Quebec Bill 90 and Bill 74, which include several outstanding tax measures announced in the 2020 Quebec budget and other amendments published in certain bulletins, are now law. Quebec Bill 90 received Assent on June 4, 2021 and includes measures to introduce a new non-refundable tax credit and modify CCA rules, as well as introduce new QST measures for certain non-resident businesses and platform operators, among others.
Bill 74 received Assent on June 2, 2021 and includes several tax changes, including measures to introduce a new investment and innovation refundable tax credit, incentivize the commercialization of innovations, and temporarily adjust how to calculate remunerated hours for the small business deduction.
The corporate income tax measures included in these bills are considered enacted for U.S. GAAP purposes as of June 4, 2021 for Bill 90 and June 2, 2021 for Bill 74 (i.e., the date of Assent). The corporate income tax measures are considered substantively enacted for purposes of IFRS and Accounting Standards for Private Enterprise (ASPE) on May 4, 2021 for Bill 90 and December 2, 2020 for Bill 74 (i.e., when the bills received first reading in the provincial legislature (as Quebec has a majority government)).
The measures in Bill 74 and Bill 90 were first announced in Quebec's 2020 budget and in various information bulletins published between 2017 and 2020.
Quebec Bill 90 includes corporate tax measures to:
- Introduce a non-refundable synergy capital tax credit for qualified investors that subscribe for shares of qualified corporations in certain sectors
- Amend the enhanced CCA rate for certain zero-emission vehicles (class 54 and 55) for the year in which they become available for use
- Amend the accelerated investment incentive for Canadian development expenses and oil and gas property expenses to harmonize with federal measures
- Allow more journalism organizations to benefit from the income tax exemption and qualified donee status
Bill 90 also includes measures to introduce new QST rules that will require certain non-resident businesses and platform operators to register, collect and remit QST effective July 1, 2021.
Quebec also made minor amendments to Bill 74 since it was presented in December 2020. The bill includes corporate tax measures to:
- Introduce a refundable tax credit for investments and innovation
- Allow companies with large investment projects more time to submit or amend applications for initial qualification certificates for Quebec's tax holiday
- Introduce an incentive deduction for the commercialization of innovations in Quebec
- Eliminate the exclusion threshold for certain income tax credits for research and development
- Introduce a refundable tax credit for employer contributions in respect of persons with a severely limited capacity for employment
- Amend the Quebec film or television production refundable tax credit rules
- Raise the limit on labour expenditures eligible for the refundable tax credit for sound recordings
- Raise the limit of the qualified labour expenditures for the refundable tax credit for the production of performances
- Amend the eligibility requirement for the refundable tax credits for multimedia titles
- Amend the eligibility requirements for the tax credits for development of e-business
- Introduce three new entities which will be subject to compensation tax for financial institutions at specific rates
- Eliminate the deduction for innovative manufacturing corporations for corporations whose taxation year begins after December 31, 2020
- Extend the income-averaging mechanism for certified forest producers of private forests for a five-year period, and increase the carry-over period to ten years
- Extend the provincial manufacturing and processing equipment tax credit to certain property acquired before January 1, 2021
- Temporarily adjust the calculation of remunerated hours for the small business deduction due to the COVID-19 pandemic
- Introduce a 35% refundable tax credit on qualified wages for print media companies, and allow certain subsidiaries to be considered as "eligible employees" for 2019 only
- Extend the eligibility for the refundable tax credit to support digital transformation of print media companies to December 31, 2023 (from December 31, 2022)
- Amend the refundable tax credits for the production of multimedia titles
- Allow any provision recorded in connection with the redemption of retractable or mandatory redeemable shares to be included in the calculation of tax paid-up capital (regardless of financial statement presentation).
Quebec Bill 74 also enacts harmonization measures announced in Information Bulletins published in 2017, 2018 and 2019 to:
- Modify the definition of "specified corporate income" to exclude income from certain farm and fishing related sales to arm's-length purchaser corporations
- Change the rules for character conversion transactions
- Change the at-risk rules for tiered limited partnerships to apply to a partnership that is a limited partner of another partnership
- Eliminate the billed-basis accounting elections
- Change the reverse takeover rules for trusts or partnerships by a loss corporation.
For more information, contact your KPMG advisor.
Information is current to June 21, 2021. 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