Update on Quebec’s Economic and Financial Situation Released

On December 3, 2018, the new Coalition Avenir Québec government released their Update on Quebec’s Economic and Financial Situation. There were a number of tax changes announced, including the below:

  • Effective 2019, the refundable tax credit for child assistance will be renamed the refundable tax credit granting an allowance to families, and the child assistance payment that it includes will be renamed the family allowance. Additionally, the maximum amount of the child assistance payment for second and third children will be increased by $500 per year as of 2019.
  • Effective for the 2018 taxation year, a new refundable tax credit for senior assistance is introduced. For the lowest-income seniors, this refundable tax credit may be up to $200 for a single senior and $400 for a senior couple per year. The credit will be reduced at a rate of 5% for each dollar of family income over $22,500 for a single individual or $36,600 for a married individual. These amounts will be indexed in future years.
  • Adjustments to the calculation of work premiums reduction thresholds, as of 2019, to take into account changes in QPP deductions and additional contributions.
  • The Quebec government will follow the accelerated capital cost allowance rules announced by the Department of Finance Canada announced in its Fall Economic Statement 2018 on November 21, namely to:
    • allow taxpayers to write off the full cost of machinery or equipment used in manufacturing or processing and clean energy generation equipment, for the taxation year in which the property becomes available for use, where such property becomes available for use before 2024, with a gradual reduction afterwards;
    • introduce an accelerated investment incentive, namely, an accelerated capital cost allowance making it possible to claim up to three times the amount that could otherwise be deducted for nearly all other types of assets, for the taxation year in which the property becomes available for use.
  • Special depreciation rules will apply to an accelerated investment incentive property that is:
    • qualified intellectual property that is
      • included in Class 14 or 44 of Schedule B to the Regulation Respecting the Taxation Act, or
      • incorporeal capital property; or
    • composed of general-purpose electronic data processing equipment and systems software for that equipment, namely, property included in Class 50 of Schedule B to the Regulation Respecting the Taxation Act.
  • Elimination of the additional capital cost allowance of 60%, announced earlier in the year: Among the changes announced:
    • The additional capital cost allowance of 60% is eliminated as of December 4, 2018, but may apply to property acquired before July 1, 2019 if an obligation in writing was entered into on or before December 3, 2018.
    • Transitional rules will apply for qualified property acquired between November 21, 2018 and December 3, 2018.
  • Introduction of an additional capital cost allowance of 30%, effective December 4, 2018, for the investment in manufacturing and processing equipment, clean energy generation equipment, general-purpose electronic data processing equipment, and certain intellectual property.
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