Quebec budget: new refundable tax credit for SMBs

Éric Girard, the Minister of Finance of Quebec, tabled his government's 2019-2020 budget yesterday afternoon. The budget contains few fiscal measures; the main measures are intended to help extend the careers of experienced workers.

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

The budget proposes introducing a refundable tax credit for SMBs for workers aged 60 and older. Applicable to taxation years ending in 2019 or later, the credit will be granted to qualified corporations with respect to all employees aged 60 and older. It will be calculated based on the employer's contributions for the employee. The tax credit rate will vary based on the employee's age and the corporation's total payroll. 

For an employee aged 60 to 64 at the beginning of the year ("specified employee"), the credit is calculated at the rate of 50% of the employer's contributions under the Quebec Pension Plan, the Quebec Parental Insurance Plan, the Health Services Fund, the labour standards and the occupational health and safety. The annual ceiling on the credit for a specified employee is $1,250. For an employee aged 65 or older at the start of the year ("eligible employee"), the credit is calculated at the rate of 75% of the employer's contributions; the annual ceiling per eligible employee is $1,875. 

A corporation is qualified if it carries on a business and has an establishment in Quebec. Moreover, its paid-up capital, including paid-up capital of the members of an associated group, must be less than $15 million. Lastly, the total remunerated hours of the corporation for the year must exceed 5,000 hours. This last condition does not apply to corporation in the primary and manufacturing sectors. 

The credit is reduced linearly based on the total payroll of the corporation, which includes that of associated corporations, and is completely eliminated when the payroll exceeds the threshold, which is $6 million for 2019 and 2020, $6.5 million for 2021, and $7 million for 2022. The threshold will be indexed as of 2023. 

Amendment to the tax credit for the reporting of tips 

With respect to the refundable tax credit for the reporting of tips by employers in the restaurant and hotel sector, the budget proposes that the new indemnities attributable to tips paid by employers for absences due to family obligations or health reasons under the Act respecting labour standards be added to the eligible expenses. This amendment applies to indemnities paid as of 2019. 

Fonds de solidarité FTQ 

The budget proposes that the Act to establish the Fonds de solidarité des travailleurs du Québec (F.T.Q.) be amended for the purposes of applying the investment requirement in such a way that all strategic investments and investments in major projects that have a structuring effect on Quebec's economy cannot exceed 27.5% of the Fonds' net assets at the end of its previous fiscal year. This amendment will apply to any taxation year, starting in 2019. 

New initiatives to ensure tax fairness 

To counter tax evasion and abusive tax avoidance, the government will be implementing measures to: 

  • Increase tax compliance with respect to financial market transactions. To deal with the lack of uniformity in the information that securities dealers and brokers provide to investors, Revenu Québec, in collaboration with the financial sector, will introduce a new tax slip that will simplify the reporting of financial market transactions; 
  • Foster tax fairness in the sharing economy by making it mandatory for individuals who operate a digital accommodation platform in tourism regions where the tax on lodging applies to register for the tax, collect the tax and remit it to Revenu Québec; 
  • Extend the Attestation de Revenu Québec to public-building cleaning contracts in the amount of $10 000 or more; the administrative terms and conditions will be specified at a later date; 
  • Block access to public contracts for businesses and promoters on which a penalty has been imposed further to an assessment for abusive tax avoidance strategies; and 
  • Strengthen the mandatory disclosure mechanism and improve the rules governing the use of nominees. With this aim in mind, amendments--to be announced at a later date--will be made to the tax legislation. 
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This document is intended to provide information of a general nature, which is not to be considered as tax advice. Although reasonable measures have been taken to ensure the accuracy of this information, Desjardins does not provide any guarantee of its accuracy.