SELF-EMPLOYED WORKERS TAX REMINDER

Source and warning

This content is an independent and unofficial rewording of the Revenu Quebec publication IN-300(2018-03).pdf . It is provided for information purposes only and does not constitute legal, tax, or professional advice. For any decision, refer to the official document.

Who this document is for

This document is primarily intended for people who carry on activities as self-employed workers in Quebec, including those who operate a sole proprietorship, who practise a profession or trade on their own account, or who earn income from commercial, farming, fishing, or commission activities. It also concerns self-employed workers who:

• must determine whether they have registration obligations with Revenu Quebec;
• may have to collect GST and QST;
• have employees and must make source deductions;
• must report business or professional income;
• must pay social contributions related to their business income;
• may be required to make instalment payments;
• must keep records and supporting documents. The document specifies that the masculine is used only to simplify reading and refers equally to women and men.

Context and purpose

This publication is a tax reminder intended for self-employed workers. It brings together the main tax obligations that may apply to a person working on their own account in Quebec.

Full and detailed information

Verifying self-employed status

Before applying the tax rules specific to self-employment, a person must make sure that their situation actually corresponds to self-employed status. The document refers to the publication Self-employed worker or employee? (IN-301) to verify whether the criteria for distinguishing a self-employed worker from an employee are met. This distinction is important because tax obligations differ depending on whether a person is considered an employee or a self-employed worker.

Registration for Revenu Quebec files

A self-employed worker may have to register for certain files administered by Revenu Quebec. This obligation depends on their situation and activities. The files mentioned are:

• the QST file;
• the GST file;
• the source deductions file.

Registration is not automatically required in all cases. The self-employed worker must first determine whether it is necessary based on their situation. To determine whether registration is required, the document refers to the publication Registration for Revenu Quebec files (IN-202).

Permits, decals, or registration certificates depending on the sector of activity

Depending on the activities carried out, a self-employed worker may also have to obtain a permit, a decal, or a registration certificate. The document gives examples of sectors or activities where such an obligation may apply:

• the sale of insurance policies when the premiums are subject to the insurance premiums tax;
• the sale of wine;
• the sale of beer;
• the sale of cider;
• the sale of other alcoholic beverages;
• the sale of tobacco. For the sale of tobacco, the document refers to the publication The Main Provisions of the Tobacco Tax Act (IN-219).

Registration methods mentioned

To register for Revenu Quebec files, the document indicates that the self-employed worker may:

• use Revenu Quebec online services;
• contact customer service;
• complete and submit the form Application for Registration (LM-1). For more information on registration for files or starting a business, the document refers to the publication Starting a Business and Taxation (IN-307).

GST and QST

Obligation to collect the taxes

When a self-employed worker is registered for the GST and QST files, or when they are required to be, they must collect these taxes.

For each reporting period assigned to them, they must:

• file a tax return;
• remit the GST collected;
• remit the QST collected. The document mentions that tax payments can be made using Revenu Quebec online services.

Possibility of a refund

A refund may be possible when the taxes collected, or the taxes that should have been collected, are less than the taxes paid on the goods and services acquired to make taxable sales. In other words, if the self-employed worker paid more GST and QST on eligible business purchases than they collected or had to collect on their taxable sales, they may likely be entitled to a refund.

Frequency of tax returns

The filing frequency for GST and QST returns is established when registering for the tax files. The assigned reporting period depends on the expected annual total of taxable sales made in Canada.

Small supplier and the $30,000 threshold

The document specifies that a person is considered a small supplier if they expect the total of their taxable sales, including zero-rated sales, not to exceed:

• $30,000 for a given calendar quarter;
• $30,000 for all four calendar quarters preceding that quarter. In that case, the self-employed worker does not have to collect GST or QST. For more information on GST, QST, and HST, the document refers to the publication General Information on QST and GST/HST (IN-203).

Source deductions and employer contributions

Obligations when a self-employed worker has employees

A self-employed worker who employs people must make certain deductions from the amounts paid to them. They must deduct:

• Quebec income tax;
• contributions to the Quebec Pension Plan, or QPP;
• contributions to the Quebec Parental Insurance Plan, or QPIP. These deductions apply to amounts paid to employees and, as a general rule, to the value of other benefits granted to them.

Amounts to remit periodically

The self-employed employer must periodically remit to Revenu Quebec:

• the Quebec income tax deducted;
• the QPP contributions deducted;
• the QPIP contributions deducted;
• their own employer contributions to the QPP;
• their own employer contributions to the QPIP;
• their contributions to the Health Services Fund, or HSF.

Annual contributions related to the employer

In addition to periodic remittances, the self-employed employer must pay once per year:

• a contribution related to labour standards;
• where applicable, a contribution to the Workforce Skills Development and Recognition Fund.

Personal contributions of the self-employed worker

As a self-employed worker, the person must also pay contributions calculated on the business income they earn from the business they operate. These contributions may relate to:

• the QPP;
• the QPIP;
• the HSF.

These personal contributions must not be confused with the amounts remitted for employees. They are paid separately:

• either when filing the income tax return;
• or through instalment payments, depending on the situation. For more information on these subjects, the document refers to the following publications:
• Reminder for Start-up Businesses - Source Deductions and Employer Contributions (IN-111);
• Employer Guide - Source Deductions and Contributions (TP-1015.G).

Personal income tax return

Income to report

A self-employed worker must include in their income tax return the relevant income related to their self-employed activities. The income mentioned is:

• business income;
• professional income;
• income from farming;
• income from fishing;
• commissions received.

General definition of business income

Business income comes from an activity carried on for the purpose of making a profit or with a reasonable expectation of making a profit. The document indicates that this type of income may notably result from:

• the practice of a liberal profession;
• the practice of a trade;
• the operation of a retail or wholesale business;
• the operation of a manufacturing business;
• the operation of any other type of business;
• carrying out a project involving risk;
• carrying on an activity of a commercial nature.

Deduction of expenses

As a general rule, a self-employed worker may deduct in their income tax return the reasonable expenses they incurred to earn business or professional income. However, the deduction is limited to the part of the expenses that relates to business. Personal expenses are not deductible.

Documents to attach to the return

The self-employed worker must attach one of the following to their income tax return:

• their financial statements;
• or the form Business or Professional Income and Expenses (TP-80). If the person operates more than one business, they must file separate documents for each business.

Deadline for filing the income tax return

The usual deadline for filing an individual's income tax return is April 30. However, when a person operates a business, the filing deadline is June 15. The spouse of the person operating a business may also benefit from this extended deadline.

Interest on the unpaid balance

Even if the return may be filed on June 15 in the case of a person operating a business, interest on any unpaid tax balance begins to accrue as of May 1. This rule applies whether the filing deadline is April 30 or June 15. For more information on the rules applicable to an individual operating a sole proprietorship, the document refers to the following publications:

• Guide to the Income Tax Return (TP-1.G);
• Business or Professional Income (IN-155).

Instalment payments

A self-employed worker may be required to make instalment payments to pay certain amounts. Instalments may be used to pay:

• income tax;
• QPP contributions;
• HSF contributions;
• contributions to the Quebec drug insurance plan;
• QPIP contributions.

Conditions triggering the obligation to make instalment payments

The payment of instalments may be required when both of the following conditions are met:

• the estimated net tax payable for the year exceeds $1,800;
• the net tax payable for one of the two previous years exceeded $1,800. Both conditions must be considered together.

Instalment deadlines

When instalments are required, they must be paid no later than the 15th day of the following months:

• March;
• June;
• September;
• December. Each payment corresponds to one quarter of the total amount calculated for the year. For more information, the document refers to the publication Tax Payments by Instalments (IN-105).

Records and supporting documents

A person who operates a business in Quebec must keep records. These records must contain enough information to allow verification of:

• business income;
• business expenses;
• amounts payable.

Retention period

As a general rule, records and supporting documents must be kept for at least six years after the end of the last taxation year to which they relate. This obligation also applies to records and supporting documents kept in electronic format.

My Account online services

The document mentions two online service spaces.

My Account for citizens

The My Account for citizens space provides access to several services allowing tax obligations related to the income tax return to be completed online.

My Account for businesses

The My Account for businesses space provides access to several services allowing tax obligations related to the following to be completed online:

• tax returns;
• source deduction returns;
• employer contribution returns.

Publications, guides, and forms mentioned

The document mentions the following publications, guides, and forms:

Type	Title	Number
Publication	Self-employed worker or employee?	IN-301
Publication	Registration for Revenu Quebec files	IN-202
Form	Application for Registration	LM-1
Publication	Starting a Business and Taxation	IN-307
Publication	The Main Provisions of the Tobacco Tax Act	IN-219
Publication	General Information on QST and GST/HST	IN-203
Publication	Reminder for Start-up Businesses - Source Deductions and Employer Contributions	IN-111
Guide	Employer Guide - Source Deductions and Contributions	TP-1015.G
Form	Business or Professional Income and Expenses	TP-80

| Guide | Guide to the Income Tax Return | TP-1.G | | Guide | Business or Professional Income | IN-155 | | Publication | Tax Payments by Instalments | IN-105 | | Publication in English | Self-Employment and Taxation | IN-300-V |

Special cases and exceptions

Small supplier

A self-employed worker who expects their taxable sales, including zero-rated sales, not to exceed $30,000 for a given calendar quarter or for all four preceding calendar quarters is considered a small supplier. In this situation, they do not have to collect GST or QST.

Self-employed worker with employees

When a self-employed worker has employees, their tax obligations are not limited to their own business income. They must also act as an employer for source deductions and applicable contributions. This includes deductions from wages and, generally, from the value of benefits granted to employees.

Personal contributions separate from remittances for employees

The self-employed worker's contributions to the QPP, QPIP, and HSF calculated on their business income are separate from the amounts they remit as an employer for their employees. They must be paid separately, either when filing the income tax return, or by instalment payments when required.

Extended filing deadline to June 15

An individual operating a business may file their income tax return no later than June 15 instead of April 30. Their spouse may also benefit from this deadline. However, this extension does not postpone the start of interest on an unpaid balance: interest begins to accrue as of May 1.

Multiple businesses

When a self-employed worker operates several businesses, they must prepare separate financial information for each one. This requirement applies whether they attach financial statements or use the form TP-80.

Activities requiring a permit, decal, or certificate

Certain activities may create additional authorization or registration requirements. The examples mentioned in the document concern notably:

• insurance policies whose premiums are subject to the insurance premiums tax;
• alcoholic beverages, including wine, beer, and cider;
• tobacco.

Steps and procedures

1. Verify your status

The first step is to confirm that the situation truly corresponds to that of a self-employed worker. The document directs readers to the publication Self-employed worker or employee? (IN-301) for this verification.

2. Determine whether registration for files is necessary

Before registering, the self-employed worker must determine whether registration is required. The files to consider are:

• QST;
• GST;
• source deductions. The publication Registration for Revenu Quebec files (IN-202) is mentioned to help make this verification.

3. Register, if required

When registration is necessary, the methods mentioned are:

• use the online services;
• contact customer service;
• complete and submit the form Application for Registration (LM-1).

4. Check whether a permit, decal, or certificate is needed

Depending on the activities carried on, it may be necessary to obtain additional authorization. The sectors given as examples are:

• insurance with premiums subject to the insurance premiums tax;
• alcoholic beverages;
• tobacco.

5. File GST and QST returns, if registered or required to be registered

For each assigned reporting period, the self-employed worker must:

• file a tax return;
• remit the GST collected;
• remit the QST collected. The reporting period is determined at the time of registration according to the expected annual total of taxable sales made in Canada.

6. Make deductions and remittances if there are employees

The self-employed worker who has employees must:

• deduct Quebec income tax;
• deduct QPP contributions;
• deduct QPIP contributions;
• periodically remit the amounts deducted;
• pay employer contributions to the QPP, QPIP, and HSF;
• pay annually the contribution related to labour standards;
• pay, if applicable, the contribution to the Workforce Skills Development and Recognition Fund.

7. Report income in the personal income tax return

The self-employed worker must report:

• business income;
• professional income;
• farming income;
• fishing income;
• commissions.

They must also attach:

• either their financial statements;
• or the form Business or Professional Income and Expenses (TP-80). If there is more than one business, the documents must be filed separately for each one.

8. Deduct only eligible expenses

The expenses deducted must be:

• reasonable;
• incurred to earn business or professional income;
• limited to the portion related to business. Personal expenses must not be deducted.

9. Respect the filing deadline

The general filing deadline for an individual is April 30. For a person operating a business, the deadline is June 15. The spouse may also benefit from the June 15 deadline.

10. Pay the balance on time to avoid interest

Even if the return may be filed on June 15, interest on any unpaid tax balance begins to accrue on May 1.

11. Check the obligation to make instalment payments

The self-employed worker must check whether the two instalment-payment conditions apply:

• estimated net tax for the year greater than $1,800;

• net tax payable greater than $1,800 for one of the two previous years. If so, they must make four instalments, each corresponding to one quarter of the annual amount calculated. The deadlines are:

• March 15;

• June 15;

• September 15;

• December 15.

12. Keep and retain records

The self-employed worker who operates a business in Quebec must keep records allowing their income, expenses, and amounts due to be verified. Records and supporting documents, including those in electronic format, must generally be kept for at least six years after the end of the last taxation year concerned.

Important warnings

• The document does not constitute a legal interpretation of tax laws.
• The information provided does not replace the Income Tax Act, the Excise Tax Act, the Quebec Sales Tax Act, or any other applicable law.
• A person must not assume that they are self-employed without verifying whether they meet the applicable criteria.
• Registration for the QST, GST, or source deductions files depends on the situation; it must be assessed before any step is taken.
• Certain activities may impose additional requirements, such as a permit, a decal, or a registration certificate.
• A person registered or required to register for the GST and QST files must collect the taxes, file the returns, and remit the applicable amounts.
• The small supplier status is based on the $30,000 threshold applicable to a given calendar quarter and the four preceding calendar quarters; when this criterion is met, the person does not have to collect GST or QST.
• Personal expenses are not deductible in a self-employed worker's income tax return.
• Business expenses are deductible only for the portion related to activities generating business or professional income.
• A person operating multiple businesses must provide separate financial documents for each one.
• The June 15 filing deadline for a person operating a business does not postpone the calculation of interest: interest applies as of May 1 on any unpaid tax balance.
• Instalment payments may be mandatory when both $1,800 thresholds are met.
• Instalment payments must be made no later than March 15, June 15, September 15, and December 15, each corresponding to one quarter of the annual

calculated amount.

• Records and supporting documents must generally be kept for at least six years after the end of the last taxation year concerned.
• Electronic documents are also subject to the retention requirement.
• The contact information, telephone numbers, mailing addresses, and contact details present in the original document are not reproduced here, in accordance with the publication instructions.

Summary

This document presents the main tax obligations of self-employed workers in Quebec, including possible registration for the QST, GST, and source deductions files. A self-employed worker registered or required to be registered must collect the taxes, file their returns, and remit GST and QST, unless they are considered a small supplier under the $30,000 threshold. If they have employees, they must make source deductions, remit the applicable contributions, and pay certain employer contributions. They must report their business, professional, farming, fishing income, and commissions, while deducting only reasonable expenses related to their business activities. The income tax return is normally due on April 30, but a person operating a business, as well as their spouse, may benefit from a deadline until June 15; however, interest on an unpaid balance begins on May 1. Instalment payments may be required if the estimated net tax exceeds $1,800 and the net tax for one of the two previous years also exceeded $1,800. Instalments are due on March 15, June 15, September 15 and December 15. Records and supporting documents, including electronic ones, must generally be kept for at least six years after the last taxation year concerned.