Canada: Tax measures in 2020 budget are enacted (Quebec)

Several tax measures in Quebec 2020 budget are enacted

Several tax measures in Quebec 2020 budget are enacted

Legislation—Bill 90 and Bill 74—enacted in early June 2021 includes several outstanding tax measures as announced in the 2020 Quebec budget as well as certain other amendments.

The legislation includes provisions that:

  • Introduce a new non-refundable “synergy capital” tax credit for qualified investors that subscribe for shares of qualified corporations in certain sectors
  • Amend the enhanced capital cost allowance (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
  • Introduce new Quebec sales tax (QST) measures for certain non-resident businesses and platform operators and require them to register, collect and remit QST (effective 1 July 2021)
  • Introduce a new investment and innovation refundable tax credit
  • Provide incentives for the commercialization of innovations
  • Temporarily adjust how to calculate remunerated hours for the small business deduction

With regard to corporate tax measures, the legislative measures:

  • 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 (R&D)
  • 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 with the tax year beginning after 31 December 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 10 years
  • Extend the provincial manufacturing and processing equipment tax credit to certain property acquired before 1 January 2021
  • Temporarily adjust the calculation of remunerated hours for the small business deduction due to the coronavirus (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 31 December 2023 (from 31 December 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)
  • 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

Read a June 2021 report prepared by the KPMG member firm in Canada

 

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