Taxation and Residency

If you have sufficient residential ties in Québec, you consider a Québec resident for income tax purpose. Generally, your residential ties are deemed sufficient as of your arrival in Québec. Québec residents are taxed on their world income. The principal basis upon which the Income Tax Act of Québec imposes liability for income tax is residency. Under the Québec income tax system, a person's liability for income tax is based on his or her status as a resident or a non-resident of Québec. A person who is resident in Québec during a taxation year is subject to Québec income tax on his or her worldwide income from all sources. Generally, a non-resident person is only subject to Québec income tax on income from sources inside Québec. Residency has become an important factor as an increasing number of taxpayers attempt to establish non-residency to reduce their income tax liability with revenue Québec.

Residential Ties

The most important factor in determining residency is whether an individual maintains residential ties with Quebec while living outside the province. An individual’s residency status can only be determined on a case-by case basis, after reviewing all relevant facts. The term “residence” is not specifically defined in Quebec’s Taxation Act, but its interpretation has been shaped by numerous court decisions. The courts have consistently held that residence is a question of fact, determined by examining a combination of circumstances rather than a single criterion. For tax purposes, residence does not depend on citizenship or ownership of a home. It goes beyond mere physical presence — an individual may be considered a resident if they maintain enduring personal or economic ties with a place, even while living elsewhere. When determining whether a person is a Quebec resident for tax purposes, residential ties are the most important factor. If someone leaves Quebec or Canada, Revenu Québec will assess whether they maintained any residential ties during their absence. Generally, an individual who leaves Quebec continues to be considered a resident until all significant residential ties are severed. Residential ties are generally categorized as significant residential ties, secondary residential ties, and other residential ties.

Primary Residential Ties

Determining Quebec tax residency involves evaluating an individual’s significant and secondary residential ties to the province. Significant ties include owning property and having a spouse or dependents residing in Quebec. Secondary ties encompass personal belongings, economic connections, and provincial coverage such as health insurance, driver’s licenses, or provincial services. Special situations, including interprovincial workers, students, or individuals who move during the year, require additional considerations. Your tax residency is determined based on where you maintain the most significant residential ties on December 31 of a given tax year. This is referred to as “factual residency.” Dwelling: Maintaining a dwelling suitable for year-round occupancy and available for use establishes an important residential tie. The dwelling does not need to remain vacant; it may be rented to a non-arm’s length person or to an arm’s length person with a lease that can be terminated in less than three months’ notice. While the Income Tax Act does not specify a three-month period, this guideline provides uniformity for evaluating residential ties. Immediate Family: Revenu Québec considers a spouse and dependent children residing in Quebec as significant residential ties. A legal separation naturally reduces the weight of this factor. If a married individual leaves Quebec while their spouse or dependents remain in the province, the individual may still be considered a resident of Quebec during their absence. An exception arises when the individual and spouse are legally separated, and the individual has permanently severed all other residential ties with Quebec.

Permanence and intent of stay: Whether an individual intended to permanently sever residential ties with Quebec upon leaving the province is a question of fact, determined by considering all the circumstances of each case. While the length of stay abroad is a factor, the courts have emphasized that no specific duration automatically renders an individual a non-resident. Generally, if there is evidence that the individual anticipated returning to Quebec at the time of departure, Revenu Québec will place greater weight on any remaining residential ties with the province. Regularity and Length of Visits to Quebec: When an individual leaves Quebec and claims non-resident status, occasional visits for personal or business reasons generally do not affect their residency status. However, frequent or regular visits, especially if they occur on a consistent basis, may influence the determination of residency. This factor, considered alongside other residential ties, is assessed collectively to determine whether the individual should be regarded as a continuing resident of Quebec.

Other Relevant Residential Ties

• Retention of provincial health coverage (e.g., RAMQ for Quebec)
• Ownership or use of a seasonal residence in Quebec
• Professional or other memberships in Quebec held on a resident basis

Secondary residential ties

If an individual’s significant ties are not clearly established, secondary ties may influence the determination of Quebec residency. The greater the number of secondary ties, the more likely the individual will be considered a Quebec resident. Secondary ties may include:

• Personal property: Retaining valuable items in Quebec, such as furniture or vehicles.
• Economic ties: Maintaining bank accounts, credit cards, or investments in Quebec.
• Provincial health coverage: Holding a valid Quebec Health Insurance Card (RAMQ).
• Driver’s license: Possessing a Quebec driver’s license.
• Social ties: Participating in local religious, social, or recreational organizations.