Quebec 2016 Budget Bill Receives Royal Assent | KPMG | GLOBAL

Quebec 2016 Budget Bill Receives Royal Assent

Quebec 2016 Budget Bill Receives Royal Assent

Quebec Bill 112 received royal assent on February 8, 2017.

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The bill implements several measures that were announced in the province's 2016 and 2015 budgets and in various Information Bulletins published in 2014, 2015 and 2016.

The provisions are considered substantively enacted for purposes of IFRS and Accounting Standards for Private Enterprise (ASPE) as of November 15, 2016, when the bill received first reading in the provincial legislature (as Quebec has a majority government). Bill 112 is considered enacted for U.S. GAAP purposes on February 8, 2017, the date the bill received Royal Assent.

The tax measures covered in Bill 112 include:

  • A restructure of the corporate income tax:
    • The income tax rate, which is currently 11.9%, will be reduced to 11.8% in 2017, 11.7% in 2018, 11.6% in 2019 and 11.5% in 2020
    • Corporations in the primary and manufacturing sectors will only be able to claim the small business deduction (SBD) if their employees work for at least 5,500 hours during the taxation year or if their employees and those of their associated corporations worked at least 5,500 hours during the previous taxation year. If the hours worked are between 5,000 and 5,500, the SBD will be reduced, falling to nil at 5,000 hours
  • Harmonization with certain federal bills regarding
    • Corporate and trust loss trading and
    • The income tax treatment of certain testamentary trusts
  • Relief measures on surplus stripping rules applicable to certain transfers of family businesses
  • Amendments to the Act respecting duties on transfers of immovables to ensure integrity and fairness [for example, tightening certain provisions granting an exemption from paying transfer duties and
  • Compulsory filing for certain planning disclosure forms for certain Quebec contingency-fee engagements.

Outstanding measures

Bill 112 does not contain the following measures from the province's 2016 budget: the rate deduction for qualifying innovative manufacturing corporations, and the temporary refundable tax credit for major digital transformation projects.

For more information, contact your KPMG adviser.

Information is current to February 21, 2017. 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

© 2017 KPMG LLP, a Canada limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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