Quebec says M&P businesses may access enhanced relief, up until the end of 2020
Quebec announced it will extend the provincial manufacturing and processing (M&P) equipment tax credit to certain property acquired before January 1, 2021, among other changes. In a new information bulletin, released February 20, 2020, Quebec also advises that it intends to harmonize with proposed federal legislation to extend certain amateur athlete trusts, but that it does not intend to harmonize with proposed federal legislation to increase the basic personal amount to $15,000 by 2023.
A corporation that makes an eligible investment in qualified M&P equipment may be able to claim a tax credit on certain eligible expenses ranging from 4% to 24%. The applicable credit rate depends on where the qualified property is used, the corporation's paid-up capital (PUC) calculated on an associated-group basis and the cumulative amount of eligible expenses the corporation has claimed. Higher tax credit rates are available for corporations whose PUC is less than $500 million, and these tax credit rates are fully refundable, but only on cumulative eligible expenses up to $75 million. Otherwise, the lower tax credit rates are available and are non-refundable. Qualified M&P equipment must meet certain conditions, including that it is used mainly in specified "resource regions" of Quebec.
However, Quebec previously announced it would temporarily expand the availability of the tax credit to include eligible expenses to acquire M&P property used solely in Quebec (and outside of resource regions), and temporarily enhance various tax credit rates. For example, Quebec announced that it would increase the M&P equipment tax credit rate for corporations in Quebec with a paid-up capital of $250 million or less for eligible expenses (up to the cumulative threshold) for qualified property used mainly in previously eligible regions (i.e., resource regions) as follows:
These changes apply for eligible expenses to purchase qualified M&P property between August 16, 2018 and December 31, 2019, provided certain conditions are met.
Enhanced M&P equipment tax credit — One-year extension
Quebec states that it will extend the tax credit for investments relating to M&P equipment to qualified property acquired before January 1, 2021, under certain conditions (from January 1, 2020). To be eligible, the property must be acquired in accordance with a written obligation contracted after August 15, 2018 and before January 1, 2020, or the construction of the property by the corporation or on its behalf must have started after August 15, 2018 and before January 1, 2020.
Amateur athlete trusts expiration period — One-year extension
Quebec also announces that it will harmonize with federal proposals to extend the expiration period for amateur athlete trusts to nine years (from eight years), for trusts that would otherwise expire in 2019. Under the proposed federal measure, these trusts will expire in 2020 and any remaining trust property will be deemed to be distributed to the athlete (and included in their income) at the end of the 2020 taxation year.
For more information, contact your KPMG adviser.
Information is current to February 25, 2020. 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.