The Minister of Finance, Éric Girard presented the 2024-2025 Quebec budget earlier today. Below are the tax highlights of the budget.
Measures for individuals
Changes relating to the supplements for handicapped children under the refundable tax credit granting an allowance to families
The refundable tax credit granting an allowance to families has 3 main components: a basic amount for child support, the supplement for handicapped children (SHC) and the supplement for handicapped children requiring exceptional care (SHCREC).Changes will concern :
- Certain assessment parameters and tables of presumed cases of significant disability linked to an impairment for the application of the SHC; and
- Adding a new situation to the first level of the SHCREC.
Changes to certain assessment parameters for an impairment
The attestation of observations and the methods used to confirm persistent histological, anatomical or metabolic changes will be replaced by a requirement that the professional's assessment report include the following:
- The diagnosis or diagnoses made;
- A description of the extent and severity of the impairments based on recognized measures, or on a qualitative analysis if no recognized measurements are available;
- A description of the child's abilities and disabilities and their impact on the child's functioning in his or her various living environments; and
- A precise description of the therapeutic care received in the last 12 months and those planned for the coming year.
The diagnoses and the extent and severity of the impairments must have been assessed by a member of a professional order in accordance with established standards of practice and must be confirmed by significant findings in the history-taking and physical examination, by biological tests, by medical imaging or by any other examination carried out and, as appropriate, by analysis of the results of standardised or normalised tests.
Revision of presumed cases of serious handicap related to an impairment
New tables on presumed cases of significant disability will replace the current tables in Part 1 of Schedule A to the Taxation Regulation.
These changes will apply in respect of any SHC applications filed with Retraite Québec after June 30, 2024.
They will also apply to any decision rendered after June 30, 2024 following a reassessment of the child's condition by Retraite Québec.
Supplement for handicapped children requiring exceptional care
SHCREC provides additional financial support to parents of a child who is seriously ill or has very significant disabilities to help them meet their child's needs. Historically, this measure was aimed at children aged two or over with severe and multiple disabilities or any child whose state of health requires complex medical care at home.
Addition of a new situation to the first level of the SHCREC
In order to allow certain very young children to qualify, the measure will now also apply to disabled children who are under two years old at the start of a given month and who are in one of the defined situations involving a serious chronic illness with no known treatment or a neurogenetic, congenital or metabolic illness with no known treatment.
These changes will apply to all SHC applications submitted to Retraite Québec after June 30, 2024.
They will also apply to any decision rendered after June 30, 2024 following a reassessment of the child's condition by Retraite Québec.
Due to the time needed to adapt administrative systems, processing of these applications will begin in October 2024, so that the first payments under this measure will be made starting in late fall 2024.
Measures Relating to Businesses
Enhancement of the refundable tax credit for Quebec film or television productions
The refundable tax credit for Québec film or television productions is calculated on the basis of the labour expenditure incurred by a corporation for a property that is a Québec film production.
The base rate of this tax credit is generally 32%, but can reach 40% for certain productions.
Historically, the labour expenditure taken into account when calculating the basic tax credit could not exceed 50% of the production costs incurred and directly attributable to this film production.
In view of the increase in production costs incurred by Quebec production companies, the Quebec government believes that the ceiling of 50% of production costs is no longer adequate. The ceiling on production costs has therefore been increased to 65% of production costs incurred and directly attributable to film production. This change will apply in respect of a Quebec film production for which an application for an advance ruling, or an application for a certificate if no advance ruling has been requested for this production, is filed with the SODEC after March 12, 2024.
Adjustments to the refundable tax credit for film production services
Like the refundable tax credit for Quebec film and television productions, this credit is designed to encourage filming in Québec. However, it is intended to encourage the filming of foreign productions. Historically, the credit was 20% on all eligible production costs incurred in Quebec and an increase for computer-aided special effects and animation calculated by applying a rate of 16% to the qualified labour cost attributable to computer-aided special effects and animation.
To further encourage foreign productions to film in Québec and to promote investment in infrastructure and equipment, tax legislation will be amended to :
- Increase the rate of the basic tax credit by 5 percentage points, up to 25%;
- Refocus tax support by applying a 65% rule to contracts relating to activities connected with computer-aided special effects and animation;
These changes will apply in respect of an eligible production for which an application for an approval certificate will be submitted to the SODEC after March 12, 2024 if SODEC deems that work on the production was not sufficiently advanced on the day of the budget speech, or after May 31, 2024 in other cases.
Changes to the tax credits for the development of e-business ("TCEB")
The TCEB provides tax assistance to businesses in the information technology sector that carry out e-business activities. It is made up of a refundable tax credit at a rate of 24% and a non-refundable tax credit at a rate of 6%.
Briefly, the TCEB is calculated on qualified wages incurred and paid by a qualified corporation to eligible employees performing duties in connection with eligible activities, and the wages may not exceed an amount of $83,333 calculated on an annual basis.
The following changes to the TCEB have been announced :
- Introducing an exclusion threshold per eligible employee in the calculation of the TCEB so that it is calculated on an amount corresponding to the excess of eligible salary over the applicable exclusion threshold;
- Removing the $83,333 limit currently applicable to the qualified wages of an eligible employee; and
- Increasing the non-refundable tax credit by one percentage point per year, so that it eventually reaches 10%, and correspondingly reducing the refundable tax credit so that it eventually reaches 20%.
The exclusion threshold applicable in respect of qualified wages incurred and paid, for a taxation year, by an qualified corporation in respect of an eligible employee, will correspond to the amount taken into account in calculating the basic personal tax credit for the calendar year in which the qualified corporation's taxation year begins, adjusted to take into account the number of days in the taxation year during which the employee qualifies as an eligible employee (for example, $18,056 in 2024).
These changes will apply, for the refundable tax credit and the non-refundable tax credit, in respect of a taxation year beginning after December 31, 2024. The changes to the tax credit rates will take effect on January 1 of each calendar year concerned, until January 1, 2028.
Changes to tax credits for the production of multimedia titles
This tax credit currently has two components: the "general component" tax credit and the "specialized component" tax credit. For the purposes of these two tax credits, the amount of tax assistance a qualified corporation may receive is determined on the basis of the qualified labour expenditure incurred by the corporation. The rates currently applicable range from 26.25% to 37.50%, depending on the category of multimedia title produced. In addition, the qualified labour expenditure in respect of a salary or wages cannot exceed $100,000, calculated on an annual basis.
The following changes to the credits for the production of multimedia titles have been announced:
- Introducing an exclusion threshold per eligible employee in the calculation of these tax credits so that they are calculated on an amount corresponding to the excess of the qualified labour expenditure in respect of an eligible employee over the applicable exclusion threshold;
- Removing the $100,000 limit currently applicable to the qualified labour expenditure in respect of an eligible employee; and
- Introducing, for each component, a non-refundable tax credit with an initial rate of 2.5% in 2025, rising thereafter by 2.5 percentage points per year to eventually reach 10%, and correspondingly reducing the refundable tax credits currently in place.
The exclusion threshold per eligible employee will correspond to the amount used to calculate the basic personal tax credit (for example, $18,056 in 2024).
Note that the portion of the non-refundable tax credit for each component that does not reduce the tax payable of a qualified corporation for the taxation year to which the tax credit applies may be carried back 3 taxation years or forward 20 taxation years. However, this carry-over will not be allowed for a taxation year for which the corporation is not entitled to the tax credit – general component, nor for a taxation year that begins before January 1, 2025.
These changes will apply in respect of a taxation year beginning after December 31, 2024. The changes relating to the rates of refundable and non-refundable tax credits for the general component and the specialized component will take effect on January 1 of each calendar year concerned.
Abolition of the tax credit to foster the retention of experienced workers
This refundable tax credit, introduced in 2019, is granted to qualified corporations or qualified partnerships that employ individuals aged 60 or over.
Given the existence of other incentive measures for experienced workers and its low impact on the retention and attraction of experienced workers, the tax credit for experienced workers will be abolished in respect of an amount paid by the corporation or partnership, as the case may be, as employer contributions attributable to a date after March 12, 2024.
More specifically, an amount paid by an eligible corporation or an eligible partnership, as the case may be, as employer contributions will be considered an eligible contribution if it relates to the portion of a salary, wages or other remuneration paid, allocated, granted, awarded or attributed to an employee in the calendar year, and that is attributable to a date prior to March 13, 2024.
Measures Relating to Consumption Taxes
Increases in specific tax on tobacco products
The rates of this tax will be modified as follows:
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Specific Tax on Tobacco Products |
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Until March 12, 2024 |
From March 13, 2024 to January 6, 2025 |
As of January 7, 2025 |
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Rate per cigarette |
18.9 cents |
19.9 cents |
20.9 cents |
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Rate for loose or leaf tobacco (per gram) |
18.9 cents |
19.9 cents |
20.9 cents |
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Rate for all other tobacco (per gram) |
29.07 cents |
30.61 cents |
32.15 cents |
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Ad Valorem tax on cigars |
Rate unchanged: 80% |
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Specific measures have been announced for taking of inventory of the products concerned on the day of the planned tax increases.
Increase in the number of years covered by the Guide d’Évaluation Hebdo (Automobiles et Camions Légers) published by Société Trader Corporation
Rules have been established in the Quebec Sales Tax (QST) system to determine the market value of used road vehicles for the purposes of calculating and paying QST at the time of sale. The amount of QST payable is generally calculated on the higher of the sale price agreed upon by the parties to the transaction, or the average wholesale price listed in certain reference volumes, less $500.
The reference volume used to determine the market value of used motor vehicles is the Guide d'Évaluation Hebdo (Automobiles et Camions Légers) published by Société Trader Corporation. The average wholesale prices listed in this volume only cover a nine-year period. However, vehicles more than nine years old are often the subject of transactions.
A situation of under-reporting of used motor vehicles sales prices has been observed, in the case of vehicles for which the average wholesale price is not listed in the reference volume. Consequently, the number of years covered by the average wholesale selling price indicated in the Guide d'Évaluation Hebdo (Automobiles et Camions Légers) will be increased from 9 to 14 years, starting on January 1, 2025.