Self-employement in Montreal (2015, health insurance, credit)

[jwt8070]

I am posting this question for a friend who has been accepted to immigrate to Qucbec. He is a skilled programmer and has been self-employed for the last few years. He has a few loyal clients who send him enough work to keep him busy. He would like to continue working with his clients after moving to Montreal, meaning he will be self-employed. He is married and has two small kids.

He has a few of questions related to income tax and health insurance working as self-employed.

1. What income tax does he have to pay (Federal, Province, City, ...) and roughly what percentage of his income will be taxed. He currently makes about $60k gross annually.

2. Will he have to pay for health insurance for his family out of his own pocket? If so, how much does it cost for purchasing health insurance for a family of four?

Thank you.

[BIMBAM]

This could be of some interest to you. Depending on how he might want to structure his business, he could get a very large tax credit, and he will get tax credits and assistance checks for his two children:

Financial solutions, SMB Financial and tax measures

All taxes included, he'll probably pay about 15000 dollars in tax, so a quarter of the income. He may be eligible for a number of rebates, however, so he could get some back.

We have single payer government funded health care, which you'll need to apply to get a card for when you arrive, so you won't need much in the way of health insurance. You might need some insurance to cover dental, vision care, drug costs (although these are heavily subsidized and provided free after a point) etc. Mine costs about 200 dollars a year for me alone, so the family of four should be able to get some for under a thousand dollars, or just go piece meal out of pocket for the extra health care expenses if they so choose.

[jwt8070]

BIMBAM,

Thank you for the information.

Originally Posted by BIMBAM

This could be of some interest to you. Depending on how he might want to structure his business, he could get a very large tax credit, and he will get tax credits and assistance checks for his two children:

Financial solutions, SMB Financial and tax measures

I looked at the information in the above page, one of the requirements is that the corporation must employ minimum six full employees during the year in to order to qualify for the tax credt. My friend will be working for himself so I don't think he is eligible.

Originally Posted by BIMBAM

All taxes included, he'll probably pay about 15000 dollars in tax, so a quarter of the income. He may be eligible for a number of rebates, however, so he could get some back.

I think you are talking about income tax (federal and province) here. Are there also employment tax one must pay if he is self-employed? In the US where I live, if one is self-employed, one must pay the employee portion of the employment tax which is normally paid by the company if one is employed by a company. Are there also such taxes in Quebec?

It is good to know that one does not have to pay extra for health insurance.

[barneyg]

Those employment taxes exist here too. In Quebec, your friend would need to pay both the employee and employer portions of the QPP (Quebec Pension Plan i.e. social security) and QPIP (Quebec Parental Insurance Plan) and contribute to the health services fund (FSS, normally only paid by the employer).

On $60k gross income, that's
QPP = ~$4,500
QPIP = ~$600
FSS = ~$250

With no deductions and credits whatsoever (other than the basic personal credit), his federal taxes would be around $6,500 and his provincial taxes would be aroud $7,500. So you're looking at a bit over $40,000 net income for $60,000 gross income.

Bimbam is right that hospitals are free but I'd like to know what insurance company will charge less than $1,000/year for a family for drugs+dental+vision insurance, that's outrageously low. All Quebec residents are required to have prescription drug insurance, either through the RAMQ (public) at a cost around $600/year, or through a group insurance plan, in which case the employee's contribution will be lower (and I would assume is where the $200 comes from) but the employer chips in significantly, which would obviously not be the case for someone who is self-employed.

To add my own example to the mix, I currently have a typical group insurance plan for a fairly large employer. I pay around $300/year for the basic family plan (which only covers drugs, travel insurance and other minor stuff). My employer adds $1400/year so the actual cost of coverage is $1700/year, and that's for a rather large group. A plan covering dental/vision would cost me $2200 while my employer would still pay $1400, so $3600 total.

[sunshineleith]

Originally Posted by barneyg

...All Quebec residents are required to have prescription drug insurance, either through the RAMQ (public) at a cost around $600/year, or through a group insurance plan...

Just a correction here - the premium runs anywhere from 0 to $563 per annum (they actually reduced it from $600 in 2011).
Summary of costs | RAMQ

Do you know how it is determined? I am guessing by salary?

Also OP - good information here on the health insurance in Quebec:
How to register | RAMQ

[barneyg]

Originally Posted by sunshineleith

Just a correction here - the premium runs anywhere from 0 to $563 per annum (they actually reduced it from $600 in 2011).
Summary of costs | RAMQ

Do you know how it is determined? I am guessing by salary?

Thanks, I had gone by this year's maximum amount payable on the Quebec tax return, which is 581$. As with a bunch of Quebec credits, it is based on family income. Someone who is single won't pay anything if his/her income is below ~$15k and will pay the full premium if his/her income is above ~$25k. For a family with 2+ kids, those thresholds go up to about 30k and 45k (only adults pay the premium, which would be 1163$ in that case).