Payroll in Quebec and Source Deductions: The New Employer’s Guide

You have an employee (congratulations!) — now you have to pay them correctly. In Quebec, every pay run triggers source deductions (DAS) to remit to two governments, on fixed dates, with no room for error. Here is how Quebec payroll works from end to end: what to withhold, what to remit, when, and how to avoid the penalties waiting for new employers.

The anatomy of a Quebec pay

On every gross pay, you withhold the employee’s share and add your employer shares:

The exact amounts come from the official deduction tables — in practice, payroll software or a payroll service applies them automatically and updates them every January 1 (and sometimes July 1).

Remittances: two recipients, one calendar

The amounts you withhold are not yours: you hold them in trust until remittance.

• To the CRA: federal income tax and employment insurance (employee and employer shares);
• To Revenu Québec: Quebec income tax, QPP, QPIP and HSF — in Quebec, these plans are administered by Revenu Québec, not the CRA.

The frequency depends on your payroll size: new small employers generally remit monthly, by the 15th of the following month. With a clean record and a small payroll, quarterly remittance can become available.

The penalty that stings: late remittances are penalized severely (an escalating percentage based on lateness), and both administrations are unforgiving about source deductions — it is the employees’ money. Set a recurring reminder for the 10th of the month, or automate.

The pay stub: mandatory and detailed

With every pay, the employee must receive a stub showing, among other things: the employer’s name, the pay period, hours paid at the regular and overtime rates, the rate, gross pay, the detail of every deduction, and net pay. Keep these records for six years — like the rest of your bookkeeping.

The February ritual: T4, RL-1 and summaries

• T4 (federal) and RL-1 (Quebec) slips for every employee: due to employees and the administrations by the last day of February;
• Summaries: Revenu Québec’s RL-1 Summary reconciles your remittances for the year (including HSF and CNT);
• CNESST: the annual wage declaration sets your actual premium.

Run payroll yourself or outsource it?

• 1 to 3 employees on stable salaries: payroll software or the official calculators are enough, with discipline on the dates;
• Variable hours, tips, commissions: a payroll service spares you a lot of rework;
• Either way: keep the understanding. The penalties carry your name, not the provider’s.

Where InnoBooks fits in

InnoBooks complements your payroll process upstream and downstream:

• ✅ Team timesheets: everyone’s hours, by client and project — payroll’s input data;
• ✅ Billable hours converted to invoices: salaries paid measured against the revenue they generate;
• ✅ Payroll costs in your reports: payroll, charges and profitability visible continuously;
• ✅ Accountant-ready data for your year-end summaries.

Frequently asked questions about payroll and source deductions

I’m incorporated and pay myself a salary. Does all this apply to me?

Yes — your corporation is your employer. Same withholdings, same remittances, same T4/RL-1, with one exception: an owner holding more than 40% of the voting shares does not pay employment insurance premiums (unless they opt into the special benefits program).

What if I missed a remittance?

Remit immediately — don’t wait for the next due date: the penalty climbs in tiers with lateness. For a first good-faith mistake, relief programs can sometimes reduce penalties — but don’t count on that twice.

Are tips subject to source deductions?

Yes. In Quebec, reported (and allocated, in food service) tips are part of pensionable, taxable wages: income tax, QPP, QPIP, vacation pay. The restaurant industry has specific reporting rules — look them up if that’s your sector.

Does a subcontractor get a T4?

No — no withholdings, no T4. Depending on the case, a T4A slip may be required for fees paid. But watch the status: a “subcontractor” who works like an employee is an employee in the tax authorities’ eyes (see our guide on hiring your first employee).

Bottom line

Quebec payroll boils down to three disciplines: calculate accurately (official tables or up-to-date software), remit on time (the 15th of the following month for most small employers, to both administrations) and document (stubs, registers, T4/RL-1 in February). Rigour more than complexity.

Payroll starts with well-tracked hours. Try InnoBooks for free — timesheets, billing and team reports in one place.