2019-2020 Quebec Budget Summary

The Minister of Finance, Mr. Eric Girard, tabled on March 21, 2019 the 2019-2020 Quebec budget plan. Here are the main proposed tax measures:

MEASURES PERTAINING TO INDIVIDUALS

Enhancement of the tax credit for experienced workers

As of the 2019 taxation year, the tax credit for experienced workers will be renamed the tax credit for career extension. The following changes will also be made to the credit:

• The age of eligibility for the tax credit will be lowered to include workers aged 60 (currently only available to workers aged 61 and over).
• The ceiling on excess work income eligible for the tax credit will be raised to $10,000 for workers aged 60 to 64 and will remain at $11,000 for those aged 65 and over.

Adjustment of maximum eligible work income based on worker’s age (in dollars)

Review of the Drive Green program

As of 2020-2021, the Drive Green program, which offers incentives to purchase or lease certain electric vehicles and related equipment, will be reviewed. Proposed changes include:

• the elimination of the $3,000 rebate currently offered in respect of vehicles on which the manufacturer’s suggested retail price is between $75,000 and $125,000;
• the reduction of the maximum manufacturer’s suggested retail price of an electric vehicle giving entitlement to the $8,000 rebate on the purchase of such vehicle from $75,000 to $60,000.

Gradual elimination of the additional contribution for childcare

The additional contribution for childcare, which can reach $13.90 per day, calculated over the basic contribution of $8.25 per day, will be eliminated on a gradual basis between 2019 and 2022.

MEASURES PERTAINING TO BUSINESSES

Introduction of a refundable tax credit for SMBs to foster the retention of experienced workers

To support SMBs in their efforts to retain experienced workers, the budget provides for the implementation of a measure to reduce the cost of Quebec payroll taxes. It will apply to Québec payroll taxes for workers aged 60 and over.

Eligible businesses will be able to benefit from a tax credit relating to payroll taxes of:

• 50% for workers aged 60 to 64, up to a maximum of $1,250 per worker;
• 75% for workers aged 65 and over, up to a maximum of $1,875 per worker.

The rate will be reduced linearly for a total payroll between $1 million and the threshold for the reduced rates of employer contribution to the Health Services Fund (HSF).

For the purposes of the refundable tax credit to foster the retention of experienced workers, a qualified corporation will mean a corporation that has an establishment in Québec and carries on a business there, whose paid-up capital, for the preceding year, is less than $15 million and, except where the corporation is a primary and manufacturing sector corporation for the year, whose total remunerated hours, for the year, exceeds 5,000.

Application date

These amendments will be applicable in respect of a taxation year that ends after December 31, 2018.

Reduction of the capital investment threshold applicable to a large investment project in a designated region

A corporation that carries out a large investment project in Québec may, under certain conditions, claim a tax holiday in respect of the income from its eligible activities relating to the project and a holiday from employer contributions to the HSF regarding the portion of wages paid to its employees that is attributable to the time they devote to such activities.

To further stimulate the carrying out of structuring projects in the designated regions, the capital investment threshold applicable to them will be reduced from $75 million to $50 million.

Application date

This change will apply to investment projects for which an application for an initial qualification certificate is filed after March 21, 2019.

This change may also apply to investment projects in respect of which a corporation has already applied for an initial qualification certificate on or before March 21, 2019, but which began to be carried out after March 21, 2019.

Changes to certain measures respecting tips

Since January 1, 2019, the Act respecting labour standards provides that an employer is required to pay indemnities to certain employees, where they are absent from work to fulfill family obligations or for health reasons.

The Act also provides that tips must be taken into account in determining these new indemnities.

To take into account the new measures, the tax legislation will be amended to provide that the eligible expenses for the refundable tax credit for the reporting of tips will include the portion of these indemnities attributable to tips that were paid in the taxation year or fiscal period, as applicable.

Application date

These amendments will apply to indemnities paid after December 31, 2018.

OTHERS MEASURES

New initiatives to ensure tax fairness

Strengthening the mandatory disclosure mechanism and improving the rules governing the use of nominees

The government intends to amend the tax legislation so as to strengthen the mandatory disclosure mechanism and improve the rules governing the use of nominee contracts. The amendments will be announced at a later date.

Blocking access to public contracts for businesses and promoters that have used abusive tax avoidance strategies

Legislative amendments will be made so that businesses on which a penalty has been imposed further to a final assessment for abusive tax avoidance, as well as the promoters of the transactions in question on whom a penalty has been imposed on the same basis, are listed in the register of enterprises ineligible for public contracts.

Extending the Attestation de Revenu Québec to public-building cleaning services

The Attestation de Revenu Québec will be mandatory for cleaning contracts in the amount of $10,000 or more for public buildings such as:

• government and municipal buildings;
• schools, private and public colleges and universities;
• clinics and hospitals;
• office buildings;
• shopping centres, restaurants and movie theaters.

The Attestation de Revenu Québec will be applicable to persons registered for the QST.

The administrative terms and conditions as well as the information to be provided to Revenu Québec will be specified at a later date.

Increasing tax compliance in respect of transactions on financial markets

There is currently inconsistency in the information security dealers and brokers provide to investors.

Therefore, Revenu Québec will establish, in cooperation with the sector, a new tax slip that will make it easier to report financial market transactions.

Application of the tax on lodging to the activities of persons operating a digital platform offering accommodation units

Changes will be made to the tax on lodging system so that a person operating a digital accommodation platform will henceforth be required to register with Revenu Québec for the purposes of collecting and remitting the tax on lodging.

A person so registered will be required, in respect of any accommodation unit covered by the system rented in a sleeping-accommodation establishment located in a participating tourist region, to collect the 3.5% tax on the price of every overnight stay, render an account of it and remit it in accordance with the existing terms and conditions under the tax on lodging system, where such a unit is supplied through the person’s digital accommodation platform and is billed at a time when the person’s registration is in effect.

Application date

These changes will apply after the date on which the bill implementing these measures is assented to.

Prepared by:

Isabelle Nadeau, B.C.L., LL.B., LL.M. Tax, is a Partner at Crowe BGK

Connect with her: [email protected]

Jean-François Senécal, LL.B., D. Tax, is a Senior Tax Manager at Crowe BGK

Connect with him: [email protected]

Jianyi Li is a Tax Specialist at Crowe BGK

Connect with him: [email protected]