Quebec Announces Tax Harmonization Measures | KPMG | GLOBAL

Quebec Announces Tax Harmonization Measures

Quebec Announces Tax Harmonization Measures

Quebec announced new harmonization measures in Information Bulletin 2017-6.

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The tax measures in this eleven-page bulletin will align several Quebec tax measures with recently proposed federal government tax legislation, notably measures that were announced in the 2017 federal budget and included in the Bill C-44, which received first reading on April 11, 2017.

This bulletin also contains a table that indicates which of the federal legislative or regulatory proposals that were announced by Finance on September 16, 2016 will be incorporated into Quebec tax legislation or regulations.

When implementing measures relating to the federal budget, the bulletin states that the changes to the Quebec tax system will only be adopted following assent to any federal statute (or adoption of any federal regulation) implementing the proposed federal measure being harmonized. Further, the bulletin states that these changes will apply on the same dates as the federal measures being harmonized.

Measures harmonizing with the 2017 federal budget

 

Corporate tax measures

 

Quebec will harmonize with various federal corporate provisions proposed in the 2017 federal budget, including measures that:

  • Eliminate billed-basis accounting elections 
  • Clarify the concept "factual control" 
  • Allow switch fund corporations and segregated funds to reorganize on a tax-deferred basis, in certain circumstances 
  • Introduce a new anti-avoidance rule to target straddle transactions that allow taxpayers to selectively realize gains and losses on derivatives 
  • Extend the base erosion rules to foreign branches of life insurers 
  • Re-classify expenditures related to drilling or completing a discovery well as Canadian Development Expenses (these expenses are currently treated as Canadian Exploration Expenses (CEE)) 
  • Re-classify expenses renounced to flow-through share investors 
  • Make changes to investments in specified clean energy generation and conservation equipment under capital cost allowance regime 
  • Eliminate additional deduction for gifts of medicine to charities 
  • Eliminate a tax exemption for farming and fishing property insurers.

 

Personal tax measures

 

Quebec will harmonize with several personal tax provisions proposed in the 2017 federal budget, including measures that:

  • Eliminate the eligible home relocation loans deduction 
  • Authorize nurse practitioners to certify eligibility for the disability tax credit 
  • Allow certain fertility expenses to qualify for the medical expense tax credit 
  • Make changes to the electronic distribution of Quebec's equivalent T4 information slips (i.e. RL-1 information slips) 
  • Extend the eligibility criteria for the tuition tax credit to include tuition paid to a university, college or other post-secondary institution in Canada for occupational skills courses that are not at the post-secondary level 
  • Introduce income tax consequences for holding certain non-qualified or prohibited investments, or of granting certain advantages by registered education savings plans (RESP) and registered disability savings plans (RDSP) 
  • Preserve the ecological gifts program.

 

Quebec will not harmonize with certain 2017 budget measures, including those that relate to:

  • Restructuring the non-refundable caregiver credit 
  • Extending the anti-avoidance rules that currently apply to tax-free savings accounts and retirement registered plans to RESPs and RDSPs 
  • Changing the Members of Legislative Assemblies' and municipal officers' expense allowances.

 

These are measures that do not apply at a provincial level or that Quebec already has separate legislation for.

Other harmonization measures
Quebec also announced harmonization with the proposed principal residence exemption changes, which were announced on October 3, 2016 and various proposed measures announced in the draft proposals relating to technical amendments released by Finance on September 16, 2016, including:

  • Changes related to reverse takeovers of trusts or partnerships by a loss corporation 
  • New rules for banks and Federal Credit Union allocations to other provinces 
  • Postponing the effective date for measures concerning the sales of linked notes announced in the 2016 federal budget to January 1, 2017 (from October 1, 2016).

For more information, contact your KPMG adviser.

Information is current to May 09, 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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