Tax Credits Respecting the Work Premium

In Quebec, the Work Premium is a refundable tax credit for low- and modest-income individuals and families. It is designed to encourage people to enter or remain in the workforce. Unlike a non-refundable credit, a refundable credit can result in a refund even if no tax is owed.

Components of the Work Premium Program

• Work Premium: The standard refundable credit available to low-income residents who meet specific eligibility criteria, such as work income and family income.
• Adapted Work Premium: A more flexible credit designed for individuals with a severely limited capacity for employment.
• Supplement to the Work Premium: A monthly supplement for long-term recipients of last-resort financial assistance who are transitioning into the workforce.

Eligibility for the Work Premium

To be eligible for the work premium, you must meet certain conditions for the tax year:

• You must be a resident of Quebec and be at least 18 years old (or have a dependent).
• You or your spouse must have work income.
• Your net family income must not exceed the maximum threshold for your family situation.
• You did not transfer an amount to your parent as a child aged 18 or over enrolled in post-secondary studies (line 20 of Schedule S).
• No one received the family allowance from Retraite Québec for you, unless you turned 18 before December 1, 2024.
• No one designated you as a dependent child for the purposes of the work premium or adapted work premium (line 50 of Schedule P).
• You were not a full-time student. However, if you were a full-time student, you may still qualify if, on December 31, 2024, you were the parent of a child who lived with you.

Not eligible: You cannot claim any of the work premium tax credits if you were confined to a prison or similar institution on December 31, 2024, and were confined for more than 183 days during the year.

Claiming the Work Premium

• Schedule P: You must complete Schedule P, Tax credits respecting the work premium, with your Quebec provincial tax return (TP-1). The final calculated credit amount is claimed on line 456 of your TP-1 return.
• Advance payments: You can apply for advance payments of the work premium throughout the year to receive the credit in monthly installments. The total advance payments received (reported on an RL-19 slip) must be reported and reconciled at tax time.

Work Premium and the Tax Shield

The tax shield is a provincial refundable credit in Quebec that helps protect low- and modest-income families from a reduction in benefits, such as the work premium, when their income increases. The tax shield is calculated and claimed on Form TP-1029.BF-V.

Example

A single worker earning $25,000 may qualify for a work premium of around $900. If their income rises to $28,000, the premium decreases, but they may claim the tax shield to reduce the loss in benefits.