Distributions Maroline – Quebec Court of Appeal finds that a Quebec employer must pay Quebec health and QPP premiums on rewards paid to a 3rd-party’s Ontario employees

The taxpayer (“Maroline”) was assessed for failure to include rewards that it paid to salespersons employed by independent retailers in Ontario in the payroll total on which it reported Quebec health premiums (“contributions”) payable by it pursuant to the Act respecting the Régie de l'assurance maladie du Québec (the “LRAMQ”). Those employees never reported to any establishment of Maroline in Quebec.

The Court noted that the literal wording of the relevant provisions (which were similar in this regard to ITA Regs. 100(1) – “employee” and 100(4)) had the effect of deeming those salespersons to be employees of Maroline who reported for work at the Quebec Maroline office out of which the rewards were paid. In affirming the assessments and reversing the decision below, the Court stated:

Ontario salespersons are deemed to be employees within the meaning of the LRAMQ, even though they do not perform services in Quebec. The liability arises from the fact that the wages are paid by the respondent from an establishment in Quebec.

… [T]he judge was of the view that the interpretation advocated by the appellant accords the LRAMQ extraterritorial application. This point must be qualified because, in reality, the legislator assesses employers on their entire payroll paid from their establishment in Quebec. The fact that Ontario salespersons are not eligible for the benefits of the province's health care plan is of little relevance to this analysis.

Assessments based on similar provisions of the Quebec Pension Plan Act were also confirmed.

Neal Armstrong. Summary of Agence du revenu du Québec v. Distributions Maroline Inc., 2022 QCCA 1208 under Reg. 100(4).