The client
An incorporated business owner in Thetford Mines paying themselves $3,800/month by T4 plus $1,200/month in dividends bought a $225,000 home at 5% down -- on an income a first lender's underwriter counted twice.
Purchase price
$225,000, Thetford Mines
5% down, insured
Federal T4 income
$3,800/month
From the applicant's own incorporated business
Quebec Releve 1 (RL-1)
$3,800/month
The SAME employment income, restated on Quebec's own provincial slip
Dividend income
$1,200/month
From the same incorporated business
The problem
Every province taxes income at both federal and provincial levels, but Quebec collects its own provincial income tax directly rather than through the federal system most other provinces use -- which is why Quebec employers issue a provincial Releve 1 slip alongside the federal T4, both reporting the identical employment income under two different tax authorities.
How one income became two on paper
- ▸The T4 reported $3,800/month in employment income from the applicant's own incorporated business
- ▸The Releve 1 reported that exact same $3,800/month -- Quebec's own provincial mirror of the T4, not a second job or a second payment
- ▸A first lender's underwriter, unfamiliar with the RL-1 specifically, added it to the T4 and the dividends as though it were a separate, additional income source, inflating qualifying income to $8,800/month
Nobody had overstated anything on either slip. The error was entirely in how a lender unfamiliar with Quebec's own dual tax-slip system read two documents describing one paycheque.
The numbers
Correcting the double-count meant qualifying the file on a real number smaller than the one first submitted -- an unusual direction for this kind of correction, but the right one.
| Qualifying on the corrected, non-duplicated income | Amount |
|---|---|
| Base mortgage (95% of purchase price) | $213,750 |
| CMHC premium (4.00% at 90.01-95% LTV) | +$8,550 |
| Total insured mortgage | $222,300 |
| GDS at the qualifying payment | Double-counted (T4 + RL-1 + dividends) | Corrected (T4 + dividends only) |
|---|---|---|
| Qualifying income used | $8,800/mo | $5,000/mo |
| GDS | 20.9% | 36.9% |
The double-counted figure would have shown a misleadingly comfortable 20.9% GDS; the true, corrected income shows 36.9% GDS and 40.5% TDS -- both still clear CMHC's maximums, on an income scale consistent with average new mortgage amounts in a market like Thetford Mines, but by a real, much narrower margin than the double-counted figure suggested.
The solution
A courtier hypothécaire licensed under Quebec's Act respecting the distribution of financial products and services caught the double-count before it reached final approval on an inflated number.
First, explained Quebec's federal/provincial dual tax-slip system in writing, walking the underwriter through why a Releve 1 exists at all and what it actually reports, the same groundwork behind how an incorporated borrower's file actually comes together.
Second, confirmed directly with the corporation's accountant that the T4 and the Releve 1 describe the identical employment income, not two separate payments.
Third, resubmitted the file on the corrected, non-duplicated total -- T4 plus dividends only -- rather than leaving an inflated number on file that a later audit or re-verification would catch.
The outcome
The purchase funded insured at 36.9% GDS and 40.5% TDS on the true income -- a real approval, but on a noticeably tighter margin than the double-counted figure had suggested; Quebec's welcome tax on the $225,000 purchase came to $1,936.
Both corrected ratios sit inside CMHC's 39% GDS and 44% TDS maximums; the double-counted 20.9% figure was never the real number this file was ever going to close on.
What to take from this file
- 01Quebec's Releve 1 is the provincial mirror of the federal T4, not a second income source. A lender unfamiliar with Quebec's dual tax-slip system can double-count the same pay without meaning to.
- 02Catch an inflated income figure before it reaches final approval, not after. A double-counted number left on file creates real risk at renewal or re-verification.
- 03A correction that lowers qualifying income is still the right correction. A tighter, accurate approval is worth more than a comfortable, wrong one.
- 04An incorporated business owner's accountant can confirm, in writing, exactly what each slip actually represents -- a fast, authoritative way to close this kind of gap.
Sources
Every regulatory figure in this file traces to one of these primary sources. Client details and anything that varies by lender are illustrative, as flagged below.
- ▸CMHC — Purchase (Mortgage Loan Insurance) — default-insurance premium schedule by LTV band (25-year amortization).
- ▸CMHC — CMHC Home Start — minimum down payment tiers (5%/10%) and the $1.5M insured price cap.
- ▸OSFI — Minimum qualifying rate for uninsured mortgages — the minimum qualifying rate — greater of contract rate + 2% or 5.25%.
- ▸CMHC — CMHC Reviews Underwriting Criteria — GDS 39% / TDS 44% maximums and the 600 credit-score floor for insured files.
- ▸Provincial/territorial mortgage-broker legislation fetched directly (bclaws.gov.bc.ca, legisquebec.gouv.qc.ca, fcaa.gov.sk.ca, web2.gov.mb.ca, nslegislature.ca, assembly.nl.ca) plus FCNB's own site for NB and CanLII's index for PE — see notes for per-province method — provincial mortgage regulators and licence titles.
- ▸Gouvernement du Québec — Droits sur les mutations immobilières — Quebec's transfer duties ('welcome tax') — 2026 indexed brackets.
Illustrative in this file — lender-specific, not rules:
- ▸4.90% contract rate — rates move daily; not a quote.
Authority & provenance
How this case file was built
We publish the origin, the verification method and the reviewer for every case file, so you can judge how far to trust it before you rely on it with a client.
Where it comes from
Derived from files handled by Treadstone’s fulfillment desk and from scenarios contributed by partner brokerages. Names, employers, exact amounts and dates are changed so no client or file is identifiable.
Provenance: Composite — a pattern seen repeatedly on fulfilled files, not a single transaction.
What is verified
Every regulatory figure traces to a primary source listed above and was checked against it on the date shown. The arithmetic is recomputed by machine on every rebuild.
Anything that varies by lender is labelled illustrative rather than stated as a rule.
Who reviewed it
Reviewed for Canadian regulatory accuracy before publication, and re-checked whenever a cited rule changes.
Reviewed by: Nicholas Parson, Treadstone Associates — reviews every case file before publication.
This case file is professional reference material for licensed mortgage professionals. It is not advice to a borrower, and it is not a lender commitment. Insurer rules, qualifying rates and provincial taxes change — confirm the current position with the insurer, regulator or lender before you rely on any figure here in a live file.