2012 Quebec Budget
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Raymond Bachand, Quebec Minister of Finance, delivered today, March 20, 2012, the 2012/2013 Budget of the Government of Quebec. Below are the highlights of the most important tax measures included in the budget.
Measures concerning businesses | Measures pertaining to trusts | Measures concerning individuals | Other measures
Measures concerning businesses
No changes to tax rates for business.
Reduction in contributions to the Health Services Fund for employers employing workers age 65 and over
- Employers that employ such workers may claim, as of 2013, a reduction in their contributions to the Health Services Fund. For each employee at least 65 years old, this reduction may reach $400 in 2013, then rise to $500 in 2014, $800 in 2015, to finally reach $1,000 in 2016.
Introduction of tax relief for public transportation organized by employers
- An employer that organizes, alone or jointly with other employers, a public transportation service for employees who live outside the local municipal territory where the establishment they normally work at is located may deduct an additional amount equal to 100% of the amount otherwise deductible for the setting up and operation of such a service.
- The employees are not required to include, in the calculation of their income from an office or employment, the value of the benefits relating to the use of an intermunicipal public transportation service organized by their employer.
Enhanced recognition of post-secondary studies for the purposes of the tax credit for new graduates working in a remote resource region
- The cumulative amount of the tax credit has been raised from $8,000 to $10,000 for those who have obtained a recognized post-secondary diploma.
Renewal of the refundable tax credit for labour training in the manufacturing, forestry and mining sectors
- Renewal of the refundable tax credit until December 31, 2015 under the same terms and conditions.
Changes to the refundable tax credit for multimedia titles (general) and the refundable tax credit for corporations specialized in the production of multimedia titles
- Change relating to the specialized corporation certification
- The condition whereby all or almost all the activities a corporation carries out in Quebec consists in producing eligible multimedia titles will be changed so that a corporation can obtain a specialized corporation certification if these activities are higher than 75%.
- Change to the rules applicable to subcontracting
The tax legislation will be changed so that the tax assistance is granted to the corporation that assumes the economic risk relating to the eligible production work, in this case the corporation that awards the subcontract. This change will apply the day after the Budget Speech.
Improvement to the tax credit for investments relating to manufacturing and processing equipment
- The tax credit for investments will be changed so that property that is acquired for use exclusively in Quebec and primarily in the smelting, refining or hydrometallurgy activities of foreign ore, other than ore from a gold or silver mine, is qualified property if it is acquired before January 1, 2018 and if it satisfies the other conditions otherwise stipulated by the tax legislation.
Introduction of fiscal measures to encourage the creation of new financial services corporations
- To encourage the creation of new corporations in the financial services sector, two new refundable tax credits will be introduced for a period of five years.
- Refundable tax credit for the hiring of employees by a new financial services corporation
- An eligible corporation may receive, for a taxation year, a refundable tax credit equal to 30% of eligible salaries, limited to $30,000 per eligible employee annually.
- Refundable tax credit relating to a new financial services corporation
- An eligible corporation may receive, for a taxation year, a refundable tax credit equal to 40% of eligible expenditures, limited to $150,000 annually.
- A tax holiday will be introduced to foster the hiring of foreign employees specialized in finance.
Introduction of a refundable tax credit pertaining to the diversification of markets of Quebec manufacturing companies
- To support Quebec manufacturing companies that want to commercialize their products in markets outside Quebec, a new refundable tax credit will be introduced equal to 30% of eligible certification expenses, limited to $45,000.
Changes to the refundable tax credit for resources
- The tax credit rates available to corporations that develop no mineral resource, oil or natural gas well regarding eligible expenses relating to mining resources, oil or natural gas will be reduced by 10 percentage points, while the rate of the tax credit available to such corporations regarding eligible expenses relating to other natural resources (cut stone) will be reduced by five percentage points. These changes will apply to eligible expenses incurred after December 31, 2013.
Introduction of a refundable tax credit to foster touristic accommodation offerings outside the greater Montréal and Québec City regions, which may reach $175,000 per taxation year
Measures fostering the capitalization of businesses
- Introduction of a refundable tax credit pertaining to the costs of issuing shares as part of an initial public offering under the stock savings plan II
- To further facilitate a corporation’s initial access to public capital, a refundable tax credit of 30% relating to the eligible issue expenses that an eligible corporation incurs in an IPO under the SSP II will be introduced. The eligible issue expenses may not exceed the lesser of:
- 15% of the gross proceeds of the issue of shares; and
- An eligible corporation may receive this refundable tax credit for eligible issue expenses it incurs the day after the Budget Speech.
Measures pertaining to labour funds
- To better adapt the investment requirements imposed on the Fonds de solidarité FTQ to the capital requirements of Quebec companies, various amendments will be made to the Act establishing the Fund.
- Streamlining of the investment diversification requirement.
- Creation of an investment fund for high value-added processing of wood. This fund, Fonds Valorisation Bois, s.e.c., will have $170 million in capital over five years.
- Increased recognition of the major investments made by the Fund.
- Change to the calculation rules of the 60% requirement.
- Increase in the limit applicable to the capital that Fondaction may collect over its next three fiscal years by means of a 25% tax credit. The rate of the tax credit applicable to the issue price paid for any eligible share acquired after May 31, 2015 will be brought back to 15%.
Measures pertaining to trusts
The tax legislation will be amended so:
- That the rate applicable for determining the tax payable by an inter vivos trust (including a mutual fund trust and a specified investment flow-through trust) corresponds to the highest rate applicable for the calculation of the tax payable by an individual, i.e. 24%. This amendment will apply for taxation years of an inter vivos trust ending the day of the Budget Speech or thereafter.
- That an inter vivos trust that does not reside in Canada is liable for Quebec tax on its property income derived from the rental of immovable properties located in Quebec. The tax rate applicable to such income will be set at 5.3% to reflect its taxation at the federal level. Such a trust will be required to file a tax return for each taxation year in which it owns such an immovable property, whether or not it has tax payable for the year. These amendments to the tax legislation will apply to a taxation year ending the day of the Budget Speech or thereafter.
- To stipulate that an inter vivos trust that does not reside in Canada but becomes a resident of Canada will be deemed to have disposed of its immovable rental properties before becoming a resident of Canada. These amendments to the tax legislation will apply to an inter vivos trust that begins to reside in Canada at a given time as of the day of the Budget Speech.
Measures concerning individuals
No changes to tax rates for individuals.
Improvement to the refundable tax credit for home care of seniors
- The annual cap on eligible expenses will be raised by $3,900.
- The rate of the tax credit for home-support services for seniors will be gradually increased to 35% from 30%, that is, an increase of 1 percentage point, until it reaches 35% in 2017.
- Elimination of the reduction to the tax credit based on family income for seniors recognized as dependents.
Improvement to the amount granted to the caregiver of an elderly spouse unable to live alone
- Increase in the amount of the refundable tax credit to $700 in 2012, rising to $1,000 as of the 2016 taxation year.
Introduction of a refundable tax credit for costs incurred by seniors for a stay in a functional rehabilitation transition unit
- Effective the 2012 taxation year, an individual who is age 70 or older is entitled to a refundable tax credit equal to 20% of the total amounts each of which corresponds to the aggregate of the expenses paid in the year in respect of a stay, begun in the year or the previous year, in a functional rehabilitation transition unit, up to the portion of that aggregate that is attributable to a stay of no more than 60 days.
Introduction of a refundable tax credit for the purchase or rental of equipment to help seniors continue living independently at home
- Effective the 2012 taxation year. an individual who is age 70 or older is entitled, for the year, to a refundable tax credit equal to 20% of the portion in excess of $500 of the aggregate of the amounts paid in the year for the purchase or rental, including installation costs, of equipment to help them continue to live independently at home.
Reduction in payroll contributions for employers participating in the acquisition of shares of a labour fund
- A change will be made to the base wages, as defined in the Taxation Act for the purposes of the compensatory tax required of financial institutions, which is used as the point of departure in determining the contributions required under the Act respecting the Québec Pension Plan, the Act respecting the Régie de l’assurance maladie du Québec, the Act respecting Labour Standards, the Act respecting industrial accidents and occupational diseases, and the Act to promote workforce skills development and recognition. More specifically, the value of the benefit from amounts paid by an employer to acquire for the benefit of one of its employees a share or fraction of a share issued by the Fonds de solidarité FTQ or Fondaction will be excluded from the base wages of such employee. This change will apply to a share or fraction of a share acquired after December 31, 2012.
Measures pertaining to cooperatives
- Various changes will be made to the terms and conditions of the Cooperative Investment Plan to improve its integrity and consistency and better take into consideration the business situation of certain categories of cooperatives.
Measures relating to pooled retirement savings
- In this budget, the Government is undertaking to table a bill so that the rules for the implementation of voluntary retirement savings plans can enter into force January 1, 2013.
- To encourage better retirement coverage while limiting the administrative burden on small employers, companies with at least five eligible employees will be required to offer a voluntary retirement savings plan unless they already offer their employees the opportunity to contribute to a retirement savings plan through payroll deductions.