Ottawa, July 19, 2005
Archived - Amendments to be Recommended to the Income Tax Act With Respect to the Québec Parental Insurance Plan
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The Department of Finance today indicated its intention to recommend amendments to the Income Tax Act to provide for the tax treatment of benefits and premiums under the Québec Parental Insurance Plan (QPIP), which is expected to come into force on January 1, 2006.
The QPIP will replace maternity and parental benefits currently provided under the employment insurance (EI) program for eligible Quebec residents. EI premiums for employers and employees in Quebec will be reduced to reflect the fact that Quebec residents will no longer receive maternity and parental benefits under EI. QPIP premiums will be collected directly by the Province of Quebec.
The proposed amendments would ensure that the federal tax treatment of QPIP premiums and benefits is consistent with the federal tax treatment of EI premiums and benefits. Specifically:
- Benefits paid under the QPIP would be included in the calculation of an individual's income.
- Employees would be eligible for a federal non-refundable tax credit for QPIP premiums paid, to be provided at the same rate as the federal non-refundable tax credit for EI premiums.
- Employers would be able to deduct premiums paid under the plan in the calculation of their income.
- The self-employed would be eligible for a non-refundable tax credit for the employee's share of QPIP premiums and a tax deduction for the employer's share, where the calculation of these shares is determined by the Province of Quebec.
These amendments would apply to benefits received and premiums paid upon the implementation of the QPIP. It is intended that legislation to implement the proposed amendments be introduced at the earliest opportunity.
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