Leaving Québec Tax Return: Revenu Québec Rules for Non-Residents

Do I file a Québec tax return after leaving Canada?

Yes, for the year you leave. If you were resident in Québec on the day you stopped being resident in Canada, you must file a Québec return for that year, wherever you live on December 31 (Revenu Québec guide, "Are you required to file"). It is a second return, filed with Revenu Québec, on top of the federal return you file with the CRA (CRA: Leaving Canada). The Québec return is due by April 30 of the year after you leave, or June 15 if you or your spouse carried on a business, though any balance owing is still due April 30 (guide).

The Québec return splits your year in two (Revenu Québec: Leaving Québec):

If you were covered by Québec's public prescription drug insurance plan, the return also asks about its premium (line 447, Schedule K); Revenu Québec asks emigrants to contact it for the rules that apply (guide, line 447).

What makes a case not simple: shares of a private company or a business (large deemed gains, a deferral election and possibly security), Québec real estate you keep, rent or sell, a spouse, children or home that stay in Québec, long return visits, a federal return already filed without the Québec forms, or Revenu Québec and the CRA disagreeing on your departure date.

What to gather: your departure date and proof of it, a list of everything you own on that date with its fair market value, the original cost of each item, the cost of any property you held outside Canada, all slips for the year, and evidence of the ties you cut and the home you set up abroad.

The federal return and departure tax are covered in Leaving Canada: the final return and departure tax.

When does Revenu Québec say I stopped being a Québec resident?

You may stop being a Québec resident when you leave and cut your residential ties here. Revenu Québec weighs the ties you set up elsewhere, how often and how long you come back, and how likely you are to return to live in Québec (guide, line 17).

On the Québec return you enter the date you stopped being resident in Canada (line 18). Revenu Québec generally treats you as an emigrant when you leave to settle permanently in another country and cut your residential ties with Canada, for example:

• you sell or give up your Canadian home and set up a permanent home abroad;
• your spouse and dependants leave too;
• you sell your personal property, end your social ties here and build new ones abroad.

If your spouse, children or a home you can live in stay in Québec, you may still be a Québec resident (and a Canadian resident) while you live abroad, and the departure forms may not apply. The federal side of the same question is in Canadian tax residency.

When the absence is only temporary: if you leave to work or study in another country but keep your residential ties in Québec, you stay a Québec resident while away. You then owe Québec tax on your worldwide income for the whole year, not just to your departure date (Leaving Québec).

What if Revenu Québec and the CRA see my residence differently?

Each agency makes its own decision. Revenu Québec applies its own criteria, set out in interpretation bulletin IMP. 22-3, published in French only (guide, line 17). The CRA uses the federal test explained in Canadian tax residency.

When the two decisions differ, you can face two different departure dates, or one agency treating you as still resident for the whole year. If you left Québec and Canada on the same day, both returns normally show that one date, backed by the same records. If one agency questions your date or treats you as resident for the whole year, the answer depends on your ties and evidence.

Which Québec forms match the federal departure forms?

Each federal emigrant form has a Québec twin, filed with your Québec return. Filing only the federal forms leaves the Québec ones missing.

TP-785.2.5-V counts shares, bonds, interests in trusts and partnerships, personal-use property, business property and capital property. It leaves out cash and bank deposits, RRSPs, RRIFs, TFSAs, FHSAs, pension plans and similar registered plans, personal-use items worth less than $10,000, and, if you lived in Canada for 60 months or less in the 10 years before leaving, property you owned when you last became a resident or inherited since, unless it is taxable Canadian property. Send it with your departure-year Québec return, by its filing due date; it is due even in a case where no return is otherwise required. Late filing costs $25 a day, up to $2,500 (form TP-785.2.5-V).

The federal versions are explained in the T1161 list of properties and the T1243 deemed disposition form.

Foreign property: if the total cost of your property outside Canada (such as foreign bank accounts, shares of foreign companies or foreign rental property) was more than $100,000 at any time in your departure year, Québec also expects its Foreign Property Return, TP-1079.8.BE-V, by your return's filing deadline. Personal-use property and property used only in an active business do not count. It is separate from the federal T1135 (guide, foreign property).

Is there a separate Québec security threshold to defer departure tax?

Yes. Québec measures its own tax on the deemed disposition against its own threshold. If the Québec tax on that income is over $12,875, you must give Revenu Québec security it considers adequate by April 30 of the year after you leave. At or below that amount, no security is needed (form TP-1033.2-V).

The federal threshold for former Québec residents is lower than the general federal one (CRA). Do not assume the federal figure applies to Québec tax. Form TP-1033.2-V lists three kinds of security: an irrevocable letter of guarantee from a financial institution with a place of business in Québec, a hypothec on a building or land in Québec, or certificated shares of a Canadian private corporation. Send the form with your return by April 30 of the year after you leave, whether or not security is needed. The federal side is covered in deferring departure tax.

When do I still file a Québec return after I leave?

After the departure year, you generally file a Québec return for a year in which you were employed in Québec, carried on a business in Québec, or sold taxable Québec property (guide, "Are you required to file"; non-residents of Québec). Rent from a Québec home you keep is not on that list, though as a landlord you may still owe Revenu Québec the yearly RL-31 slip; it and the federal non-resident rental rules are in non-resident landlords. A long stay can also bring you back in full (next section).

Selling Québec property: taxable Québec property includes real estate in Québec and property used in a business carried on in Québec. A non-resident who sells land or a home that was never rented out must send Revenu Québec form TP-1097-V, a notice of disposition, within 10 days of the sale, unless a notice of the proposed sale was already filed, the buyer is the same, the price is not higher and the cost is not lower than in that notice. A rented building is depreciable property and goes on form TP-1102.1-V instead (the land stays on TP-1097-V); that notice is optional, but without it and a payment or security the buyer must pay Revenu Québec 30% of the building's cost (form TP-1102.1-V). A late TP-1097-V notice costs $25 a day, up to $2,500. If the seller does not settle with Revenu Québec, the buyer must pay an amount out of the price to Revenu Québec on the seller's behalf, within 30 days after the end of the month of the purchase (form TP-1097-V). The federal certificate is covered in non-residents selling Canadian property.

Can long visits make me a Québec resident again?

Yes. If you stay in Québec for one or more periods adding up to 183 days or more in a year, you can be a deemed Québec resident for that whole year (non-residents of Québec). A deemed resident is generally taxed by Québec on worldwide income for the year, not just Québec income. The same days count federally: 183 days or more in Canada can make you a deemed resident of Canada for the year, unless a tax treaty makes you resident only in your new country (Income Tax Act, s. 250); see Canadian tax residency.

Count your days in Québec each year and keep travel records. Coming back and setting up residential ties again also makes you a Québec resident again, whatever the day count (guide, line 17).

What happens to the solidarity tax credit and RL slips?

The solidarity tax credit stops. You cannot receive a monthly payment if, just before the first day of that month, you are no longer resident in Québec (guide, solidarity tax credit). You must tell Revenu Québec if you leave Québec permanently (changes during the year).

RL slips for income paid while you lived in Québec go on your departure-year Québec return. Slips for later years matter only if one of the filing triggers above applies. What federal slips and payers do after you leave is covered in Canadian slips after leaving Canada; federal benefits are in benefits after leaving Canada.

Example

These examples are illustrative; figures are in Canadian dollars.

Simple departure with a portfolio

Julie leaves Montréal for Paris on July 1 and owns a C$60,000 non-registered portfolio. For that year she files a federal and a Québec return, both reporting her worldwide income to June 30. On the Québec side she attaches TP-785.2.5-V, because her property is worth more than C$25,000, and TP-1033.2.A-V for the deemed sale of the portfolio. She files T1161 and T1243 on the federal side.

Deferring tax on private company shares

Marc leaves Québec owning private company shares worth C$400,000 with a large gain. He elects to defer on both sides: T1244 federally and TP-1033.2-V for Québec, both by April 30 of the next year. Each agency checks its own tax on the gain against its own threshold, so Marc may need security with the CRA, with Revenu Québec, or both.

Pulled back in by a condo

Sophie moves to Mexico but keeps her Laval condo. In her second year abroad she spends seven months there, about 210 days. Because that is more than 183 days, she may be a deemed Québec resident for that whole year and owe Québec tax on her worldwide income, not just Québec income. The same stay may also make her a deemed resident of Canada, subject to the Canada–Mexico tax treaty.

Different for you?

• You own shares of a private company or a business: the deemed gain, the deferral elections and any security on both sides are usually worked out before the departure date; get individual tax help and see close or keep your corporation.
• You are keeping or selling Québec real estate: the TP-1097-V notice, the federal certificate and non-resident rental withholding all apply; see non-residents selling Canadian property, non-resident landlords and get individual tax help.
• You missed the Québec return or forms, or Revenu Québec or the CRA questions your departure date: get individual tax help. For the federal side, see the CRA still thinks you are a resident and the CRA residency questionnaire.
• You plan long stays back in Québec: a stay of 183 days or more can make the whole year taxable in Québec and federally; get individual tax help and see Canadian tax residency.
• You are moving to another province, not abroad: see province of residence for tax.
• You need the federal departure return: see leaving Canada.