Canada: Tax Memo: 2013 Quebec Budget Tax Highlights

Last Updated: December 4 2012
Article by Pierre Lessard and Rémi Tremblay

On November 20, 2012, Nicolas Marceau, Quebec Minister of Finance, delivered the 2013/2014 Budget of the Government of Quebec. Below are the highlights of the most important tax measures included in the budget.

Measures concerning businesses

  • No changes to tax rates for businesses.
  • Implementation of a tax holiday for large investment projects – the THI
  1. A corporation or a partnership that, after the day of the Budget Speech, enters into a large investment project in Quebec may, under certain conditions, benefit from a tax holiday regarding tax on the income from its eligible activities relating to such project and from a holiday from employer contributions to the HSF regarding the portion of wages paid to its employees that is attributable to the time they spend on such activities.
  2. This tax holiday will last for ten years and may not exceed 15% of the total eligible investment expenditures relating to such project.
  3. To qualify as a large investment project, an investment project must, in particular, concern activities in the manufacturing, data processing and storage, wholesale trade or warehousing sectors.
  4. In addition, the investment project must satisfy a requirement that a minimum investment threshold of $300 million be achieved and maintained.
  5. A corporation will have to obtain an initial certificate as well as annual certificates issued by the Minister of Finance and the Economy.
  • Elimination of the tax holiday for a major investment project will be effective the day of the Budget Speech.
  • Improvement to the tax credit for investments relating to manufacturing and processing equipment
  1. Extension until 2017 of the tax credit for investments relating to manufacturing and processing equipment
  2. The tax credit rate allowed for qualified property for use mainly in the eastern part of the Bas-Saint-Laurent administrative region or in an intermediate zone will be increased by five percentage points in certain circumstances.
  3. This further increase in the tax credit rate for investments will apply for eligible expenses incurred regarding qualified property acquired after the day of the Budget Speech.
  • Temporary increase from 17.5% to 27.5% in the rate of the refundable tax credit for R&D salary relating to biopharmaceutical activities for expenditures incurred and work carried out before January 1, 2018.

Measures concerning individuals

  • Increase of health contribution
  1. As of 2013, the health contribution payable for a particular year by an adult, other than an exempt adult, resident in Quebec at the end of the year will be equal to:
    • where the adult's income for the year is not over $40,000, the lower of $100 and 5% of the amount by which his or her income exceeds $18,000;
    • where the adult's income for the year is over $40,000 without exceeding $130,000, the lower of $200 and the aggregate of $100 and 5% of the amount by which his or her income exceeds $40,000;
    • where the adult's income for the year is over $130,000, the lower of $1,000 and the aggregate of $200 and 4% of the amount by which his or her income exceeds $130,000. As of 2013, the health contribution will be subject to a source deduction.
  • Additional income tax for high-income individuals
  1. As of the 2013 taxation year, a fourth level will be added to the personal income tax table. A rate of 25.75% will apply to this level, which will be comprised of the taxable income bracket over $100,000.
  • Increase in the rate applicable to the calculation of the income tax payable by an inter vivos trust
  1. The rate for determining the income tax payable by an inter vivos trust (including a mutual fund trust and a specified investment flow-through trust) will be raised from 24% to 25.75% as of the 2013 taxation year.
  2. To reflect the fact that the applicable tax rate for inter vivos trusts will be increased by 1.75 percentage points as of the 2013 taxation year, the tax rate to which inter vivos trusts not resident in Canada will be subject on their property income derived from the rental of an immovable property located in Quebec used primarily for the purposes of earning or producing gross revenue that constitutes rent will be raised from 5.3% to 7.05% as of the 2013 taxation year.
  • Additional information
  1. Various amendments must be made to the tax legislation to reflect the fact that the personal income tax table will include a fourth level of taxation as of the 2013 taxation year.
    • Tax rate respecting split income of children
    • Special tax rate relating to an income-averaging annuity payment derived from artistic activities
    • Tax rate on excess profit sharing plan amounts
    • Capital gains inclusion rate for the purposes of calculating the alternative minimum tax
    • Applicable rate for the purposes of the calculation of the refundable tax credit for child care expenses of an individual resident in Canada outside Quebec
    • Mechanisms applicable to the disposition of taxable Quebec property by non-residents
  • A refundable tax credit for the activities (Fitness and Arts) of children from families whose income does not exceed $130,000 will be gradually implemented as of the 2013 taxation year. The tax credit of 20% can reach in 2017 $100 per child when fully implemented. The limit on eligible expenses for the refundable tax credit will be set at $100 for the 2013 taxation year and, subsequently, will be gradually increased by $100 a year until $500 per child is reached as of the 2017 taxation year.

Other tax measures

  • Increase in the specific tax on tobacco products
    1. effective midnight the day of the Budget Speech:
      • the rate of the specific tax of 10.9 cents per cigarette will be raised to 12.9 cents per cigarette;
      • the rate of the specific tax of 10.9 cents per gram of loose tobacco or leaf tobacco will be raised to 12.9 cents per gram;
      • the rate of the specific tax of 16.77 cents per gram of any tobacco other than cigarettes, loose tobacco, leaf tobacco and cigars will be raised to 19.85 cents per gram; the minimum rate applicable to a tobacco stick will be raised from 10.9 to 12.9 cents per stick.
    2. Persons not under an agreement with Revenu Québec who sell tobacco products in respect of which the specific tax has been collected in advance or should have been will have to take an inventory of all these products they have in stock at midnight November 20, 2012 and remit, before December 22, 2012, an amount equal to the difference between the tax applicable at the new rates and the tax applicable at the rates in effect prior to midnight, November 20, 2012. This also applies for collection officers under agreement with Revenu Québec. The form will be provided by Revenu Québec.
  • Increase in the specific tax on alcoholic beverages
  1. At 3 a.m. the day following the Budget Speech, the new rates of the specific tax applicable to alcoholic beverages sold for consumption in an establishment will be $0.82 per litre for beer and $2.47 per litre for all other beverages, while those applicable to alcoholic beverages sold for consumption other than in an establishment will be $0.50 per litre for beer and $1.12 per litre for other beverages. This variation of the new rates will also apply to alcoholic beverages sold by microbrewers and small-scale producers. The form will be provided by Revenu Québec.
  • Increase in the contribution by financial institutions
  1. For the period from January 1, 2013 to March 31, 2019, the rates of the temporary contribution will be:
    • for amounts paid as wages:
      • in the case of a bank, a loan corporation, a trust corporation or a corporation trading in securities, 2.8%,
      • in the case of a savings and credit union, 2.2%,
      • in the case of any other person, 0.9%;
    • for insurance premiums and amounts established regarding insurance funds, 0.3%.
  • Changes relating to the obligation on certain trusts to file a return
  1. The tax legislation will be amended to add three situations where a trust liable for Quebec tax is required to file a tax return and to require a trust that resides in Canada outside Quebec and that owns a rental immovable property in Quebec to file an information return. These amendments to the tax legislation will apply to a trust for its taxation years starting after the day of the Budget.
  • Standardization of taxation of refundable tax credits
  1. The following refundable tax credits will henceforth have to be included in calculating the income of a taxpayer who receives them, after the day of the Budget: for SR&ED, for university research and for research carried on by a public research centre or a research consortium; for fees and dues paid to a research consortium; for private partnership pre-competitive research; for on-the-job training periods; for design; for the construction or conversion of vessels.
  • Some measures applicable in 2013 regarding experienced workers will be deferred to a later date.

Other measures

  • The government will consult the industry and the stakeholders concerned about natural resources development before making changes to the regimes that establish the framework for developing these non-renewable resources.
  • Fight against tax evasion: the government is therefore asking Revenu Québec to recover an additional $80 million in 2013-2014 and another $90 million in 2014-2015.
  • The government is cancelling the gradual increase of 1¢/kWh of the cost of the heritage pool over the period from 2014 to 2018 and will instead index the cost of heritage pool electricity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Collins Barrow National Incorporated
Collins Barrow National Incorporated
Collins Barrow National Incorporated
Collins Barrow National Incorporated
Minden Gross LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Collins Barrow National Incorporated
Collins Barrow National Incorporated
Collins Barrow National Incorporated
Collins Barrow National Incorporated
Minden Gross LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions