On March 12, the Québec government released its 2024 budget. The following are highlights of the key tax measures.

Personal tax measures

No personal income tax rate changes were announced in this year’s budget. The current personal combined income tax rates for 2024 are outlined below:

Changes to the refundable tax credit for supplements granting family allowance

Supplement for handicapped children (SHC)

Changes will apply in respect of any supplement for SHC application filed with Retraite Québec after June 30, 2024. They will also apply in respect of any decision rendered after June 30, 2024, following reassessment of the child’s condition by Retraite Québec.

Recognizing the evolution of science and medical practices, as well as the updating of certain rules through publication of Information Bulletin 2016‑6, the various tables of presumed cases of serious handicap related to an impairment ⁠–⁠ presented in Part 1 of Schedule A of the Regulation respecting the Taxation Act ⁠–⁠ will be replaced. These changes are outlined in Table A.1 within the Additional Information to the budget documents.

Changes will apply in respect of any application filed with Retraite Québec after June 30, 2024. They will also apply in respect of any decision rendered after June 30, 2024, following reassessment of the child’s condition by Retraite Québec.

Supplement for handicapped children requiring exceptional care (SHCREC)

The SHCREC is intended for a child aged two or over with serious and multiple disabilities, or a child whose state of health requires complex medical care at home.

As such, children under the age of two are not currently eligible for the SHCREC, even if they have serious and multiple disabilities from an early age, and their care needs far exceed those of a healthy child of the same age. To ensure the realities of these families are better addressed, the tax legislation will be amended to add a new situation (Situation C) to the first level of the SHCREC:

• the child has an established serious chronic disease, without known treatment, and presents both:
  • serious, multiple and persistent disabilities, including very severe motor disabilities, and
  • significant and persistent daily symptoms requiring multiple complex medical care
• the child has a neurogenetic, congenital or metabolic disease, without known treatment, limiting life expectancy to childhood, and is associated with very severe symptoms from the first months of life due to serious, multiple and persistent disabilities

Changes will apply in respect of any application filed with Retraite Québec after June 30, 2024. It will also apply in respect of any application for such supplement filed before July 1, 2024, and for which no decision has been rendered by Retraite Québec before that date

Corporate tax measures

No corporate income tax rate changes were announced in this year’s budget. The current corporate income tax rates for 2024 are outlined below:

Québec film or television production refundable tax credit

To promote the shooting of foreign productions in Québec and foster investment in infrastructure and equipment, the tax legislation will be amended to:

• increase the rate of the basic tax credit by five per cent
• refocus tax assistance by applying a 65 per cent rule to contracts relating to activities connected with computer‑aided special effects and animation

Currently, a corporation can benefit, for a taxation year, from a tax credit for film production services equal to 20 per cent of the amount of its eligible production costs incurred for that year, in respect of a qualified production. The tax legislation will be amended to increase the rate of the basic tax credit to 25 per cent for a taxation year.

These changes will apply in respect of a qualified production for which an application for an approval certificate will be submitted to the Société de développement des entreprises culturelles (SODEC):

• after the day of the budget speech, if the SODEC deems work on the production was not sufficiently advanced on the day of the budget speech; or
• after May 31, 2024 in all other cases

Tax credits for development of e‑business (TCEB)

For tax years beginning after Dec. 31, 2024, the following changes will be made:

• introducing an exclusion threshold per eligible employee in the calculation of the TCEB, so that the TCEB is calculated on an amount corresponding to the excess of the qualified wages over the applicable exclusion threshold (2024: $18,056).
• removal of the $83,333 limit currently applicable to the qualified wages of an eligible employee
• increasing the non‑refundable tax credit by one per cent per year, so that it eventually reaches 10 per cent, and correspondingly reducing the refundable tax credit so that it eventually reaches 20 per cent

Changes are outlined in Table A.2 within the Additional Information to the budget documents.

Tax credits for production of multimedia titles

For tax years beginning after Dec. 31, 2024, the following changes will be made:

• introducing an exclusion threshold per eligible employee in the calculation of these tax credits, so that they are calculated on an amount corresponding to the excess of the qualified labour expenditure in respect of an eligible employee over the applicable exclusion threshold (2024: $18,056)
• removing the $100,000 limit currently applicable to the qualified labour expenditure with respect to an eligible  employee
• introducing, for each component, a non‑refundable tax credit whose initial rate will be 2.5 per cent in 2025, and which will subsequently increase by 2.5 per cent per year to eventually reach 10 per cent, and correspondingly reducing the current refundable tax credits

Changes are outlined in Table A.4 within the Additional Information to the budget documents.

Tax credits for production of biofuel and pyrolysis oil in Québec

For the purposes of these tax credits, the value of compliance credits granted to a corporation under the Clean Fuel Regulations is currently considered as government assistance received/receivable by the corporation for a taxation year.

In response to U.S. subsidies, and their perceived impact on production in Québec, under the tax credit for production of biofuel in Québec and the tax credit for production of pyrolysis oil in Québec, the expression “government assistance” will include the value of compliance credits granted to a corporation under the Clean Fuel Regulations, but only as of a corporation’s taxation year beginning after Dec. 31, 2027.

Tax credit to foster retention of experienced workers

The tax legislation will be amended to abolish the tax credit for experienced workers in respect of an amount paid by the corporation or partnership as employer contributions attributable to a date later than the day of the budget speech.

Other tax measures

Increases in the specific tax on tobacco products

The government is announcing two increases in the specific tax on tobacco products of $2.00 each per carton of 200 cigarettes. These increases take effect March 13, 2024 and Jan. 6, 2025.

Measures to address avoidance of Québec sales tax (QST) on vehicle transfers

The QST system includes rules to determine the market value of vehicles for purposes of calculating QST. The amount of QST payable is generally calculated based on the greater of the sale price agreed upon by parties to the transaction and the average wholesale price listed in certain reference volumes, less $500. The average wholesale prices listed in the Guide d’Évaluation Hebdo (Automobiles et Camions Légers) only cover a nine‑year period, but will be increased to 14 years.

Transfer of vehicles between related individuals

When a used road vehicle is brought into Québec following its transfer outside Québec between related individuals, it has been noted the estimated value rule remains applicable. Such an outcome is not desirable given tax policy, which aims to exclude all transfers of used road vehicles between related individuals from the application of the estimated value rule.

As a result, the QST system will be amended so that the estimated value rule does not apply to a used road vehicle brought into Québec following its transfer outside Québec between related individuals. This change will apply in respect of such used road vehicles brought into Québec after the day of the budget speech.

Next steps

Contact your Baker Tilly advisor to learn more about how we can help you navigate the complexities of the Canadian tax system.

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Sean Grant-Young
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