Quebec Budget 2011

Highlights

Download the budget highlights as a PDF.

Quebec Minister of Finance Raymond Bachand presented the government’s budget on March 17, 2011. The budget does not change corporate or personal tax rates.

The highlights of the provincial budget are outlined here. In a few hours, PwC will issue a more detailed Tax Memo that discusses the budget.

Corporate Tax Measures | Personal Tax Measures | Quebec Sales Tax Measures | Other Measures

Corporate Tax Measures

No changes to tax rates for businesses.

Introduction of a refundable tax credit for the production of cellulosic ethanol in Québec

An eligible corporation that produces eligible cellulosic ethanol in Québec may receive, for its eligible production of cellulosic ethanol (produced in Québec from renewable materials eligible and sold in Québec), a refundable tax credit of up to $0.15 per litre for a temporary period ending March 31, 2018.

Changes to the refundable tax credit for book publishing

The refundable tax credit for book publishing will be changed so that the digital version of an eligible book or a book that is part of an eligible group of books of a corporation will be eligible for the tax credit. This change will apply the day after the Budget Speech.

Change to the refundable tax credit for sound recording production

The tax credit for sound recording production will be changed so that a sound recording sold in a format other than on a physical medium, for instance a downloadable file, can henceforth be eligible for the tax credit. This change will apply the day after the Budget Speech.

Measures to encourage investments of tax-advantaged funds

Many amendments will be made to the statutes of incorporation of investment corporations such as the Fonds de solidarité des travailleurs du Québec (FTQ), Fondaction and Capital régional et coopératif Desjardins in order to better adapt the standards with the capital needs of businesses such as for:

• Recognition of investments made for business succession;
• Greater recognition of investments in local venture capital funds;
• Increase in the limit applicable to the strategic investment category;
• Redefinition of the category grouping major investments made by the Fonds de solidarité FTQ;
• Increase in the capital of Capital régional et cooperatif Desjardins.

Personal Tax Measures

No changes to tax rates for individuals.

Introduction of a tax credit for experienced workers

To encourage experienced workers to remain in, or return to, the labour market, a tax credit to eliminate the income tax that people 65 or over would have had to pay on part – ultimately, a maximum of $10,000 in 2016 – of their eligible work income in excess of $5,000 will be introduced as of the 2012 taxation year according to the following formula:

Rate applicable for the year to the first
taxable income bracket of the personal
income tax table (16%)

x

Eligible amount of work income for the year (maximum $10,000, when fully implemented)

x

Amount by which 1 exceeds the
rate used for the year to calculate the
deduction for workers (1 – 0.06)

This tax credit may not be carried forward or transferred to the individual's spouse.

Greater access to the refundable tax credit for informal caregivers of adult persons:

As of the 2011 taxation year, the refundable tax credit for informal caregivers of adult persons will have three components. The first will apply to informal caregivers who house, in the strict sense of the term, an eligible relative; the second, to informal caregivers who cohabit with an eligible relative unable to live alone; and the third, to certain informal caregivers caring for an elderly spouse.

Replacement of the refundable tax credit for the acquisition or leasing of a new green vehicle by a purchase or leasing rebate program

Effective January 1, 2012, an electric vehicle purchase or lease rebate program will replace the existing refundable tax credit. It is expected that the rebate will be calculated on the basis of battery capacity in kilowatt-hours. For 2012, the rebate will range between $5,000 and $8,000.

Quebec Sales Tax Measures

To reflect the fact that the QST rate will be 9.5% effective January 1, 2012, the tobacco tax rates will be changed to keep the tax burden on these products constant.

The mechanism for managing the exemption stipulated by the fuel tax system will be changed to replace the existing reimbursement of the tax paid measure with a purchase exemption measure applicable effective July 1, 2011.

Other Measures

Implementation of the Agence du revenu du Québec with a cost-benefit approach effective April 1, 2011.

Québec Pension Plan

A gradual rise over six years of the contribution rate from 9.9% to 10.80% in increments of a 0.15 percentage point per year. The contribution rate will be increased effective January 1 of each year, starting January 1, 2012 and continuing until January 1, 2017.

The monthly increase in the QPP applied for after age 65 will rise from 0.5% to 0.7% effective January 1, 2013.

The monthly reduction in a pension applied for prior to age 65 will be raised from 0.5% to 0.6% in the case of a maximum pension. The adjustment will be phased in over three years beginning January 1, 2014.

Shale Gas

Introduction of a new shale gas royalty plan. The new royalty plan will come into effect once the strategic environmental assessment recommended by the BAPE has been completed and the legal and regulatory framework has been adapted to its conclusions. This will allow the industry the necessary lead time to adapt to the new plan.

In 2012, the Québec government will introduce the gas development program. This program will make it possible to pursue exploration so as to determine the industry's true potential. The introduction of the gas development program will allow businesses to pay lower royalties in the initial phases of certain specific projects, which will have to be authorized. On the other hand, royalty rates will increase more rapidly based on a well's profitability.