Important disclaimer: This information is not individual tax advice. All information provided by PEO Canada is for educational purposes only. For any advising matters regarding your province of employment and/or personal tax situation, please consult a qualified professional.
You may have stumbled upon the term “province of employment” when starting a new job, filling out your TD1 forms, or filing your taxes, but what does it actually mean? There are likely many things you don’t know about province of employment. Perhaps there are even more things you don’t know that you don’t know!
Whether you’re a remote worker, someone who works outside of your home province, or just the kind of person who likes to be informed and prepared, you’ve come to the right place. This guide takes the complicated, nebulous topic that is province of employment and boils it down into its basic building blocks. We have compiled this overview of need-to-know information to address the areas that employees like you have the most questions about.
Province of Residence vs Province of Employment
Province of residence simply refers to the province where you reside as of December 31st of the year you are filing taxes for.
Example: Kate lived in Ontario from January 2024 to November 2024, but she moved to Manitoba in December 2024. Kate’s 2024 province of residence is defined as Manitoba.
Example: Jamal lived in Nova Scotia in December 2024, but moved New Brunswick in January 2025. Jamal’s province of residence is still defined as Nova Scotia for the 2024 tax year.
Province of employment relates to one of two situations:
- If you physically report to work at your employer’s deemed establishment, then your province of employment is the province in which you work.
- If you do not physically report to work at your employer’s deemed establishment, your province of employment is determined based on where your employer’s business is located/from where your employer pays your wages.
Example: Peter lives in Alberta, but he physically reports to work at his employer’s establishment in the Yukon. He performs all of his work duties in the Yukon and then flies home to Alberta during his scheduled breaks. Peter’s province of employment is defined as the Yukon.
Example: Fatima lives in Ontario and travels to Quebec to meet with clients for her employer. She does not report to work at any establishment of her employer. Her employer’s payroll department is based out of their British Columbia office. Fatima’s province of employment is defined as British Columbia.
Sometimes special considerations can impact province of employment designation. For example, equipment/machinery frequently used at a specific work site can sometimes mean the work site location counts as a deemed establishment.
What does “in Canada beyond the limits of any province” mean?
If your employer does not have any deemed establishment in Canada and is located in/pays you from outside of Canada, your province of employment may be determined to be “in Canada beyond the limits of any province”. This is referred to using code “ZZ” for reporting purposes.
Example: Tech Company Inc. employs several programmers working from home in Saskatchewan and Prince Edward Island. Tech Company Inc. has no deemed establishment in Canada and there are no special considerations that apply. In this case, their Canadian employees would fall under the in Canada beyond the limits of any province designation for province of employment.
How Province of Employment Impacts Various Employment Factors
When your province of residence and province of employment are not the same, it may affect different aspects of your employment. Some factors to consider are:
Income Tax Deductions
Tax deductions are based on your province of employment, but your tax responsibility is based on your province of residence. When these designations do not match, your deductions may add up to either more or less than what you are personally responsible for contributing.
Note: for those whose province of employment is in Canada beyond the limits of any province, employment income is taxed using only the code ZZ federal tax tables.
Tax Filing
When you file your personal income tax return, the Canada Revenue Agency (CRA) and Revenue Quebec (where applicable) will compare your taxes deducted against taxes owed. Those with mismatched provinces of employment and residence can expect there to be some kind of difference between these amounts. This may result in either a tax refund or an outstanding balance.
Employment/Labour Standards
You are protected under the legislation of the province/territory in which you are physically working.
Workers’ Compensation
Workers’ Compensation coverage relates to the province/territory in which you are physically working.
Benefits Premiums
Employer paid premiums will have sales taxes applied based on the province of employment. Employee paid premiums will have sales taxes applied based on the province of residence.
Example: Haruhi works from her home office in Ontario for an Alberta-based company. In her particular case, her province of residence is Ontario and her province of employment is Alberta.
- Her employment income is taxed using the Alberta tax tables (as well as the federal tax tables).
- Her tax liability is determined by her province of residence, which is Ontario.
- She is protected under Ontario’s employment/labour standards legislation.
- She is covered under Ontario’s workers’ compensation legislation.
- Haruhi happens to have a 50/50 cost share in place for benefits premiums. The 50% of benefit premiums deducted from her pay is subject to Ontario sales tax, while the 50% of benefit premiums that her employer pays is subject to Alberta sales tax.
Quebec Considerations
On top of the many items to consider when your province of residence and province of employment do not align, there are additional factors when either one of those designations is Quebec.
When Quebec is the Province of Residence
Those who live in Quebec but are taxed outside of Quebec will not receive an RL1 slip. Instead they will receive only a T4 slip.
Quebec residents are responsible for contributing to Quebec-specific programs, rates, and premiums (such as the Quebec Pension Plan). Since deductions are based off of province of employment, Quebec residents who are taxed outside of Quebec will not see those specific deductions come off of their pay. Instead, their deductions will correspond to their province of employment. However, Quebec residents are still responsible for those contributions and should plan accordingly.
When Quebec is the Province of Employment
Those who do not live in Quebec but are taxed in Quebec will receive both a T4 slip and an RL1 slip.
Since deductions are based off of province of employment, non-Quebec residents who are taxed in Quebec will see Quebec-specific programs, rates, and premiums deducted from their pay. These deduction amounts may not align with the contributions they are responsible for based on their province of residence. These individuals should also plan accordingly.
Some Options for Planning Ahead
Now that you know more about province of employment and the potential implications, you may be wondering about potential next steps. Any matters regarding your personal finances will be unique to you, so be sure to speak with a qualified tax advisor for any questions about what’s right for your particular situation. That being said, there are many options to consider when it comes to being proactive and minimizing surprises come tax time. Here are just a handful of options to explore:
Increasing tax deductions at the source
You can request additional taxes be deducted from your pay by filling out the applicable section of the Federal TD1 Personal Tax Credits Return form. On the second page in the box provided, simply fill the additional amount (on top of your current deductions) that you would like taken off per pay. Then submit the completed form you your employer/payer.
Decreasing tax deductions at the source
You can request a reduction in deductions by filling out a T1213 Request to Reduce Tax Deductions at Source form. Be sure to submit your T1213 to the CRA as per the instructions on the last page of the form. Once you receive a Letter of Authority back from the CRA, you can submit it to your employer/payer.
Setting money aside
Instead of (or in addition to) changing your deductions at the source, you can choose to set aside a portion of your earnings to put toward potential amounts owing in taxes.
Taking no action
Adjusting your tax deductions at the source is completely optional, so you can always decide to take no action. There are many reasons why you might choose this course of action (or should we say, this course of inaction). For example, some people may decide to take no action if they anticipate owing but normally receive a tax refund. Others may decide to take no action if they anticipate receiving a refund and prefer that option.
Key Takeaways:
- Province of residence and province of employment do not always align
- Province of employment can affect different aspects of employment, including tax deductions and benefits premiums
- When Quebec is either the province of residence or the province of employment, there are additional factors to consider
- There are many options for planning around the potential impacts that province of employment matters can have on your finances
- Consult a qualified advisor if you have questions about how province of employment matters may affect your personal tax situation
Works Consulted:
The National Payroll Institute. NPI Guidelines – It Pays to Know: Province of Employment Guidelines. Toronto, Ontario: The National Payroll Institute, 2024.