The Minister of Finance, Éric Girard, tabled Quebec’s 2026–2027 budget. Below is a summary of the main tax measures announced.
Measures Relating to Businesses
Tax credit for the development of e-business integrating artificial intelligence functionalities (TCEBAI)
Briefly, the TCEBAI is calculated on an amount corresponding to the amount by which the qualified wages incurred and paid by the qualified corporation in the year for an eligible employee exceed the applicable exclusion threshold.
For a qualified corporation whose taxation year begins in 2026, the applicable TCEBAI rates are 22% for the refundable tax credit and 8% for the non-refundable tax credit. However, these rates are reduced by half when at least 50% of the qualified corporation’s gross revenue comes from certain activities attributable to intercompany outsourcing services.
Following Budget 2025-2026, it was determined that certain adjustments must be made in order to provide greater predictability to companies that will benefit from the TCEBAI while ensuring the sound implementation of the measure.
Proposed adjustments:
- expansion of eligible activities;
- relaxing the conditions relating to the carry-forward of the unused balance of the non-refundable tax credit;
- clarifying the rate reduction for companies that carry out intercompany outsourcing.
Addition of specialized AI consulting services to eligible activities
The Sectoral Act will be amended so that, for the purposes of the employee certificate, specialized AI consulting services will be added to the list of eligible activities.
Eligibility for certain preparatory work
The Sectoral Act will be amended so that, where it is reasonable to consider that preparatory work is carried out within 12 months prior to the start of a mandate or project or the development of a product integrating AI functionalities to a significant extent, such work will constitute an activity primarily related to e-business integrating AI functionalities to a significant extent.
Conditions relating to the carry-forward of the balance of the non-refundable tax credit
Generally speaking, a corporation that is eligible for the TCEBAI is also eligible for the non-refundable tax credit under the same conditions.
However, a corporation with a non-refundable tax credit balance at the end of its taxation year that began before January 1, 2026, and which does not comply with the new TCEBAI parameters for its taxation years beginning after December 31, 2025, would not be able to use that balance.
So as not to unduly disadvantage companies in this situation, the tax legislation will be amended so that the condition whereby the carry-over can only be made against a taxation year for which the corporation obtains the refundable tax credit will be removed for balances arising in a taxation year that began before January 1, 2026.
Clarifications regarding the rate reduction for corporations that carry out intercompany outsourcing
In Budget 2025-2026, the tax legislation was amended to reduce the tax assistance granted to corporations that carry out intercompany outsourcing.
The Sectoral Act will be amended to specify that, when calculating the proportion of gross revenue for the purpose of applying the rate reduction, all revenue from services provided by a corporation to an ultimate beneficiary outside Québec who is a person or partnership with whom the corporation is not dealing at arm’s length must be taken into account, including support or maintenance revenue.
Application date
These amendments will generally apply to taxation years beginning after December 31, 2025.
Refundable tax credit for Québec film or television productions
The refundable tax credit for Québec film or television productions is calculated based on the labour expenditure incurred by a corporation in respect of a property that is a Québec film production.
In order to better reflect the current reality of the industry, changes will be made.
Proposed adjustments:
- add the funding from the Indigenous Screen Office to the list of excluded assistance amounts for the purposes of the tax credit;
- modify the eligibility criteria regarding the length and number of episodes for certain eligible classes of films.
- Consequential amendments will also be made to the tax credit for film dubbing and the film production services tax credit with respect to eligible classes of films.
Addition of an excluded assistance amount
To ensure the ongoing complementarity of the various sources of funding of the cultural sector, the tax legislation will be amended so that financial assistance granted by the Indigenous Screen Office is an excluded assistance amount for the purposes of the refundable tax credit for Québec film or television productions.
Changes made to the eligible classes of films
In general, for the purposes of the refundable tax credit for Québec film or television productions, a film must, among other things, belong to an eligible class of films, in order to be considered an eligible Québec film or television production.
The Act respecting the sectoral parameters of certain fiscal measures will be amended so that documentaries and audiovisual magazine programs are no longer subject to requirements regarding program length, or independent segments of comparable length, or number of episodes in order to constitute eligible classes of films for the purposes of the tax credit.
Application date
These amendments will apply to a film or television production for which an application for an advance ruling, or an application for a certificate if no advance ruling was previously filed in respect of this production, is filed with SODEC after the day of the budget speech.
Harmonization with immediate expensing for greenhouse buildings
On January 26, 2026, the Prime Minister of Canada issued a news release announcing the implementation of an immediate expensing measure for greenhouse buildings.
This measure allows producers to fully write off the total cost of greenhouses acquired on or after November 4, 2025, and that become available for use before 2030.
The Ministère des Finances du Québec now wishes to announce that Québec tax legislation and regulations will be amended by adapting them based on their general principles to integrate them into the measure relating to the immediate expensing of greenhouses.
Measures for Individuals
Introduction of an automated process for filing tax returns on behalf of certain low-income individuals
A new initiative is proposed to automate the filing of tax returns for certain low-income Quebecers starting with the 2026 tax year. The purpose of this measure is to provide Quebec residents with the tax credits to which they may be entitled but do not receive because they do not file their Quebec income tax return. This initiative is inspired by a similar announcement regarding the filing of federal income tax returns effective for the 2025 tax year.
Quebec tax legislation will be amended so that Revenu Québec can file such a tax return on behalf of certain selected low-income individuals starting with the 2026 tax year. The selection criteria for eligible individuals will be determined by spring 2027.
Following the filing of this tax return by Revenu Québec, a notice of assessment will be issued in connection with it. In accordance with the usual process, this notice will be sent to the individual.
To protect the rights of eligible individuals, the current assessment, objection, and appeal processes will apply to assessments made under the provisions relating to the automated filing of tax returns on behalf of an individual.
Application date
This measure will take effect as of the 2026 tax year, provided that the bill implementing it has been enacted.
Improvements to the Voluntary Retirement Savings Plan
To make the VRSP more attractive, the 2026–2027 budget announces changes, the details of which will be released shortly by Retraite Québec.
These changes will aim, in particular, to:
- establish a minimum contribution rate of 2% of salary;
- raise the management fee cap to 1.50% for all existing investment options;
- offer greater flexibility to employers and administrators, notably by allowing employees with less than one year of service to be enrolled only once a year;
- introduce new investment options requiring an employer contribution of at least 2% of the employee’s salary, with management fees that may reach 1.75%.
In addition, the government will continue to explore the possibility of establishing a public VRSP and will increase oversight of employers’ compliance with the Voluntary Retirement Savings Plans Act.
Other Measures Related to Tax Compliance
Adjustments to Certain Disclosure Mechanisms
Under the current provisions of the mandatory disclosure and preventive disclosure mechanisms for certain transactions with a high risk of non-compliance, an information return must be sent to the Minister in a separate envelope by certified mail using a prescribed form.
This disclosure must include, in particular, a description of the facts and a statement of the tax consequences with sufficient detail to allow the Minister to analyze the transaction or series of transactions in question and to adequately understand their tax implications.
Given the significant increase in the number of returns filed and the intention to eventually allow their electronic filing, the budget proposes the following legislative amendments:
- remove the requirement that information returns be sent to the Minister in a separate envelope by registered mail;
- eliminate the Minister’s obligation to confirm receipt of information returns;
- remove the presumption of compliance applicable to information returns where the Minister does not contact the person who filed the return within 120 days of its submission to request additional information.
Application date
These changes will apply to a transaction or series of transactions that begins after the day of the budget speech.