Provincial Parental Insurance Plan

Key Takeaways

• The only provincial parental insurance plan (PPIP) in Canada operates in Quebec.
• The Quebec Parental Insurance Plan (QPIP) offers up to 75% of weekly income for new parents for one year.
• The QPIP premiums paid can be partially deducted from Canadian federal taxes.
• Outside of Quebec, parental benefits are available through Canada's federal employment insurance program.
• The QPIP replaced federal employment insurance benefits within Quebec.

What Is a Provincial Parental Insurance Plan (PPIP)?

A provincial parental insurance plan (PPIP) is a mandatory social benefit program that pays benefits to new parents. It is administered at the provincial level in Canada. The support is meant to encourage and enable parents to stay at home during the first year of their child's life.

The Province of Quebec administers the only PPIP, known as the Quebec Parental Insurance Plan. In particular, the QPIP delivers maternity, paternity, parental, and adoption benefits to qualified persons. At the federal level, Canada offers a similar benefit through its employment insurance program.

Detailed Overview of the Provincial Parental Insurance Plan (PPIP)

The Province of Quebec has a plan mandatory paid parental leave program called the Quebec Parental Insurance Plan (QPIP). The QPIP is a social insurance program that was designed to help Quebecois parents spend a year at home after the birth or adoption of a child. Wager earners, employers, and the self-employed in Quebec are required to pay into the plan and the QPIP pays up to 75% of weekly income for new parents. The income replacement plan is available to all taxpayers who are parents, regardless of marital status or sexual orientation. It also applies to parents who are adopting a child.1

Outside of the Province of Quebec, the term provincial parental insurance plan is used to refer to the QPIP for purposes of administering Canadian federal tax. Canadian federal taxpayers are eligible for a tax deduction relating to taxes, paid or payable, on regular or self-employed income at the provincial level, including those paid into the QPIP. The Canada Revenue Agency (CRA) administers the deduction.2

Canadians in other provinces can receive similar maternity and parental benefits through the federal employment insurance program. Quebec's plan replaces these federal benefits in the Province of Quebec. The plan is in place for the same reasons but has differing rules, regulations, and tax implications.2

Fast Fact

Quebec's parental insurance plan came into effect on Jan. 1, 2006.

Additional Financial Benefits for Canadian Parents

In addition to the PPIP deduction, there are other tax benefits geared toward helping Canadian parents. Here are some of the other programs and deductions.

There is a program called Automated Benefits Application (ABA) that makes it easy for parents to automatically apply for child benefits when registering the birth of a new baby. In provinces that don't offer the ABA, new parents can apply for benefits directly.3

There is the Canada child benefit (CCB), which is a tax-free monthly payment made to eligible families to help with the cost of raising children. In 2019, a tax-paying household could be due to receive up to $6,496 per year for each eligible child under the age of six and up to $5,481 per year for each plan-eligible child from six to 17 years of age.4

There is also the goods and services tax/harmonized sales tax (GST/HST) credit. This credit is a tax-free quarterly payment of up to $560 per year with an additional $147 annually, per child, for eligible individuals and families who have low and modest incomes. The payment is meant to offset all or part of the GST/HST that they pay.5

There are also some related provincial or territorial programs that are administered by the Canada Revenue Agency (CRA). The majority of provinces and territories also have child and family benefits and credits. Eligible individuals and families can receive these deals in addition to the other deductions.

Among other potential benefits, there is a child disability benefit - a tax-free benefit for eligible families who care for a child under 18 who is eligible for the disability tax credit. The child disability benefit is paid each month, along with the Canada child benefit.6

There is also the Canad workers' benefit, formerly known as the working income tax benefit (WITB), which is a refundable tax credit that provides tax help for working low-income individuals and families. Eligible individuals and families may be able to pay for quarterly benefit advance payments.7

Practical Example: How the PPIP Works for Quebec Parents

In a hypothetical example, Celine, a full-time employee of an eCommerce company in Quebec, has given birth to a baby girl and would like to spend the first year of her new daughter's life full-time in the care of the child. She could apply for benefits under the QPIP, for people in the Province of Quebec.

According to the rules for the QPIP, Celine's maximum insurable earnings for the year are $76,500.8 She would receive weekly checks throughout the year for up to 75% of her income. If she earns less than $2,000 per year, she will not have taxes assessed on these earnings. If she makes over $2,000 per year, both she and her employer will have a tax assessment. Regarding taxes, she will be charged a premium rate of 0.526% for a maximum of $402.39 and her employer will be charged 0.736% for a maximum of $563.04