Tax lawyers Montreal

Labor law: in search of the vacuum

Your client is fired. It is part, with 20 years of service. He wants a compensation of $ 300,000. He asks you how to structure it to pay the least possible taxes.

The easy answer is to suggest him to pay tax on the $ 300,000. But with the marginal tax rate in Quebec which border the 50%, your client will not cut champagne with you on such a recommendation from you.


Tax laws reflect a fiscal pact or compromise. Taxation works by revenue source.

Some sources of income attract punitive taxes, such as on employment income or income from business or self-employed are not included. So if you are employed or self-employed, you deserve the eyes of the tax that you charge up to 50%. Somehow a penalty for choosing this form of subsistence income?

However, there are sources of income supposedly more deserving. So if you take a risk and make an investment which translates into a capital gain will reduce your tax burden at 25%. Is a reward for investing in the economy.

And if you build up a corporation, you will be allowed a federal-Québec tax rate of 19% on the first $ 500,000 of income from your company rates. At least if the revenues are kept in society and not distributed to shareholders in the form of salaries, fees, or dividends.


Patience ... Stay calm, as the Mayor said Coderre ..... This is a case of vacuum.

I speak here of Electrolux. I suggest that any lawyer strategist labor law will be interested to look at benefit of its customers tax vacuums it can present their case by case, depending on the facts and circumstances in this case.

Tax laws contain a large number of vacuums. Some are deliberately, as part of the fiscal policy of the state. Others are of statutory interpretation arising from the interpretation we can make enabling provisions of these laws. And others, is not of itself vacuums "pure", allow a tax-deferred over time.

Counsel innovative labor law will mirror its rules on possible vacuums.


We all know the possibility of contributions to registered retirement savings to the extent of the margin schemes. It is also understood that, exceptionally, certain types of moral or punitive damages may escape taxation. But there are others. Among the possible offer, we can list:

a) income from active business on the first $ 500,000 of income are taxed at 19% in Quebec;

b) Capital gains are taxed at 25%. And sale by the case of goods (stocks, any rights) could earn him a more favorable tax rate;

c) loans and investments are not taxable as long as we can document that it is not pure assemblies;

d) sharing plans spread over time can provide a tax deferral;

This list is not exhaustive. It fits the facts of any particular situation.

The moral of the story is to get the vacuum and push the envelope there or the facts and the law allow. But all obviously subject to your appetite on customer acceptance of any risk.

All this will of course also take into account the perspective of the employer, flexibility on innovative solutions, and its desire for a tax deduction. All in all an arbitration employee-employer game ....

Tax lawyers Montreal | Montreal Quebec tax lawyer