New Quebec Harmonization Tax Bulletin Released | KPMG | CA

Quebec Tax Measures Announced - Changes Concerning Federal Tax Harmonization Measures and Certain Personal Tax Changes

New Quebec Harmonization Tax Bulletin Released

Recent information bulletin includes harmonization measures for personal and federal tax.

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Quebec has recently announced certain tax measures in Information Bulletin 2016-9 that will align several Quebec tax measures more closely with recently proposed federal government tax legislation. The Information Bulletin, which was published September 23, 2016, also discusses various topics, such as personal tax measures and QST changes that are similar to recent federal GST/HST proposals of July 22, 2016.

Harmonization measures
Quebec will harmonize the Quebec rules that are applicable to certain trusts and their beneficiaries with the Federal government's January 15, 2016 draft legislation relieving measures for trusts and estates affected by the "graduated rate estate" rules and proposed amendments to the trust "loss restriction event rules". The measures announced in Quebec's bulletin will:

  • Clarify which investment funds are excluded from the loss restriction event rules
  • Change the balance-due day and certain filing deadlines for a loss restriction event
  • Ensure that the income of an exclusive spousal trust or a similar trust, on the death of the trust's primary beneficiary, is taxed in the trust and not in the hands of that beneficiary, subject to a joint election
  • Allow greater flexibility in the income tax rules for recognizing charitable donations made by an individual's estate while it was a graduated rate estate, or by certain trusts following the death of their beneficiary.

Regarding the joint election that allows income in certain testamentary trusts to be deemed to have become payable to their primary beneficiary for the trust's taxation year (deemed to end at the end of the beneficiary's day of death), a valid election made for purposes of the federal tax legislation will be deemed to have been made for the purposes of Quebec's tax legislation. If a valid election is not made for the purposes of the federal tax legislation, no election will be possible for the purposes of Quebec's tax legislation.

Quebec will only adopt these harmonization measures if the corresponding federal legislation receives royal assent.

Personal measures
The announced personal tax measures include several changes to Quebec's refundable tax credit for child assistance. These changes include:

  • Updating certain eligibility criteria respecting the supplement for handicapped children
  • Clarifying eligibility for the supplement for handicapped children with exceptional care needs, in the case of children six years of age and over whose health condition requires certain complex medical care at home. 

Also, new terms and conditions will be added for filing a farm property tax credit application.

QST changes
Quebec plans to introduce changes to the QST system to generally incorporate the proposed GST/HST legislative and regulatory measures announced by the federal government on July 22, 2016. The proposed federal measures to be incorporated into the Quebec tax system include:

  • Revisions to the GST/HST pension plan rules to ensure that they apply to pension plans that use master trusts or master corporations
  • Clarifications to certain GST/HST rules applicable to some pension plans and financial institutions
  • Extension to the application of the SLFI GST/HST rules to include group trusts for registered education savings plans
  • Modernizing the GST/HST drop shipment rules and introduce technical improvements
  • Clarifications to the GST/HST rules for certain supplies of municipal transit services
  • Introducing various housekeeping amendments to the GST/HST legislation and regulations, except where such amendments are not required in the Quebec tax system.

Quebec also notes that the QST changes would generally have the same effective dates as the GST/HST changes, subject to the required adaptations. Indeed, the QST system has only been harmonized to certain provisions related to FIs since January 1, 2013.

For more information, contact your KPMG adviser.

Information is current to September 27, 2016. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500

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