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:
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.
Certain measures are announced to encourage the retention of experienced workers in Québec.
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.
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.
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.
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.
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.
The government has decided to introduce a new tax holiday relating to the carrying out of a large investment project (hereinafter “new tax holiday”). Considering the introduction of this new tax holiday, the former tax holiday relating to the carrying out of a large investment project (hereinafter referred to as the “former TH-LIP”) is abolished as of March 21, 2023. As the former TH-LIP, the new tax holiday provides a limited tax holiday in respect of the income tax and a limited holiday from the employer contribution to the Health Services Fund. To qualify for the new tax holiday, the total investment expenditures attributable to the carrying out of the investment project must reach $100 million by the end of the 48-month investment period, amongst other conditions.
Refundable tax credit for Québec film or television production: The Act respecting the sectoral parameters of certain fiscal measures will be amended to recognize the contribution of certain market intermediaries in the online distribution of certain productions and to ease the current rules to facilitate the acquisition of stock footage. These changes will apply in respect of a film or television production in which an application for an advance ruling, or an application for a qualification certificate if no advance ruling was previously filed for that production, is filed with the SODEC after March 21, 2023.
Refundable tax credit for book publishing: The tax legislation will be amended so that the 50% limit on qualified labour expenditure attributable to preparation costs and digital version publishing costs will be raised to 65%. In addition, the tax legislation will be amended so that the rate of the refundable tax credit for book publishing will be increased from 27% to 35% with respect to qualified labour expenditure attributable to printing and reprinting costs. These amendments will apply in respect of an eligible work or an eligible group of works for which an application for an advance ruling, or an application for a qualification certificate if no advance ruling has been filed in respect of that work or group of works, is filed with the SODEC after March 21, 2023.
Refundable tax credit for the production of multimedia events or environments presented outside Québec: The tax legislation will be amended to broaden the base for labour expenditures for the purposes of this tax credit and to increase the limit on qualified labour expenditures. These changes will apply in respect of a qualified production for which an application for an advance ruling, or an application for a qualification certificate if no advance ruling has been filed in respect of that production, is filed with the SODEC after March 21, 2023.
Amendments will be made to the tax legislation and regulations to give the Minister of Revenue the power to ask taxpayers whether they own or have used virtual assets to carry out certain transactions during a taxation year or a fiscal year, as the case may be, and to request, where applicable, the details of these transactions.
The government will make legislative changes to better oversee ATMs used to trade cryptoassets in Québec. Additional monitoring efforts will also be deployed.
New obligations will come into effect on March 31, 2023, and require registrants to provide information on ultimate beneficiaries of businesses so that this information can be made public.
This information will have to be provided to the Quebec Enterprise Registrar no later than on the date of the first annual update declaration following the effective date of these new obligations.
This article has been published for general information. You should always contact your trusted advisor for specific guidance pertaining to your individual tax needs. This publication is not a substitute for obtaining personalized advice.
Crowe BGK provides personalized Tax Services. With an increasingly complex world of taxation, our tax professionals will ensure you benefit from all deductions available to you.