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On December 3, 2018, Québec Finance Minister Eric Girard tabled his ministry’s fall 2018 Update on Québec’s Economic and Financial Situation. The economic update:
This Tax Insights discusses these measures outlined in the economic update.
Subject to the special rules with regard to property, including a property that is a qualified intellectual property or general-purpose electronic data processing equipment, Québec’s tax system will be amended to incorporate the proposed federal amendments to the Income Tax Regulations relating to accelerated depreciation by:
In applying the Québec tax system, the full cost of acquiring a property that is a qualified intellectual property or general-purpose electronic data processing equipment will be deductible in the tax year in which the property becomes available for use.
Qualified intellectual property will mean property acquired after December 3, 2018 that is a patent or a right to use patented information, a licence, a permit, know-how, a commercial secret or other similar property constituting knowledge, and that:
In the March 2018 Québec Economic Plan, an additional capital cost allowance of 60% was introduced for investments in manufacturing or processing equipment and general-purpose electronic data processing equipment acquired before April 1, 2020.
The tax legislation will be amended so that when calculating the amount that a taxpayer may deduct in computing income, the additional capital cost allowance of 60% cannot exceed the level of assistance granted by this deduction at the time it was instituted. These amendments will apply to an eligible asset acquired after November 20, 2018, but no later than December 3, 2018.
The additional capital cost allowance of 60% will be eliminated for assets acquired after December 3, 2018. The additional capital cost allowance of 60% may be claimed for eligible assets acquired after December 3, 2018 and before July 1, 2019, if either of the following conditions is met:
A permanent additional capital cost allowance of 30% will be introduced for the following investments:
The contemplated properties must meet the following conditions:
The legislation will be amended so that a taxpayer who acquires the contemplated property after December 3, 2018, can deduct an amount corresponding to 30% of the amount deducted in calculating income for the preceding taxation year as capital cost allowance with respect to the asset. In addition, a separate class will be provided for properties of a same class, for which a taxpayer may claim the additional deduction of 30%.