Quebec Bill 146 received first reading November 9, 2017.
It contains measures previously announced in Quebec's 2017 budget and in various information bulletins published in 2016 and 2017. The 176-page bill also includes a measure extending existing legislation that permits certain non-arm's length share transfers without triggering the Quebec anti-surplus stripping rules. Previously, this legislation did not apply to all sectors; the measure was initially announced in the Quebec Information bulletin 2017-03. Bill 146 is considered substantively enacted for the purposes of IFRS and Accounting Standards for Private Enterprise as of November 9, 2017, the date it received first reading in the Quebec legislature (as Quebec has a majority government).
This bill also enacts other measures related to corporate, personal and indirect tax, and various tax credits. It harmonizes various Quebec tax measures with federal tax measures. Key measures from the bill are listed below.
The calculation of the small business deduction (SBD) has been amended. Specifically, the "minimum number of hours worked" qualification criteria is replaced with "minimum hours paid". Also, controlling shareholders working for the corporation without receiving a salary (because they receive another type of remuneration) will now be able to include their hours-worked in their total number of hours-paid based on a conversion factor of 1.1. These rules will apply to taxation years beginning after December 31, 2016).
Bill 146 also:
Bill 146 includes the following tax measures affecting individuals:
Various tax credits
The bill introduces, enhances, expands, or modifies several tax credits, including:
Among other things, Bill 146 introduces a residency requirement with respect to public service bodies' partial rebates.
Harmonization with federal bills
The Tax Administration Act, the Taxation Act and the Act respecting the Québec Sales Tax are amended to harmonize with recent changes made to the Income Tax Act and the Excise Tax Act by federal bills enacted in 2014, 2015 and 2016. Bill 146 mainly enacts harmonization measures that were announced in Information Bulletins published in 2015 and 2016 and in the Budget Speeches delivered on June 4, 2014, and March 26, 2015, including those that:
Based on an initial reading of the Bill 146, it appears that this bill does not contain several measures from the province's 2017 budget, including the following:
For more information, contact your KPMG adviser.
Information is current to November 21, 2017. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500