Quebec Finance Minister Eric Girard presented the province's 2024-2025 budget on Tuesday, March 12, 2024. Priorities Health | Educationfocuses on investments to provide Quebec with quality public services, primarily in health care and education. This includes investments to support our citizens and communities, pursue sustainable development initiatives, and ensure the growth of our state's economy.
Business tax measures
Corporate income tax rate
No new corporate tax rate changes were announced in this year's budget. Current corporate tax rates for 2024 are summarized below.
| Small and Medium Enterprise Corporation | General companies | |||
|---|---|---|---|---|
| rate* | threshold | Non-M&P | M&P* | |
| federal government | 9.0% | $500,000 | 15.0% | 15.0% |
| quebec | 3.2% | $500,000 | 11.5% |
11.5% |
| Combined | 12.2% | 26.5% | 26.5% | |
M&P – Manufacturing and processing
* Tax rate applicable to income not subject to temporary tax rate reduction for manufacturers of qualified zero-emission technologies.
Tax credits for e-business development
The budget proposes to modify the tax credits currently available to companies in the information technology sector that carry out electronic business activities. Proposed changes include:
- Introduce an exclusion threshold so that wages above this threshold are eligible for the credit. The base amount generally corresponds to the amount used to determine the basic personal tax credit for that calendar year (2024 – $18,056).
- Eliminates the $83,333 limit currently applied to an employee's eligible wages.
- Increase the non-refundable tax credit by 1% (currently 6%) each year until it reaches 10%. Refundable tax credits will be reduced as well, eventually dropping to 20% (currently 26%).
The proposed changes to the exclusion criteria and the elimination of qualifying wage limitations would apply to tax years beginning after December 31, 2024. The tax credit rate changes will become effective on January 1 of each calendar year beginning January 1, 2025. .
Tax credits for the production of multimedia titles
The Budget proposes to amend the refundable tax credits currently available to businesses for the production of multimedia titles. The proposed changes reflect changes for electronic business and include:
- Introduce an exclusion threshold so that wages above this threshold are eligible for the credit. The base amount generally corresponds to the amount used to determine the basic personal tax credit for that calendar year (2024 – $18,056).
- Eliminates the $100,000 limit currently applied to qualified payroll costs for qualified employees.
- Introducing a non-refundable tax credit in 2025 at an initial rate of 2% for each existing component. This increases by 2.5 percentage points each year to a maximum of 10 percent, with a corresponding reduction in existing refundable tax credits.
The proposal also includes measures to allow for the carryback and rollover of unused non-refundable credits in a given year.
These proposed changes to tax credits would be effective for tax years beginning after December 31, 2024. The tax credit rate changes will become effective on January 1 of each calendar year beginning January 1, 2025.
Refundable tax credit for film or television production in Quebec
The budget announces an increase in the cap on eligible production costs from 50 percent to 65 percent of incurred production costs directly attributable to film production.
This measure applies to film productions for which a request for advance ruling or a request for a certificate was submitted to the Socio-Cultural Society (SODEC) on or after March 12, 2024.
Refundable tax credits for film production services
The budget proposes strengthening existing tax credits for foreign film production in Quebec. Proposed changes include:
- The basic tax credit rate will increase to 25% (currently 20%).
- Limits eligible costs of contracts with computer-assisted special effects and animation service providers to 65% of the total amount for purposes of calculating basic tax credits and bonuses for special effects.
These changes apply, with respect to eligible works for which an application for advance ruling or application for certification has been submitted to SODEC, for either:
- As of March 13, 2024, only if SODEC determines that production operations were not sufficiently advanced as of March 12, 2024.or
- For all others, after May 31, 2024.
Reversal of tax credits for retaining experienced workers
The credit was first introduced in 2019 and is currently available to eligible businesses that employ individuals age 60 or older. This deduction is currently calculated based on employer contributions paid by the company in respect of the employee and varies depending on the age of the individual and the company's total payroll.
Citing the credit's low impact on retaining and attracting experienced workers, the budget proposes to cancel this credit virtually immediately. Employer contributions in respect of salaries or wages paid after March 12, 2024 are not eligible for this tax credit.
Personal tax planning
personal income tax rate
No changes to personal income tax rates have been announced. Quebec's top marginal personal income tax rate is 25.75 per cent in 2024. The combined federal and Quebec current top marginal tax rates for 2024 are summarized below.
| Salary, business income, interest | 53.31% |
| Capital gain | 26.65% |
| Target dividend | 40.11% |
| Excluded dividends | 48.70% |
Personal tax credits and other amounts
Refundable tax credits that provide benefits to families (family benefits) are designed to help families support children under the age of 18.
The budget introduces several technical changes to update the eligibility factors and improve eligibility for the two family allowance subsidies for children with disabilities. Accessibility has also been extended to children with disabilities under the age of two. These measures will apply from June 30, 2024 onwards.
Changes to the Quebec pension system
Amendments will be proposed to eliminate reductions in retirement pensions for disabled seniors who reach the age of 65. The proposed amendments will come into effect on January 1, 2025.
The budget also proposes protecting benefits for disability pensioners between the ages of 60 and 64. This protection ensures that their benefits are at least the same as before their superannuation payments and is retroactive to January 1, 2016. 2024.
Consumption tax measures
Increase in specific taxes on tobacco products
The budget announced two increases in specific taxes on tobacco products, adding an additional $2 per carton of 200 cigarettes. This increase will be implemented in two phases, with the first change taking effect on March 13, 2024 and the second on January 6, 2025.
Tax administration and other tax measures
Ensuring tax fairness
The government says it is essential that all Quebec taxpayers pay their fair share of taxes to ensure the best possible public services. As part of the budget, he plans to invest $96.5 million over five years to the following objectives:
- Strengthen tax administration and collection in Revenu Quebec. His $75.9 million in funding to hire additional staff allowed the government to recoup almost $405 million, which equates to a return of $5.33 for every dollar invested.
- Underreporting the sales price of a used car more than 10 years old at a counter.
- Strengthen the fight against economic crime and smuggling.
Over the past several years, the government has undertaken several initiatives to ensure tax fairness for all Quebecers, particularly by engaging in aggressive tax planning. These measures include:
- Work with the Canada Revenue Agency to develop strategies and obtain the information you need to combat aggressive tax planning.
- Limit the income-sharing system.
- Expand mandatory disclosure mechanisms to specify transactions or series of transactions that require disclosure, including those involving candidates or impostors.
- Ensure that companies and promoters who engage in fraudulent tax avoidance are excluded from public contracts.
These measures are expected to increase government revenues by nearly $660 million over the same period.
