Finance Minister Éric Girard presented the Fall 2023 Update on Quebec's economic and financial situation on November 7, 2023. Here is a summary of the tax measures announced.
AMENDMENTS TO THE TAX CREDIT RELATING TO INVESTMENT AND INNOVATION
The Investment and Innovation Tax Credit (C3i) was introduced in 2020 to encourage productivity gains by businesses in all regions of Quebec. In view of the upcoming expiry of the tax credit, currently scheduled for December 31, 2024, and the end of the temporary rate enhancement, scheduled for December 31, 2023, the government wishes to make certain modifications to the credit.
Amendments Relating to the Extension and Enhancement of Certain Parameters of the Tax Credit
Main changes to the parameters of the renewed investment and innovation tax credit (C3i), as of January 1, 2024
|Tax credit rate by territory||Basic parameters (1)||New parameters (2)|
Montréal and Québec city metropolitan communities
|Territories with low economic vitality||20%||25%|
|Other territories or regions||15%||20%|
||Fully refundable for all businesses|
|Cumulative limit on eligible expenditures||100 million of eligible expenditures over five years||100 million of eligible expenditures over four years|
|Time frame||Property acquired before January 1, 2025||Property acquired before January 1, 2030|
(1) These rates are subject to a temporary increase until December 31, 2023, and may be as follows up to 40%.
(2) This enhancement will apply to specified expenses incurred:
- After December 31, 2023; or
- After March 25, 2021 and before January 1, 2024, for the acquisition of a specified property after December 31, 2023.
However, this enhancement will not apply to specified expenses incurred after March 25, 2021 and before January 1, 2024, for the acquisition of a specified property after December 31, 2023 and before April 1, 2024 if:
- The property was acquired in accordance with a written obligation contracted before January 1, 2024; or
- The construction of the property by or on behalf of the corporation or partnership began before January 1, 2024.
This enhancement will also not apply to property:
- Acquired in accordance with a written obligation contracted before March 26, 2021; or
- Whose construction by or on behalf of the corporation or partnership had started on March 25, 2021.
Amendments to ease certain conditions for claiming the tax credit
- The 183rd day following that of the mailing of the notice of assessment or notice of reassessment issued to the corporation and refusing in whole or in part the application for the tax credit on the grounds that the tax credit was not claimed for the taxation year in which the expenses were incurred;
- June 30, 2024
ABOLITION OF THE ADDITIONAL CAPITAL COST ALLOWANCE OF 30%
As a result of the amendments to the tax credit relating to investment and innovation which essentially targets the same types of investment, the additional capital cost allowance of 30% will be abolished as of January 1, 2024. Accordingly, only property that meets the conditions otherwise set forth for claiming the additional capital cost allowance of 30% that is acquired not later than December 31, 2023, may give entitlement to the additional capital cost allowance for the remainder of the period applicable in respect of the property.