Quebec Tax Credit for Investments in Manufacturing and Processing

Quebec Tax Credit for Investments in Manufacturing and Processing (“M&P”) Equipment

Reinstatement and Rate Increase for Other Than Special Zones

Sam Lackman, CPA, CA
 Quebec Tax Credit for Investments in Manufacturing and Processing

As you may be aware, the Quebec tax credit for the acquisition of investments in M&P Equipment in the central regions of the province (e.g. Montreal, Quebec City etc.) was eliminated for acquisitions after December 31, 2016.

In Information Bulletin 2018-7, released on August 15, 2018, Finances Québec announced the reinstatement of this credit for the central regions of Québec, generally at a rate of 10%, for acquisitions of qualified property after August 15, 2018 and before January 1, 2020.  The rate and/or refundability could be reduced if the expenditures on qualified property in the associated group in any 3-year period exceeds $75 million and/or if the prior year taxable capital of the associated group exceeds $250 million.

As a reminder, qualified property for this credit consists of Class 53 (M&P) equipment, as well as Class 50 (computer) equipment used mainly for M&P of goods for sale or lease.  In addition, the equipment must be purchased new (not used), must begin to be used within a reasonable amount of time, for a period of at least 730 days, solely in Quebec, and mainly in the course of carrying on a business.  Finally, the first $12,500 per piece of equipment acquired is excluded in determining the amount eligible for the credit i.e. the credit is only available on pieces of equipment that cost in excess of $12,500, and only on the portion over $12,500 per piece.

Should you have any questions about this reinstated and improved Quebec incentive, please contact your Crowe BGK advisor.

About the author:

Sam Lackman, CPA, CA, is a Senior Tax Manager at Crowe BGK

Connect with him: [email protected]