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Canada: Quebec legislative update; capital cost allowance, tax credits

Canada: Quebec legislative update

Legislation in Quebec (Bill 42) received first reading on 7 November 2019.

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The bill contains measures previously announced in Quebec’s 2019 budget and information bulletins since 2017. The bill includes the following tax provisions:
 

Capital cost allowance

Capital cost allowance (CCA) measures introduce an additional 30% CCA on certain depreciable property acquired after 3 December 2018, and would create a separate class for all property subject to the additional 30% CCA.

In addition, there are measures providing that:

  • A taxpayer could deduct an additional 35% CCA when certain property is acquired after 28 March 2017, but before 28 March 2018 (included in Bill 175).
  • A taxpayer could deduct an additional 60% CCA when certain property is acquired after 27 March 2018 (included in Bill 175). The measure is further clarified in Bill 42 to apply only for property acquired before 4 December 2018 (or 1 July 2019 if the property were acquired pursuant to an obligation in writing entered into before 4 December 2018, or if the construction of the property, by or on behalf of the taxpayer, began before 4 December 2018).


Tax credits

Tax credits introduced or amended include:

  • A temporary enhancement of the refundable tax credit for investments relating to manufacturing and processing equipment
  • Enhancement of the refundable tax credit granting an allowance to families
  • A new refundable tax credit for small and medium-sized businesses to foster the retention of experienced workers
  • Amendments to the refundable tax credit for reporting of tips


Other tax measures

The bill includes measures that would:

  • Harmonize Quebec tax provisions with other federal bills
  • Reduce the capital investment threshold applicable to a large investment project carried out in a remote region, from $75 million* to $50 million when the initial qualification certificate is filed after 21 March 2019
  • Introduce a sustainable development certification allowance under the Mining Tax Act
  • Address aggressive tax planning and “sham transactions” (introduced in Information Bulletin 2019-5)
  • Define which "specified transactions" must be disclosed in prescribed form 1079.DI Mandatory or Preventative Disclosure of Tax Planning
  • Introduce new disclosure requirements for nominee agreements
  • Introduce deadlines for filing a newly prescribed form TP-1079.PN-V, Disclosure of a Nominee Agreement, which must be filed by the later of the 90th day following the conclusion of the nominee agreement, or the 90th day following the day Bill 42 receives Royal Assent


Read a November 2019 report prepared by the KPMG member firm in Canada

 

* $ = Canadian dollar

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