Canada: Highlights Of The Québec Government's 2013-2014 Budget Relating To Businesses

Changes to the Mining Tax Act

Following the defeat of the Parti Québécois on April 7, 2014, taxpayers were left facing some uncertainty with respect to the fate of Bill 55, which sought to introduce the Parti Québécois' reform to the mining tax regime, which was to apply to fiscal years beginning after December, 31, 2013. The Liberals, who had remained silent for more than a year with respect to their position on this reform, have now announced that they will adopt the Parti Québécois' proposed amendments (that is, in essence, the minimum tax and new graduated tax rates).1

In addition to the above-mentioned reform, the government also proposes to implement certain changes that will play a role in the computation of the income of certain corporations for the purposes of the Mining Tax Act.

The Mining Tax Act will be amended such that, following the receipt of a written request, the Minister of the Energy and Natural Resources will henceforth have the power to allow for the value of the gemstones extracted from a mine to be established outside the mine site.

The government also proposes to amend the definition of the term "processing" in order to include hydrometallurgy (i.e., a process used in the processing of new mineral substances, such as rare earths), with the result that the value of the hydrometallurgy products will form part of the tax base for the purposes of the Mining Tax Act.

Corresponding changes are also made to the method used to calculate the processing allowance in order to account for the addition of hydrometallurgy activities to the definition of processing. These changes will allow operators to treat assets used for hydrometallurgy activities in the same manner as those used for smelting or refining, which are two activities that were already included in the definition of processing.

These changes will apply for fiscal years beginning after December 31, 2013.

Deferral of Changes to the Refundable Tax Credit for Resources Announced in the March 20, 2012 Budget Speech

In the March 20, 2012 Budget Speech, the government announced certain changes to the refundable tax credit regime for resources, which were to apply regarding eligible expenses incurred after December 31, 2013.

These changes were aimed at reducing the rates of the refundable tax credit for resources by ten percentage points where the eligible expenses were related to mining resources, oil and natural gas, and were incurred by a corporation not operating any mineral resource, oil or gas well, and by five percentage points otherwise, except regarding the rates applicable to eligible expenses relating to renewable energy and energy conservation, which would not be reduced. The government had announced that it would restore the five and ten percentage points, as applicable, to certain corporations in exchange for providing an equity stake to the province. Budget 2014-2015 provides that the implementation of the changes will be deferred pending the results of the commission that will be put in place to analyze Québec's tax systems and assistance measures.

New Tax Incentives for SMEs

Reduced tax rate for manufacturing SMEs

In order to help the Canadian-controlled private corporations at least 25% of whose activities consist of manufacturing and processing activities (the "manufacturing SMEs"), the government announced that it will introduce a deduction of up to four percentage points from their actual reduced tax rate of 8% on their first $500,000 of annual income.2

The rate of such deduction will vary based on the proportion of a corporation's activities that can be attributed to manufacturing and processing, such that corporations for which such proportion will be equal to or higher than 50% will be entitled to the maximum additional deduction.

The maximum additional deduction to which a manufacturing SME will be entitled will be two percentage points as of June 5, 2014 and will rise to four percentage points as of April 1, 2015. The additional deduction will be adjusted proportionately if the taxation year of a manufacturing SME includes June 4, 2014 or March 31, 2015.

Additional deduction for transportation costs of remote manufacturing SMEs

Budget 2014-2015 proposes to create an additional deduction for remote manufacturing SMEs in calculating their net income to reflect the higher transportation costs attributable to the distance of certain regions from Québec's large urban centers. To be eligible, the manufacturing SME must be a Canadian-controlled private corporation whose paid-up capital is less than $15 million.

The additional deduction rate will apply for taxation years ending after June 4, 2014. The amount of this additional deduction may attain 6% of gross income for a given taxation year and depends on where the manufacturing activities of the corporation are carried out, the level of its manufacturing activities, the regional cap, the size of the corporation and its gross income for the taxation year. The additional deduction rate will be adjusted proportionately for a taxation year of a manufacturing SME that includes June 4, 2014.

Reduced contribution to the Health Services Fund to boost innovation in SMEs

Budget 2014-2015 proposes to temporarily reduce contributions that have to be made by employers to the Health Services Fund for full-time jobs created in the natural and applied sciences sector.

The reduction will be available to qualifying employers until 2020 for the increase in payroll that can be attributed to the hiring of new specialized employees in the above sector. This reduction will completely eliminate the contribution payable in respect of such new specialized employees to the Health Services Fund if an employer's total payroll does not exceed $1 million. By contrast, only a partial reduction will be afforded to employers whose total payroll is between $1 million and $5 million.

Introduction of Incentives to Foster the Marine Industry

Budget 2014-2015 proposes to add two new fiscal measures to stimulate Québec's shipyards. The first of these measures will enable Québec's shipowners to implement a tax-free reserve to grant the execution of construction, renovation and maintenance work on vessels of their fleet to a Québec shipyard. Under the second measure, Québec shipowners that grant work to a Québec shipyard will be entitled to claim an additional 50% deduction for the depreciation of a vessel.

Reduction of Certain Tax-Assistance Measures

As one of the steps taken to eliminate Québec's budgetary deficit, the government announced a 20% reduction of certain tax-assistance measures intended for businesses.

Reduction of tax benefits relating to flow-through shares

A reduction of 20% will be applied to the special deductions allowed under the flow-through share regime. More specifically, this reduction will apply to the additional deduction for mining exploration expenses incurred in Québec and to the special deduction in respect of surface expenses or oil or gas exploration expenses incurred in Québec.

The rate for these deductions, which was formerly 25% each, will now each be decreased to 10%, such that the combined deduction will range from 110% to 120% (rather than from 125% to 150%).

The deduction for certain issue expenses incurred by a corporation (which is limited to the lesser of the issue expenses incurred by the issuer or 15% of the proceeds of the issue of the flow-through shares) will also be targeted by the 20% reduction such that the limit set at 15% of the proceeds of the issue of the flow-through shares will now be reduced to 12%.

These amendments will generally apply to flow-through shares issued after June 4, 2014, except for flow-through shares issued either pursuant to a placement made no later than June 4, 2014 or pursuant to an interim prospectus receipt application or a prospectus exemption application, as applicable, made no later than June 4, 2014.

Measures concerning scientific research and experimental development

Budget 2014-2015 proposes to reduce the rate of the refundable tax credits concerning scientific research and experimental development (R&D) by 20%.

More specifically, (i) the rate of the "R&D salary" tax credit will be reduced to 14% (as opposed to 17.5%) and (ii) the rate of the "R&D university" tax credit, the tax credit concerning precompetitive research carried out in private partnership and the tax credit concerning contributions paid to an eligible research consortium will all be reduced to 28% (as opposed to 35%).

Further, under the current tax legislation, Canadian-controlled private corporations may benefit from a rate varying from 17.5% to 37.5% for the R&D salary tax credit, depending on the amount of their assets. Budget 2014-2015 proposes to reduce this rate so it would range from 14% to 30%.

The increase from 17.5% to 27.5% (and up to 37.5% for Canadian-controlled corporations) in the rate of the refundable tax credit for R&D salary in relation to biopharmaceutical activities will also be eliminated. However, a corporation that was previously granted the status of eligible biopharmaceutical corporation by Investissement Québec may continue to benefit from the increase in the rate of the refundable tax credit for R&D salary for its taxation year including June 4, 2014 at a maximum rate of 22% (and up to 30% for Canadian-controlled corporations).

Reduction of 21 refundable tax credits

The remaining assistance programs that will be affected by the government's 20% cut are as follows:

  • Refundable tax credit for technological adaptation services;
  • Refundable tax credit for design;
  • Refundable tax credits for the production of multimedia titles;
  • Refundable tax credit for major employment-generating projects;
  • Refundable tax credit for job creation in the resource regions, the Vallée de l'aluminium and in Gaspésie and certain maritime regions of Québec;
  • Refundable tax credit for job creation in Gaspésie and certain maritime regions of Québec in the fields of marine biotechnology, mariculture and marine products processing;
  • Refundable tax credit for resources;
  • Refundable tax credit for international financial centres (IFCs);
  • Refundable tax credit relating to a new financial services corporation;
  • Refundable tax credit for the hiring of employees by a new financial services corporation;
  • Refundable tax credit pertaining to the diversification of markets of Québec manufacturing companies;
  • Refundable tax credit to foster the modernization of the tourism accommodation offering;
  • Refundable tax credit for Québec film and television production;
  • Refundable tax credit for film production services;
  • Refundable tax credit for film dubbing;
  • Refundable tax credit for sound recording production;
  • Refundable tax credit for the production of shows;
  • Refundable tax credit for book publishing;
  • Tax credit for the production of multimedia environments or events staged outside Québec;
  • Refundable tax credit for on-the-job training periods;
  • Refundable tax credit for manpower training in the manufacturing, forest and mining sectors.

The coming into force of the proposed changes to the above-mentioned assistance programs varies from one to the other.


1 For more information on the Québec mining tax reform, see Major Changes to Québec's Mining Tax Regime and Ministère des Finances du Québec, Information Bulletin 2013-4, May 6, 2013.

2 The $500,000 small business income threshold is gradually reduced for corporations whose paid up capital is greater than $10 million, to become nil at $15 million.

To view the original article please click here.

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

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

Similar Articles
Relevancy Powered by MondaqAI
Crowe MacKay LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Crowe MacKay LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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 (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

To Use 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.


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.


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