2023-2024 Quebec Budget Summary

General reduction in personal income tax as of the 2023 taxation year

This general tax reduction will result in a decrease in the tax rates applicable to the first two taxable income brackets of the personal income tax table.

The tax legislation will therefore be amended so that, as of the 2023 taxation year:

• On the one hand, the tax rate for the first taxable income bracket, which does not exceed $49,275 for the 2023 taxation year, will be reduced by one percentage point, from 15% to 14%.

• On the other hand, the tax rate for the second taxable income bracket, which is the bracket over $49,275, but not exceeding $98,540, will also be reduced by one percentage point, from 20% to 19%.

The tax reduction may be up to $814 for a person living alone and $1,627 for a couple.

Adjustments will be made to the methods of calculating source deductions of income tax that must be made on wages and certain other amounts paid after June 30, 2023. Therefore, Revenu Québec will publish new source deduction tables for Québec income tax for the various pay periods reflecting the general income tax reduction for the 2023 taxation year, but these new tables will only be applicable as of July 1, 2023. Since the new source deduction tables for Québec income tax and the new mathematical formulas for the 2023 taxation year will only apply as of July 1, 2023, it follows that the income tax reduction for the first part of the 2023 taxation year will generally be taken into account when filing the personal income tax return for the 2023 taxation year.

Individuals who are required to pay their income tax in instalments may adjust, in accordance with the usual rules, any instalment payment due after March 15, 2023, in order to take into account the general tax reduction applicable for the 2023 taxation year.

Finally, consequential amendments will be made to several tax measures to reflect the lower tax rate applicable to the first and second taxable income brackets. These include the tax credit for career extension and the first-time home buyers' tax credit.

Reduction in Québec Pension Plan contributions for workers aged 65 or older

Certain measures are announced to encourage the retention of experienced workers in Québec.

• Introduction of an option to stop paying Québec Pension Plan (QPP) contributions for workers aged 65 years or older

The Act respecting the Québec Pension Plan will be amended to introduce, as of January 1, 2024, an option allowing workers aged 65 or over to stop paying QPP contributions, receiving a QPP or Canada Pension Plan (CPP) retirement pension. This choice will be subject to specific conditions

Provided they are receiving a QPP or Canada Pension Plan (CPP) retirement pension, employees may elect to stop paying QPP contributions as of the day following their 65th birthday by filing a form with the employer. This form must be kept by the employer and must be filed with Revenu Québec upon request.

Self-employed workers may elect to stop contributing to the QPP when they file their income tax return for the year in which they reach age 65, provided that they were receiving a QPP or CPP retirement pension at that time.

To be valid, this election (and revocation) will be subject to various conditions and terms of application.

• End of the obligation to contribute to the QPP for workers over 72 years of age

The Act respecting the Québec Pension Plan will be amended so that, as of the year 2024, the obligation to contribute to the QPP will cease for workers over 72 years of age, for all workers subject to the contributions provided for by this Act.

More specifically, the obligation to contribute to the QPP for a worker will cease as of the year in which the worker turns 73. Consequently, all wages paid and earnings received as of January 1 of the year in which a worker reaches age 73 will no longer be subject to QPP contributions.

Other proposed amendments to the Québec Pension Plan

• The maximum retirement QPP pension eligibility age will be increased from 70 to 72 years, as of January 1, 2024. The increase of eligibility age will allow for a further increase in the retirement pension.

• Amendments will be made to the QPP to ensure that years of low earnings as of age 65 do not reduce the average earnings used to calculate QPP retirement pension.

Enhancement of the refundable solidarity tax credit

The amounts of the housing component of the solidarity tax credit applicable for the period from July 2022 to June 2023 will be indexed at a rate of 12.88% (instead of the 6.44% of indexation normally provided) for the payment period beginning July 1, 2023. For a couple with two children, the enhancement represents $63/year.

Increase in the minimum holding period for a labour-sponsored fund share

The constituting acts of labour-sponsored funds will be amended to provide that the current minimum holding period of two years be gradually extended to five years. Accordingly, the minimum holding period will be increased to three years for shares acquired as of June 1, 2024, to four years for shares acquired as of June 1, 2025, and to five years for shares acquired as of June 1, 2026.

Introduction of a rule limiting access to the non-refundable tax credit for a labour-sponsored fund

An individual who acquires as first purchaser shares issued by a labour-sponsored fund of a class of eligible shares, will no longer be able to benefit from the non-refundable tax credit for a labour-sponsored fund, for a taxation year, if the individual’s taxable income is subject to the highest tax rate of the personal income tax table for the base year.

The base taxation year will mean the taxation year that ends on December 31 of the second calendar year preceding the taxation year for which an individual claims the non-refundable tax credit for a labour-sponsored fund. As such, only individuals whose taxable income for the 2022 taxation year did not exceed the $112,655 threshold will have access to the tax credit for a labour-sponsored fund for the 2024 taxation year.

Also, it will not be possible to carry forward the unallocated amount of the tax credit.

This change will apply to a claim for the non-refundable tax credit for a taxation year after the 2023 taxation year in respect of shares acquired after December 31, 2023.