If you are one of the 6000 plus military members residing in Quebec but working for Department National Department (DND) in Ottawa, you may have, in the past, received a T4 as well as a Relevé 1 at income tax time. The T4 is used to report federal income tax payable to the government of Canada, and the Relevé 1 to report provincial income tax payable to the government of Quebec. This year, things might be a bit different for you. For some reason, it has come to my attention that some members are not receiving a Relevé 1 for income earned in 2015.
As required by law, DND has to produce a T4 for all its employees, but DND is by no means required to produce a Relevé 1 for members residing in Quebec, who happen to work, for example, at their headquarters or other buildings located in Ottawa, leaving quite of few of you in the dark as to how and where to report the provincial income tax due to Quebec.
If this is your case, first prepare your Federal Income Tax report, entering all the amounts as indicated on your T4. When calculating how much income tax is owed to the federal government on page 4 of your T1 form, you’ll soon realize that the amount retained (box 22 of your T4) far exceeds what you owe, because box 22 of your T4 for 2015 might also include the provincial income tax withheld on your salary.
Once you have calculated how much federal tax you owe for 2015 on Schedule 1 of your federal tax return, go to page four of your return and enter the amount of box 22 on line 437. You can then enter up to 45 per cent of the amount on line 56 of Schedule 1 as provincial income tax on line 438. In doing so, you are directing the federal government to transfer to Quebec the surplus amount of income tax withheld on your salary.
For example, let’s assume that the federal tax on line 56 of your Schedule 1 is $10,000, that the amount of tax withheld in 2015 as per box 22 of your T4 is $17,000, and that your refundable Quebec abatement on line 439 is $1,650 (16.5 per cent of $10,000). This means there’s an extra $8,650 of tax withheld that can be transferred to Quebec ([$17,000 + $1,650] – $10,000). You would then enter this amount of $8,650 on line 438 of your federal return and also on line 454 of your provincial return, thereby instructing the government of Canada to transfer $8,650 of tax withheld to the government of Quebec.
Now, since you did not get a Relevé 1 for your provincial taxes, just attach a copy of your T4 (federal) to your provincial return but do not enter the amount from box 22 of your T4 on line 451 of your provincial return. Instead, enter the amount calculated as in our example above, on line 454, using your own T4 to determine what these amounts are in your particular case. Other amounts on your T4 should be reported as indicated in the 2015 Quebec Income Tax Guide.
And if all this seems too complicated, or if you are unsure how to prepare your personal income tax reports, do not hesitate to contact an accountant or your local H&R Block office.