CD 2012-025

Subject: Changes to the Net Pay Amount Commencing January 2013

December 21, 2012

1. Purpose

1.1 The purpose of this directive is to provide clients with information about changes to the net amount of pay commencing with the first pay of January 2013.

2. Background

2.1. Each new year, compensation advisors must respond to queries from employees about changes in the net pay amount on the first pay in January compared to the last pay in December.

2.2. To assist client departments in explaining these differences to their employees, this directive is issued on a yearly basis to advise them of the factors that may cause fluctuations.

3. Procedures and Instructions

3.1. The following factors may affect an employee's net pay:

3.2. Public Service Pension Plan Contributions

At the beginning of each year, the low rate of the two possible rates of contribution to the public service pension plan is used until the maximum level of contribution for that rate is reached. Then, the higher rate of contribution is used for the remainder of the year. Therefore, if employees who are contributors under the public service pension plan compare their last pay in December to their first pay in January, many of them may see that they have paid a larger amount to the plan in December than in January.

Contributions to the public service pension plan have a direct bearing on the income tax deducted at source since these contributions are deducted from the gross pay before determining the tax rate. The larger the public service pension plan contribution, the less income tax will be withheld from the employee's pay.

The Federal Budget 2012 announced that, effective January 1, 2013, all new employees who become public service pension plan members on or after January 1, 2013 will contribute at a different rate than employees who became public service pension plan members prior to January 1, 2013.

Employees who became members prior to January 1, 2013

Effective January 1, 2013, public service pension plan contributions will be 6.85% (to a maximum of $3,500.35 for the 2013 taxation year) on all pensionable earnings below and equal to the yearly maximum pensionable earnings (YMPE) ($51,100 for the 2013 taxation year), and 9.20% on all pensionable earnings over the YMPE.

Employees who become members on or after January 1, 2013

Effective January 1, 2013, public service pension plan contributions will be 6.27% (to a maximum of $3,203.97 for the 2013 taxation year) on all pensionable earnings below and equal to the YMPE ($51,100 for the 2013 taxation year), and 7.63% on all pensionable earnings over the YMPE.

3.3. Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) Contributions

Many employees reach their maximum level of CPP and QPP contributions sometime during the year. When this happens, the employee will see an increase in the net pay amount as there will no longer be CPP/QPP deductions withheld. Beginning with the new year, employees recommence paying CPP/QPP contributions until such time as they reach the maximum CPP/QPP contribution level for 2013.

Effective January 1, 2013, the CPP rate remains at 4.95% of pensionable earnings. The maximum CPP contribution is $2,356.20, for the 2013 taxation year. The QPP rate will be increased from 5.025% to 5.10% of pensionable earnings for 2013. The maximum QPP contribution is $2,427.60 for the 2013 taxation year.

The CPP contributions provide a federal tax credit of 15%. This tax credit is applied directly to the income tax that is owing and is not dependent on the employee's income tax bracket. Please note that, effective January 1, 1998, the Quebec Tax Reform eliminated the Quebec provincial tax credit for QPP. This tax credit is now included in the basic credit amount of $11,195 for the 2013 taxation year.

3.4. Employment Insurance (EI) Premiums

The employee's rate of EI premiums (excluding employees working in the province of Quebec) for the 2013 taxation year will be increased from 1.83% to 1.88% of insurable earnings. The annual maximum insurable earnings will be increased from $45,900 to $47,400. Those employees who had reached their maximum EI premiums during the previous year will recommence paying EI premiums in the new year until the new annual maximum premium level is reached. Once employees reach the annual maximum premium deduction of $891.12 in 2013, they will see an increase in their net pay amount, as there will no longer be EI deductions withheld.

The employee's rate of EI premiums, for employees working in the province of Quebec for the 2013 taxation year, will be increased from 1.47% to 1.52% of insurable earnings. The annual maximum insurable earnings will be increased from $45,900 to $47,400. Those employees who had reached their maximum EI premiums during the previous year will recommence paying EI premiums in the new year until the new annual maximum premium level is reached. Once employees reach the annual maximum premium deduction of $720.48 in 2013, they will see an increase in their net pay amount, as there will no longer be EI deductions withheld.

3.5. Quebec Parental Insurance Plan (QPIP)

Effective January 1, 2013, the employee's QPIP premium rate will remain at 0.559% of insurable earnings. The annual maximum insurable earnings will be increased from $66,000 to $67,500. Those employees who had reached their maximum QPIP premiums during the previous year will recommence paying QPIP premiums in the new year until the new annual maximum premium level is reached. Once employees reach the annual maximum premium deduction of $377.33 in 2013, they will see an increase in their net pay amount, as there will no longer be QPIP deductions withheld.

3.6. Federal Tax Brackets and Rates Effective January 1, 2013

Effective January 1, 2013, the federal income tax table has changed as follows:

Federal Tax Brackets and Rates Effective January 1, 2013
Tax brackets ($)
More than - Not more than
Tax rates
0 to 42,707 15%
42,707 to 85,414 22%
85,414 to 132,406 26%
Over 132,406 29%
Federal Tax Brackets and Rates Effective January 1, 2013
Tax brackets ($)
More than - Not more than
Tax rates
0 to 43,561 15%
43,561 to 87,123 22%
87,123 to 135,054 26%
Over 135,054 29%

3.6.1. Canada Employment Credit

Effective January 1, 2013, the maximum amount on which the credit is calculated will be increased from$1,095 to $1,117.

3.7. Provincial and Territorial Tax Brackets and Rates Effective January 1, 2013

There are no changes to the tax brackets or rates for the provinces of Prince Edward Island, Alberta, Nova Scotia and Manitoba.

3.7.1. Newfoundland and Labrador

Effective January 1, 2013, the provincial income tax table has changed as follows:
Newfoundland and Labrador Tax Brackets and Rates Effective January 1, 2012
Tax brackets ($)
More than - Not more than
Tax rates
0 to 32,893 7.7%
32,893 to 65,785 12.5%
Over 65,785 13.3%
Newfoundland and Labrador Tax Brackets and Rates Effective January 1, 2013
Tax brackets ($)
More than - Not more than
Tax rates
0 to 33,748 7.7%
33,748 to 67,496 12.5%
Over 67,496 13.3%

3.7.2. New Brunswick

Effective January 1, 2013, the provincial income tax table has changed as follows:

New Brunswick Tax Brackets and Rates Effective January 1, 2012
Tax brackets ($)
More than - Not more than
Tax rates
0 to 38,190 9.1%
38,190 to 76,380 12.1%
76,380 to 124,178 12.4%
Over 124,178 15.9%
New Brunswick Tax Brackets and Rates Effective January 1, 2013
Tax brackets ($)
More than - Not more than
Tax rates
0 to 38,954 9.1%
38,954 to 77,908 12.1%
77,908 to 126,662 12.4%
Over 126,662 14.3%

3.7.3. Ontario

Effective January 1, 2013, the provincial income tax table has changed as follows:

Ontario Tax Brackets and Rates Effective July 1, 2012
Tax brackets ($)
More than - Not more than
Tax rates
0 to 39,020 5.05%
39,020 to 78,043 9.15%
$78,043 to $500,000 11.16%
Over $500,000 13.16%
Ontario Tax Brackets and Rates Effective January 1, 2013
Tax brackets ($)
More than - Not more than
Tax rates
0 to 39,723 5.05%
39,723 to 79,448 9.15%
79,448 to 509,000 11.16%
Over $509,000 13.16%

The provincial surtax payable has been revised as follows:

  • Where the basic provincial tax payable is less than or equal to $4,289 (formerly $4,213), the surtax payable is $0.
  • Where the basic provincial tax payable is greater than $4,289 and less than or equal to $5,489 (formerly $5,392), the surtax payable is 20% of the basic provincial tax payable in excess of $4,289.
  • Where the basic provincial tax payable is greater than $5,489, the surtax payable is the total of 20% of the basic provincial tax payable in excess of $4,289, and 36% of the basic provincial tax payable in excess of $5,489.

3.7.4. Saskatchewan

Effective January 1, 2013, the provincial income tax table has changed as follows:

Saskatchewan Tax Brackets and Rates Effective January 1, 2012
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 42,065 11%
42,065 to 120,185 13%
Over 120,185 15%
Saskatchewan Tax Brackets and Rates Effective January 1, 2013
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 42,906 11%
42,906 to 122,589 13%
Over 122,589 15%

3.7.5. British Columbia

Effective January 1, 2013, the provincial income tax table has changed as follows:

British Columbia Tax Brackets and Rates Effective January 1, 2012
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 37,013 5.06%
37,013 to 74,028 7.70%
74,028 to 84,993 10.50%
84,993 to 103,205 12.29%
Over 103,205 14.70%
British Columbia Tax Brackets and Rates Effective January 1, 2013
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 37,568 5.06%
37,568 to 75,138 7.70%
75,138 to 86,268 10.50%
86,268 to 104,754 12.29%
Over 104,754 14.70%

The provincial tax reduction is indexed and is calculated as follows:

  • Where net income is less than or equal to $18,181 (formerly $17,913), the reduction is equal to the lesser of (i) basic provincial tax, and (ii) $409 (formerly $403).
  • Where net income is greater than $18,181 and less than or equal to $30,962.25 (formerly $30,506.75), the reduction is equal to the lesser of (i) basic provincial tax, and (ii) $409 - ((Annual net income - $18,181) x 3.2%).
  • Where net income is greater than $30,962.25, the reduction is equal to $0.

3.7.6. Quebec

The Government of Quebec has announced that the province will add a new tax bracket for personal taxable income in excess of $100,000.

Effective January 1, 2013, the provincial income tax table has changed as follows:

Quebec Tax Brackets and Rates Effective January 1, 2012
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 40,100 16%
40,100 to 80,200 20%
Over 80,200 24%
Quebec Tax Brackets and Rates Effective January 1, 2013
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 41,095 16%
41,095 to 82,190 20%
82,190 to 100,000 24%
Over 100,000 25.75%
Deduction for employment income

Effective January 1, 2013, the maximum deduction for employment income has been increased from $1,075 to $1,100.

Health Contribution

The Government of Quebec announced that effective January 1, 2013, the health contributions previously paid through personal tax filing will become a source deduction.

The formula for calculating the source deductions of Quebec income tax for 2013 has been revised to take into account the health contribution. Therefore, starting with the first pay in 2013, the health contribution will be part of the Quebec provincial tax withheld from regular and supplementary payments. This will affect employees who work and reside in Quebec only.

Line 22 of the "Source Deductions Return 2013" form, TP-1015.3-V (2013-01), allows individuals to ask employers or payers not to withhold health contributions under certain situations. Due to a system limitation, this exemption will not be available to employees for the 2013 taxation year, as the health contribution is part of the calculation formula for Quebec income tax for 2013. Employees who are eligible for a refund of health contributions will receive it upon filing their income tax return.

3.7.7. Yukon

Effective January 1, 2013, the territorial income tax table has changed as follows:

Yukon Tax Brackets and Rates Effective January 1, 2012
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 42,707 7.04%
42,707 to 85,414 9.68%
85,414 to 132,406 11.44%
Over 132,406 12.76%
Yukon Tax Brackets and Rates Effective January 1, 2013
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 43,561 7.04%
43,561 to 87,123 9.68%
87,123 to 135,054 11.44%
Over 135,054 12.76%
Territorial Employment Credit

Effective January 1, 2013, the maximum amount on which the credit is calculated will be increased from $1,095 to $1,117.

3.7.8. Northwest Territories

Effective January 1, 2013, the territorial income tax table has changed as follows:

Northwest Territories Tax Brackets and Rates Effective January 1, 2012
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 37,626 5.90%
37,626 to 75,253 8.60%
75,253 to 122,345 12.20%
Over 122,345 14.05%
Northwest Territories Tax Brackets and Rates Effective January 1, 2013
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 38,679 5.90%
38,679 to 77,360 8.60%
77,360 to 125,771 12.20%
Over 125,771 14.05%

3.7.9. Nunavut

Effective January 1, 2013, the territorial income tax table has changed as follows:

Nunavut Tax Brackets and Rates Effective January 1, 2012
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 40,721 4.0%
40,721 to 81,442 7.0%
81,442 to 132,406 9.0%
Over 132,406 11.5%
Nunavut Tax Brackets and Rates Effective January 1, 2013
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 41,535 4.0%
41,535 to 83,071 7.0%
83,071 to 135,054 9.0%
Over 135,054 11.5%

3.8. Tax Adjustment Factors

The calculation of income tax withheld at source is based on the taxable income earned by the employee and the income tax rates in effect for the province of employment at the time the payment is issued. For those employees who work in the province of Quebec in the National Capital Region (NCR) and reside in Ontario, or work in the province of Quebec and reside in Nova Scotia or New Brunswick, their Quebec provincial tax is calculated by using a tax adjustment factor, as provided by the Canada Revenue Agency (CRA). Effective Janaury 1, 2013, the tax adjustment factors will be modified as follows:

Tax Adjustment Factor Effective January 1, 2012
More than - Not more than ($) Nova Scotia New Brunswick Ontario
0 to 42,707 95% 92% 67%
42,707 to 85,414 104% 91% 72%
85,414 to 132,406 105% 90% 75%
Over 132,406 105% 89% 80%
Tax Adjustment Factor Effective January 1, 2013
More than - Not more than ($) Nova Scotia New Brunswick Ontario
0 to 53,600 95% 92% 67%
53,600 to 68,300 105% 91% 72%
68,300 to 79,600 106% 90% 75%
79,600 to 97,500 107% 90% 80%
Over 97,500 104% 85% 86%

3.9. Clients are reminded that each individual's own personal income situation is unique. While the above factors will assist you in your explanation, there are many other factors that may have an effect on the employee's net pay. Some of the factors to consider are: changes to the employee's province of work or residence, salary, deductions, taxable allowances and benefits, personal credits, and hardship exemptions.

3.10. Change in province of work

The income tax deducted from employees' pay is based on their province of work. In some situations, when employees change province of work, the tax liability may be such that they owe CRA and/or Revenu Québec at year end.

Employees who change their province of work at any time during the year are encouraged to review their personal tax situation in order to be aware of their tax liability upon filing at year end.

Employees who wish to have more federal and/or Quebec income tax deducted may do so by completing a "2013 Personal Tax Credits Return", form TD1 E (13) and/or, for the province of Quebec, a "Source Deductions Return 2013", form TP-1015.3-V (2013-01), and providing this documentation to their compensation advisor. For all provinces and territories, with the exception of Quebec, the deduction of additional income tax will continue to be administered by CRA. Please refer to ARCHIVED CD 2002-012, dated March 26, 2002, entitled "Deductions at Source of Additional Income Tax".

4. Inquiries

4.1 Any inquiries on the information contained in this directive should be addressed to your Public Works and Government Services Canada (PWGSC) Compensation Services Office.

Original Signed by
Carrie E. Roussin

Carrie E. Roussin
Director General
Compensation Sector
Accounting, Banking and Compensation

Reference(s): CJA 9007-7, 9007-8

Information Notice to Employees

Changes to the Net Pay Amount Commencing January 2013

The purpose of this notice is to provide you with information about changes to the net amount of pay commencing with the first pay of January 2013.

The following factors may affect your net pay:

Public Service Pension Plan Contributions

At the beginning of each year, the low rate of the two possible rates of contribution to the public service pension plan is used until the maximum level of contribution for that rate is reached. Then, the higher rate of contribution is used for the remainder of the year. Therefore, if you are a contributor under the public service pension plan and you compare your last pay in December to your first pay in January, you may see that you have paid a larger amount to the plan in December than in January.

Contributions to the public service pension plan have a direct bearing on the income tax deducted at source since these contributions are deducted from the gross pay before determining the tax rate. The larger the public service pension plan contribution, the less income tax will be withheld from your pay.

The Federal Budget 2012 announced that effective January 1, 2013 all new employees who become public service pension plan members on or after January 1, 2013 will contribute at a different rate than employees who became public service pension plan members prior to January 1, 2013.

Employees who became members prior to January 1, 2013

Effective January 1, 2013, your public service pension plan contributions will be 6.85% (to a maximum of $3,500.35 for the 2013 taxation year) on all pensionable earnings below and equal to the yearly maximum pensionable earnings (YMPE) ($51,100 for the 2013 taxation year), and 9.20% on all pensionable earnings over the YMPE.

Employees who become members on or after January 1, 2013

Effective January 1, 2013, your public service pension plan contributions will be 6.27% (to a maximum of $3,203.97 for the 2013 taxation year) on all pensionable earnings below and equal to the YMPE ($51,100 for the 2013 taxation year), and 7.63% on all pensionable earnings over the YMPE.

Canada Pension Plan (CPP) and Quebec Pension Plan (QPP) Contributions

Many employees reach their maximum level of CPP and QPP contributions sometime during the year. If you reach the maximum level of CPP/QPP, you will see an increase in your net pay amount as there will no longer be CPP/QPP deductions withheld. Beginning with the new year, you will recommence paying CPP/QPP contributions until such time as you reach the maximum contribution level for 2013.

Effective January 1, 2013, the CPP rate remains at 4.95% of pensionable earnings. The maximum CPP contribution is $2,356.20 for the 2013 taxation year. The QPP rate will be increased from 5.025% to 5.10% of pensionable earnings for 2013. The maximum QPP contribution is $2,427.60 for the 2013 taxation year.

The CPP contributions provide a federal tax credit of 15%. This tax credit is applied directly to the income tax that is owing and is not dependent on the employee's income tax bracket. Please note that, effective January 1, 1998, the Quebec Tax Reform eliminated the Quebec provincial tax credit for QPP. This tax credit is now included in the basic credit amount of $11,195 for the 2013 taxation year.

Employment Insurance (EI) Premiums

Your rate of EI premiums (excluding employees working in the province of Quebec) for the 2013 taxation year will be increased from 1.83% to 1.88% of insurable earnings. The annual maximum insurable earnings will be increased from $45,900 to $47,400. If you had reached the maximum EI premiums during the previous year, you will recommence paying EI premiums in the new year until the new annual maximum premium level is reached. Once you reach the annual maximum premium deduction of $891.12 in 2013, you will see an increase in your net pay amount, as there will no longer be EI deductions withheld from your pay.

If you work in the province of Quebec, your rate of EI premiums for the 2013 taxation year will be increased from 1.47% to 1.52% of insurable earnings. The annual maximum insurable earnings will be increased from $45,900 to $47,400. If you had reached the maximum EI premiums during the previous year, you will recommence paying EI premiums in the new year until the new annual maximum premium level is reached. Once you reach the annual maximum premium deduction of $720.48 in 2013, you will see an increase in your net pay amount, as there will no longer be EI deductions withheld from your pay.

Quebec Parental Insurance Plan (QPIP)

Effective January 1, 2013, if you work in the province of Quebec, your QPIP premium rate will remain at 0.559% of insurable earnings. The annual maximum insurable earnings will be increased from $66,000 to $67,500. If you had reached your maximum QPIP premiums during the previous year, you will recommence paying QPIP premiums in the new year until the new annual maximum premium level is reached. Once you reach the annual maximum premium deduction of $377.33 in 2013, you will see an increase in your net pay amount, as there will no longer be QPIP deductions withheld.

Federal Tax Brackets and Rates Effective January 1, 2013

Effective January 1, 2013, the federal income tax table has changed as follows:

Federal Tax Brackets and Rates Effective January 1, 2012
Tax brackets ($)
More than - Not more than
Tax rates
0 to 42,707 15%
42,707 to 85,414 22%
85,414 to 132,406 26%
Over 132,406 29%
Federal Tax Brackets and Rates Effective January 1, 2013
Tax brackets ($)
More than - Not more than
Tax rates
0 to 43,561 15%
43,561 to 87,123 22%
87,123 to 135,054 26%
Over 135,054 29%
Canada Employment Credit

Effective January 1, 2013, the maximum amount on which the credit is calculated will be increased from $1,095 to $1,117.

Provincial and Territorial Tax Brackets and Rates Effective January 1, 2013

There are no changes to the tax brackets or rates for the provinces of Prince Edward Island, Alberta, Nova Scotia and Manitoba.

Newfoundland and Labrador

Effective January 1, 2013, the provincial income tax table has changed as follows:

Newfoundland and Labrador Tax Brackets and Rates Effective January 1, 2012
Tax brackets ($)
More than - Not more than
Tax rates
0 to 32,893 7.7%
32,893 to 65,785 12.5%
Over 65,785 13.3%
Newfoundland and Labrador Tax Brackets and Rates Effective January 1, 2013
Tax brackets ($)
More than - Not more than
Tax rates
0 to 33,748 7.7%
33,748 to 67,496 12.5%
Over 67,496 13.3%
New Brunswick

Effective January 1, 2013, the provincial income tax table has changed as follows:

New Brunswick Tax Brackets and Rates Effective January 1, 2012
Tax brackets ($)
More than - Not more than
Tax rates
0 to 38,190 9.1%
38,190 to 76,380 12.1%
76,380 to 124,178 12.4%
Over 124,178 15.9%
New Brunswick Tax Brackets and Rates Effective January 1, 2013
Tax brackets ($)
More than - Not more than
Tax rates
0 to 38,954 9.1%
38,954 to 77,908 12.1%
77,908 to 126,662 12.4%
Over 126,662 14.3%
Ontario

Effective January 1, 2013, the provincial income tax table has changed as follows:

Ontario Tax Brackets and Rates Effective July 1, 2012
Tax brackets ($)
More than - Not more than
Tax rates
0 to 39,020 5.05%
39,020 to 78,043 9.15%
$78,043 to $500,000 11.16%
Over $500,000 13.16%
Ontario Tax Brackets and Rates Effective January 1, 2013
Tax brackets ($)
More than - Not more than
Tax rates
0 to 39,723 5.05%
39,723 to 79,448 9.15%
79,448 to 509,000 11.16%
Over $509,000 13.16%

The provincial surtax payable has been revised as follows:

  • Where the basic provincial tax payable is less than or equal to $4,289 (formerly $4,213), the surtax payable is $0.
  • Where the basic provincial tax payable is greater than $4,289 and less than or equal to $5,489 (formerly $5,392), the surtax payable is 20% of the basic provincial tax payable in excess of $4,289.
  • Where the basic provincial tax payable is greater than $5,489, the surtax payable is the total of 20% of the basic provincial tax payable in excess of $4,289, and 36% of the basic provincial tax payable in excess of $5,489.
Saskatchewan

Effective January 1, 2013, the provincial income tax table has changed as follows:

Saskatchewan Tax Brackets and Rates Effective January 1, 2012
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 42,065 11%
42,065 to 120,185 13%
Over 120,185 15%
Saskatchewan Tax Brackets and Rates Effective January 1, 2013
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 42,906 11%
42,906 to 122,589 13%
Over 122,589 15%
British Columbia

Effective January 1, 2013, the provincial income tax table has changed as follows:

British Columbia Tax Brackets and Rates Effective January 1, 2012
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 37,013 5.06%
37,013 to 74,028 7.70%
74,028 to 84,993 10.50%
84,993 to 103,205 12.29%
Over 103,205 14.70%
British Columbia Tax Brackets and Rates Effective January 1, 2013
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 37,568 5.06%
37,568 to 75,138 7.70%
75,138 to 86,268 10.50%
86,268 to 104,754 12.29%
Over 104,754 14.70%

The provincial tax reduction is indexed and is calculated as follows:

  • Where net income is less than or equal to $18,181 (formerly $17,913), the reduction is equal to the lesser of (i) basic provincial tax, and (ii) $409 (formerly $403).
  • Where net income is greater than $18,181 and less than or equal to $30,962.25 (formerly $30,506.75), the reduction is equal to the lesser of (i) basic provincial tax, and (ii) $409 - ((Annual net income - $18,181) x 3.2%).
  • Where net income is greater than $30,962.25, the reduction is equal to $0.
Quebec

The Government of Quebec has announced that the province will add a new tax bracket for personal taxable income in excess of $100,000.

Effective January 1, 2013, the provincial income tax table has changed as follows:

Quebec Tax Brackets and Rates Effective January 1, 2012
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 40,100 16%
40,100 to 80,200 20%
Over 80,200 24%
Quebec Tax Brackets and Rates Effective January 1, 2013
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 41,095 16%
41,095 to 82,190 20%
82,190 to 100,000 24%
Over 100,000 25.75%
Deduction for employment income

Effective January 1, 2013, the maximum deduction for employment income has been increased from $1,075 to $1,100.

Health Contribution

The Government of Quebec announced that effective January 1, 2013, the health contributions previously paid through personal tax filing will become a source deduction.

The formula for calculating the source deductions of Quebec income tax for 2013 has been revised to take into account the health contribution. Therefore, starting with the first pay in 2013, the health contribution will be part of the Quebec provincial tax withheld from regular and supplementary payments. This will affect employees who work and reside in Quebec only.

Line 22 of the "Source Deductions Return 2013" form, TP-1015.3-V (2013-01), allows individuals to ask employers or payers not to withhold health contributions under certain situations. Due to a system limitation, this exemption will not be available to employees for the 2013 taxation year, as the health contribution is part of the calculation formula for Quebec income tax for 2013. Employees who are eligible for a refund of health contributions will receive it upon filing their income tax return.

Yukon

Effective January 1, 2013, the territorial income tax table has changed as follows:

Yukon Tax Brackets and Rates Effective January 1, 2012
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 42,707 7.04%
42,707 to 85,414 9.68%
85,414 to 132,406 11.44%
Over 132,406 12.76%
Yukon Tax Brackets and Rates Effective January 1, 2013
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 43,561 7.04%
43,561 to 87,123 9.68%
87,123 to 135,054 11.44%
Over 135,054 12.76%
Territorial Employment Credit

Effective January 1, 2013, the maximum amount on which the credit is calculated will be increased from $1,095 to $1,117.

Northwest Territories

Effective January 1, 2013, the territorial income tax table has changed as follows:

Northwest Territories Tax Brackets and Rates Effective January 1, 2012
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 37,626 5.90%
37,626 to 75,253 8.60%
75,253 to 122,345 12.20%
Over 122,345 14.05%
Northwest Territories Tax Brackets and Rates Effective January 1, 2013
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 38,679 5.90%
38,679 to 77,360 8.60%
77,360 to 125,771 12.20%
Over 125,771 14.05%
Nunavut

Effective January 1, 2013, the territorial income tax table has changed as follows:

Nunavut Tax Brackets and Rates Effective January 1, 2012
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 40,721 4.0%
40,721 to 81,442 7.0%
81,442 to 132,406 9.0%
Over 132,406 11.5%
Nunavut Tax Brackets and Rates Effective January 1, 2013
Tax Brackets ($)
More than - Not more than
Tax Rates
0 to 41,535 4.0%
41,535 to 83,071 7.0%
83,071 to 135,054 9.0%
Over 135,054 11.5%
Change in province of work

The income tax deducted from your pay is based on your province of work. In some situations, when you change your province of work, your tax liability may be such that you owe the Canada Revenue Agency (CRA) and/or Revenu Québec at year end.

If you change your province of work at any time during the year, you are encouraged to review your personal tax situation in order to be aware of your tax liability upon filing at year end.

Tax Adjustment Factors

If you work in the province of Quebec in the National Capital Region (NCR) and reside in Ontario, or work in the province of Quebec and reside in Nova Scotia or New Brunswick, your Quebec provincial tax is calculated by using a tax adjustment factor, as provided by CRA. The tax adjustment factor will be applied against the amount of your federal tax calculated in Quebec, and the amount calculated becomes your Quebec provincial tax amount.

Effective January 1, 2013, the tax adjustment factors will be modified as follows:

Tax Adjustment Factor Effective January 1, 2012
More than - Not more than ($) Nova Scotia New Brunswick Ontario
0 to 42,707 95% 92% 67%
42,707 to 85,414 104% 91% 72%
85,414 to 132,406 105% 90% 75%
Over 132,406 105% 89% 80%
Tax Adjustment Factor Effective January 1, 2013
More than - Not more than ($) Nova Scotia New Brunswick Ontario
0 to 53,600 95% 92% 67%
53,600 to 68,300 105% 91% 72%
68,300 to 79,600 106% 90% 75%
79,600 to 97,500 107% 90% 80%
Over 97,500 104% 85% 86%

If you wish to have more federal and/or Quebec income tax deducted, you may do so by completing a "2013 Personal Tax Credits Return", form TD1 E (13) and/or, for the province of Quebec, a "Source Deductions Return 2013", form TP-1015.3-V (2013-01), and providing this documentation to your compensation advisor. If your department or agency has access to the Compensation Web Applications, you can activate your own additional tax deduction amount through the "Voluntary Deductions" option. Please note that, even though you activate your own additional tax deduction amount, you are still required to complete and send the form TD1 E (13) and/or the form TP-1015.3-V (2013-01) to your compensation advisor.

Any request for information regarding the content of this document should be addressed to your compensation advisor.