Quebec Budget – March 10, 2020
Eric Girard’s second Budget as Quebec’s Finance Minister focused on spending to advance the “green economy”. There were no direct measures to deal with the economic impact of the COVID-19 virus, but the Minister commented that measures could be announced if the Quebec economy is negatively affected in the short term. The comments below describe the announcements related to income taxes.
Introduction of a refundable tax credit for caregivers starting January 1, 2020 to replace the tax credit for informal caregivers. This credit would be $1,250 for a caregiver who supports and co-resides with a relative aged 70 or older, or up to $2,500 for a caregiver providing care to a person 18 or older who has a severe and prolonged impairment.
Amendment to the rules regarding the solidarity tax credit to simplify the continuation of receiving the credit in the event that one of the couple dies during the payment year.
Business and Corporate Taxes
Introduction of a generally refundable tax credit for investments and innovation equal to generally 10% on the excess of $5,000 of the cost of a software package and 10% of the excess of $12,500 of the cost of a specific manufacturing or computer equipment for purchases made between March 11, 2020 and January 1, 2025.
Introduction of an incentive deduction for companies generating income from intellectual properties such as patents or software protected by copyright to an effective tax rate on this income as low as 2%. This applies to the year-ends of companies commencing after 2020 and the intellectual property must have been the result of R&D carried out at least in part, in Quebec.
Elimination of the $50,000 threshold for R&D expenditures for qualified expenditures relating to a university research contract, an eligible contract with an eligible public research center, a pre-competition research project carried out in private partnership, or fees or dues paid to an eligible research consortium. The threshold of $50,000 will not be eliminated for R&D salaries of a business. This measure will apply to fiscal years that begin after March 10, 2020.
Introduction of a synergy capital tax credit for businesses subscribing to shares of corporations in life sciences, manufacturing & processing, green technologies, artificial intelligence or information technologies. The non-refundable credit is equal to 30% of the subscription price, up to a maximum of $225,000 annually. The unused portion of the credit in the year of subscription can be carried to another year. The investment in the shares must be retained for at least 5 years. This measure is for investments made after 2020 and includes requirements for the investee to carry out more than 75% of their business activities in Quebec.
Introduction of a refundable tax credit for small and medium size businesses to hire persons with disabilities up to a qualified limit that would generally equal a company’s employer contributions for the previous calendar year relating to these employees. The business would need at least 5,000 labour hours in its fiscal year to qualify. This measure is in effect for fiscal years ending after 2019.
If you would like to discuss any of these measures in further detail, please give us a call.