2015-2016 Quebec Budget: highlights from a corporate incentives point of view

Yesterday, March 26^th 2015, Quebec’s Minister of Finance and the Economy unveiled the province’s yearly budget. Following are the summarized highlights for the corporate tax changes:

Corporate income tax rate:

• • Gradual reduction by 0.1% per year over the next 5 years from 11.9% to 11.5%

Refundable tax credit for the development of the e-business (TCEB):

• • Made permanent
  • New non-refundable 6% tax credit of the wages eligible for the TCEB and a cap of $25,000 per job
  • Exclusion of certain work related to an agreement entered into with Quebec government departments, agencies, and corporations

Refundable tax credit for the production of multimedia titles:

• • Restoration of the tax credit rates prior to the June 4, 2014 budget to a maximum of 37.5%.
  • Limit of $100,000 per eligible employee

Tax credit for investments relating to manufacturing and processing equipment:

• • 8% reduction for expenses incurred after December 31, 2016 and a general modification of the definition and applicability of the tax credit

Calculation of taxable benefits for the application of refundable tax credits:

• • Tax legislation clarified to consider salary or wages of an employee as part of calculations only if the value is paid by means of monetary amount by the employer

Refundable tax credit for on-the-job training periods:

• • Increase from 24% to 40% and from 12% to 20% for eligible corporations and individuals, respectively
  • Increase from 32% to 50% and from 16% to 15% for an eligible trainee that is either disabled or an immigrant for corporations and for individuals, respectively

Refundable tax credit for the integration of IT in manufacturing SMBs:

• • Reset as a 20% tax credit up to $50,000
  • Additional amendments to the application rules

Refundable tax credit for Gaspé Peninsula and certain maritime regions of Quebec:

• • Extension until December 31, 2020
  • Expansion of the list of eligible activities and small reduction of the tax credit

Refundable tax credit for International Financial Centres (IFCs):

• • Replacement of the refundable tax credit by a non-refundable tax credit for most activities (excluding back-office activities)

In addition, the following refundable tax credits will be reviewed and updated:

• • The refundable tax credit for Québec film and television production
  • The refundable tax credit for sound recording production
  • The refundable tax credit for the production of performances
  • The refundable tax credit for film dubbing
  • The refundable tax credit for book publishing
  • The refundable tax credit for the production of multimedia environments or events staged outside Quebec.

How R&D Partners Can Help

If you have questions or comments about these recent changes, please do not hesitate to contact Mike Lee at 1-800-500-7733 ext.  110 for more information.