (IN-307-V).

Starting a sole proprietorship

If you have decided to be the sole proprietor of a business that you are starting, this page is intended for you. It tells the story of Michael, a young man who started a small business four years ago. His experience will help you get started.

Mix business with pleasure

It all began when Michael was a CEGEP student. He wanted to earn some money, but he could not find a job that met his aspirations. Michael loved to draw and planned to study administration. He wanted to find a student job that would enable him to both pursue his passion and gain work experience that would prepare him for his future career. Thus, he decided to start a small business designing T-shirts, called Mike's Designer Tees. He would design the shirts and manage the business.

Once he decided to be his own boss, Michael obtained enough information to get started by consulting documents available on several Web sites, including Revenu Québec's (in the Starting a business section).

First, he had to choose the type of business he wanted to start. He chose the most simple of all, a sole proprietorship. Michael is the sole proprietor. He alone assumes the risks and the liability for expenses, but he also reaps all the profits.

Next, Michael took care of the registration of his business. Then he elected to register the business for the GST and the QST with Revenu Québec, even though he is considered a small supplier. Having done so, he can claim credits and refunds for the GST and QST that he is required to pay as part of his business expenses. These credits and refunds are known in the jargon as "input tax credits" (GST) and "input tax refunds" (QST).

Having operated his business for some years now, Michael is well aware of his routine obligations, such as remitting to Revenu Québec the consumption taxes he collects, preparing his financial statements and filing his income tax return. In addition, managing the business includes record keeping. These records and supporting documents, such as invoices, receipts, cash register tapes and monthly statements of credit card transactions, must be kept, in paper or electronic form, for at least six years after the end of the last taxation year to which they relate.

Michael has elected to keep his records and supporting documents in paper form. He sorts the documents he receives or produces, and files them in a folder. His best advice–be organized on a daily basis!

Starting a partnership

If you and one or more other persons have decided to start a small business together, this page is a good source of information. It tells the story of four young women who have done just that.

Follow trade practices

Lily, Sarah, Meg and Christine are good friends who all majored in different subjects. All of them artists at heart, they have decided to start a business, called What a Dish, which produces hand-painted dinnerware. Lily is the Web master and handles business relations, Sarah creates the designs, Meg reproduces Sarah's designs on the dinnerware, and Christine is the artistic director.

To get off on the right foot, the young women contacted their local employment centre, which provided a lot of assistance. That's where they learned that a lot of information about starting a business is available on Revenu Québec's Web site.

After reading about all the possible types of businesses, they chose to form a general partnership. Each young woman brought her own expertise and contributed an equal financial share to the partnership. They are still just in the first stages of this new project. Even so, they have already taken care of the registration of their business and some of their creations are on sale. They expect to remain a small supplier for the first few years, because their sales should total less than $30,000. However, they hope to be very successful and to increase their sales to the point where they will be required to collect GST and QST. At that time, they will be required to register the business for the GST and the QST with Revenu Québec.

For the time being, their dealings with Revenu Québec are limited to filing their financial statements and income tax return. It is important for them to keep records along with supporting documents, such as invoices, receipts, cash register tapes and monthly statements of credit card transactions. By referring to the documentation produced by Revenu Québec, they learned that these documents must be kept, in paper or electronic form, for at least six years after the end of the last taxation year to which they relate.

Revenu Québec online

Do you realize that you have access to much more than just information on Revenu Québec's Web site? You can use a variety of electronic services to file an income tax return, change your address, order a Revenu Québec publication and more. Some examples follow.

Dan has completed a paper income tax return every year. This time, he has decided to use commercial software. He can then file the return with Revenu Québec by Internet using the NetFile Québec service. Subsequently, he will be able to follow the processing of his income tax return online, by consulting the Refund Info-Line.

Dan has also opted to register for Clic Revenu electronic services for individuals and will therefore be able to consult his notice of assessment online. His registration for Clic Revenu also gives him access to the online services of the Régie des rentes du Québec.

Larry is moving? He can easily notify Revenu Québec of his change of address  by Internet. At the same time, he can access the Service québécois de changement d'adresse and change his address in the files of other bodies and departments of the Québec government, such as the Directeur général des élections du Québec, the Ministère de l'Emploi et de la Solidarité sociale, the Régie de l'assurance maladie du Québec, the Régie des rentes du Québec and the Société de l'assurance automobile du Québec.

Margaret wants to get a copy of the brochure entitled New Businesses and Taxation (IN-307-V), published by Revenu Québec. She places an order by Internet on Revenu Québec's Web site. It's as easy as pie! She receives the brochure in the mail a few days later. Margaret decides to create her own small business. She registers her business for the QST and GST by Internet, using the service Registering a new business for Revenu Québec files.

Then, by registering for the Clic Revenu electronic services offered to businesses and individuals in business, Margaret knows that she will be able to easily and securely consult her tax file and conduct transactions with Revenu Québec at her convenience. Moreover, she has consulted the demo to find out about the Clic Revenu electronic services available to businesses and individuals in business.

Cynthia, now retired, is required to pay her income tax to Revenu Québec in quarterly instalments. Rather than completing the paper forms for instalment payments and mailing them along with her cheques, she opts for electronic payment via financial institutions. She finds it easier and more efficient.

Statistics

Expenditure, revenue, numbers and percentages–it's not always easy to find accurate information! This section provides up-to-date statistics concerning:

• Revenu Québec
• Québec government

Revenu Québec

Client groups

Revenu Québec deals with:

• 5.8 million taxpayers (3.9 million paper income tax returns and 1.9 million electronic returns)
• 785,000 businesses
• 250,000 people affected by the support-payment collection program
• 2.1 million people who benefit from socio-fiscal programs, such as the shelter allowance program, the property tax refund and the refundable tax credit for the Québec sales tax (QST)

Tax revenue and non-budgetary revenue

The revenue collected by Revenu Québec includes tax revenue and non-budgetary revenue.

Personal and corporation income tax represents 40.3% of all of Québec's tax revenue. Consumption taxes, excluding GST, represent 25.4%. Amounts collected for duties and permits constitute the rest of the tax revenue.

Non-budgetary revenue includes amounts collected for other departments or bodies or for the Government. of Canada. Revenue collected for the Canada Revenue Agency (in the context of the administration of the GST), the Régie des rentes du Québec and the health services fund represents 94.2% of the non-budgetary revenue.

For complete information on this subject, see Revenu Québec's Rapport annuel de gestion (available in French only).

Québec government

Forecast of government revenue and expenditure

For 2006-2007, the Québec government has forecast budgetary revenue of $57.9 billion.

For 2006-2007, the Québec government has forecast expenditure of $58.1 billion.

Comparison of government revenue and expenditure

You can compare the data for 1995-96, 2000-01 and 2004-05. Bar graphs depict the Québec government's major revenue sources and its expenditure per mandate.

Useful publications

Informational documents

ADM-500
Rapport annuel de gestion (in French only)

IN-112-V
Tax Credit for Tuition or Examination Fees

IN-118-V
Employment Expenses

IN-203-V
General Information Concerning the QST and the GST/HST

IN-216-V
The QST and the GST/HST: How They Apply to Foods and Beverages

IN-245-V
Work Premium

IN-251-V
Questions About Tips: Employees

IN-252-V
Questions About Tips: Employers

IN-255-V
Flea Markets

IN-315-V
Service Statement: Serving the Public and Businesses

Forms

TP-1-V and TP-1.G-V
Income Tax Return and Guide

TP-1015.3-V
Source Deductions Return

TP-1019.4-V
Register and Statement of Tips

Educational material

Taxes in Québec: Why We Pay Them and How They Are Used

Revenu Québec publishes this educational material in order to introduce young people to taxation in Québec and help them understand the basic concepts behind consumption and income taxes, in a perspective of social justice and fairness.

The program material is published in two versions:

• one for integration into the curriculum of the third cycle of elementary school (grades 5 and 6)
• one for integration into the secondary V Economics course

The material is available in English and French. Each kit includes a teacher's presentation and activity guide, and a workbook for each student. Students may also participate in a contest activity.

A new edition is published each year and distributed in February, free of charge, to all teachers in the relevant grade levels. This material is not available on the Internet.