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Business Income or Capital Gains?

Tue, 04/01/2014 - 08:49

Are you involved in electronic commerce? Do you actively speculate on the stock market? Do you repeatedly sell your personal residences? If you engage in such activities with a view to making a profit, we consider that you are carrying on a business. Any income from such a business must be reported as business income, not as capital gains.

For more information, see the publication Business and Professional Income (IN-155-V).

Categories:

Measures to Increase Investment by Capital régional et coopératif Desjardins

Wed, 03/26/2014 - 08:10

Capital régional et coopératif Desjardins (CRDC) can play a significant role in financing businesses in Québec regions ranking lowest in recent years on the economic development index used by the Ministère des Finances et de l'Économie du Québec (whether or not the regions in question are resource regions). To take into account this significant role, various changes will be made to CRDC's constituting act.  

For more information, see page I.3 of the Budget Plan (PDF – 4,45 MB) tabled by the Ministère des Finances et de l'Économie.

Categories:

Change to the Refundable Tax Credit for the Modernization of a Tourist Accommodation Establishment

Thu, 03/20/2014 - 09:45

The annual threshold of $50,000 will be replaced with a single threshold of $50,000. Tax legislation will be amended so that the single threshold of $50,000 applicable to a corporation for a taxation year corresponds to the qualified expenditures incurred by the corporation, in the taxation year or a prior taxation year, and to its share of the qualified expenditures incurred by a qualified partnership of which it is a member, for a fiscal period ended in the taxation year or a prior taxation year of the corporation, and that total $50,000.

A corporation will be entitled to the tax credit for a taxation year only if the single threshold of $50,000 for the year is reached.

This change applies to any corporation's taxation year that ends after February 20, 2014.

For more information, see page I.11 of the Budget Plan (PDF – 4,45 MB), tabled by the Ministère des Finances et de l'Économie.

Categories:

Death Benefit

Thu, 03/13/2014 - 08:12

A death benefit from the Québec Pension Plan or the Canada Pension Plan is not to be included in the income of a deceased person. For information on how to report such a benefit, see the instructions for line 119 of the income tax return.

Are Your Maple Product Sales Taxable?

Mon, 03/03/2014 - 09:38

Do you make maple products? If you would like to know whether or not the GST and QST apply to the sale of your products and should be collected, click Maple Products.

New Publications

Mon, 02/24/2014 - 08:44

In recent months, Revenu Québec has published or updated the following documents:

  • Employment Expenses (IN-118-V)
  • New Residents and Income Tax (IN-119-V)
  • General Information Concerning the QST and the GST/HST (IN-203-V)
  • QST, GST/HST and Fuel Tax: How They Apply to Freight Carriers (IN-218-V)
  • An Overview of the Fuel Tax Act (IN-222-V)
  • Shelter Allowance Program (IN-165-V)
  • Questions About Tips: Employees (IN-251-V)
  • Taxable Benefits (IN-253-V)
  • The QST and the GST/HST: How They Apply to Residential Complexes (Construction or Renovation) (IN-261-V)
  • Employee or Self-Employed Person? (IN-301-V)
  • Voluntary Disclosure: Rectifying Your Tax Situation (IN-309-V)
  • Information Bulletin for Restaurateurs (IN-522-V)
  • Information for Restaurateurs (IN-575-V)
  • SRM User Guide (IN-577-V)
  • Support Payments: Application for Exemption (IN-900-V)
  • The Payment of Support (IN-901-V)
  • Support Payments: When the Debtor or Creditor Resides Outside Québec (IN-904-V)
  • Support Payments Bulletin (IN-906-V)

For its part, the Canada Revenue Agency has published or updated the following documents:

GST/HST Guides
  • GST/HST New Housing Rebate (RC4028)
  • Financial Institution GST/HST Annual Information Return (RC4419)
GST/HST Info Sheets
  • Insurance – Appraisals of Damage Caused to Property (GI-134)
  • Application of the GST/HST to Home Care Services (GI-166)

Public Service Bodies' Rebate

Thu, 02/13/2014 - 10:42

Many public service bodies (This link will open a new window) (PSBs) are entitled to a PSB rebate of the GST and QST paid or payable on certain purchases and expenses. PSBs that have paid HST on purchases and expenses in a participating province (This link will open a new window) may qualify for a PSB rebate of the HST paid.

Since January 1, 2014, municipalities (and organizations designated as a municipality) are entitled to a rebate of 62.8% of the QST paid on property and services acquired to make exempt supplies. The rebate mechanism is similar to that provided for under the GST system.

PSBs eligible for a rebate

A PSB may be eligible for a rebate if, on the last day of the claim period or on the last day of the fiscal year that includes that claim period, it is either

Therefore, a PSB could be entitled to a rebate for some claim periods, but not for others.

Taxes that qualify for a rebate

The rebate claimed by a PSB is generally calculated based on the taxes that were payable, or that were paid without becoming payable, during the claim period. However, the following amounts do not give entitlement to the rebate:

  • any input tax credits and input tax refunds claimed by the PSB, or to which the PSB was entitled, for the taxes paid during that period;
  • any tax refunds, rebates or remissions that it is reasonable to expect the PSB received or was entitled to receive;
  • any amount of GST or QST that was refunded, credited, or adjusted in favour of the PSB and for which it has received a credit note from the supplier or has issued a debit note to the supplier.

The taxes payable during a given claim period cannot generally be claimed in the rebate application for a subsequent claim period. If a PSB has not claimed rebates for several periods, it must file a separate rebate application form for each period for which it is entitled to a rebate.

Rebate application forms

A PSB filing a rebate application for the first time must complete the GST/HST Rebate Application for Public Service Bodies (form FPZ-66-V) for the GST and the Application for a QST Rebate for Public Service Bodies (form VDZ-387-V) for the QST.

After we process the application, we will send the PSB personalized versions of the forms, which the PSB will be required to use for its next application.

Frequency of rebate applications

If the PSB is registered for the GST and the QST, it must apply for a rebate when it files its returns, whether it be on a monthly, quarterly or annual basis.

If the PSB is not registered for the GST and the QST, it must apply for a rebate twice a year: once for the first six months of its fiscal year, and a second time for the last six months.

Filing deadlines for the rebate

A PSB registered for the GST and the QST has four years from the due date of its GST and QST returns for a given claim period to file a rebate application. A PSB that is not registered for the GST and the QST has four years from the last day of the claim period to file a rebate application.

If a PSB has already claimed a rebate for a claim period and subsequently realizes that it could have claimed rebates for other amounts of tax for the same period, it must adjust the previously filed application by including the additional amounts of tax. It cannot include the amounts in the rebate application for a different claim period. Adjustments to applications must generally be made no later than four years after the date the applications were originally filed.

Example 1

A charity that is not registered for the GST and the QST pays GST and QST on purchases and expenses that qualify for a rebate throughout its fiscal year ending December 31, 2013. Can the charity file a single rebate application that covers the entire fiscal year?

As the charity is not registered for the GST and the QST, it must file two rebate applications per fiscal year: one for the first six months and another for the last six months. The charity must file one rebate application for the period from January 1, 2013, to June 30, 2013, and another for the period from July 1, 2013, to December 31, 2013. It must calculate its rebate based on the taxes paid or payable for each respective period.

Example 2

A charity that is registered for the GST and the QST files monthly tax returns. It always files rebate applications with its tax returns before the due date of the returns. In August 2013, the charity realized that it had not included an invoice dated April 24, 2013, in its April rebate application. The invoice showed a GST amount of $1,500 and a QST amount of $2,992. Can the charity include these amounts in its rebate application for the period from August 1, 2013, to August 31, 2013?  

The taxes became payable during the period from April 1, 2013, to April 30, 2013. Therefore, the charity may only claim the rebate on the application for the period from April 1, 2013, to April 30, 2013. Since the charity had already filed its rebate application for that period, it must adjust that application rather than include the taxes in an application for a subsequent period.

Example 3

In July 2013, an organization that is not registered for the GST and the QST was designated as a municipality in respect of certain designated activities. The effective date of the designation is July 1, 2009. The fiscal year of the organization designated as a municipality ends on December 31. How can the organization claim a rebate of the taxes paid or payable since July 1, 2009?

Since the organization is not registered for the GST and the QST, it must file two rebate applications per fiscal year: one for the first six months and another for the last six months.

Under the GST system, an organization designated as a municipality may file its rebate application within four years following the last day of its claim period. In this example, the organization must first file, no later than December 31, 2013, a rebate application for the period from July 1, 2009, to December 31, 2009. It must then file separate rebate applications for each of the subsequent six-month periods.

In addition, if the organization designated as a municipality has already claimed a rebate as a charity or a non-profit organization for a period after July 1, 2009, it must, for its designated activities only, adjust the rebate application using the rebate rates of a municipality.

Under the QST system, an organization designated as a municipality is not entitled to any rebates pertaining to its designated activities before January 1, 2014.

Example 4

A non-profit organization that is registered for the GST and the QST files quarterly tax returns. It determined that it was a qualifying non-profit organization during its fiscal year ending December 31, 2013. The non-profit organization has never filed a rebate application. Can it apply for a rebate on the taxes paid on its purchases and expenses in the last four years?

The taxes paid or payable during a period when a non-profit organization was not entitled to the rebate cannot be carried to a rebate application for a period when the organization is entitled to a rebate. To claim a rebate of the taxes paid or payable during a previous period, the organization must determine whether it was a qualifying non-profit organization on the last day of the particular claim period or the last day of the fiscal year that includes that claim period.

If it determines that it was only a qualifying non-profit organization during its fiscal year ending December 31, 2013, the organization must file a separate rebate application for each quarter of 2013 in which it was entitled to the rebate.

For more information, see the Canada Revenue Agency's GST/HST Public Service Bodies' Rebate guide (RC4034).

Distributing RL Slips to Recipients

Thu, 02/06/2014 - 09:37

Since July 3, 2013, any person who files paper RL slips has been required to distribute only copy 2 of the slips to the persons for whom the slips are being filed (the "recipients").

However, this new measure does not apply to RL-14 slips (see courtesy translation RL-14-T) filed on paper. Distribute copies 2 and 3 of such slips to the recipients.

If you distribute RL slips to recipients electronically, you must obtain their prior consent (in writing or electronically). In such cases, provide each recipient with only one copy of the electronic slip.

Principal Changes Related to the RL-2 Slip

Mon, 02/03/2014 - 15:00
Pooled registered pension plan

A pooled registered pension plan (PRPP) administrator must file RL-2 slips (see courtesy translation RL-2-T) to report any amount paid (including amounts from which a source deduction was made) during the year to persons who were resident in Québec on December 31 of the year concerned, or who were resident in Québec immediately before ceasing to reside in Canada during the year concerned.

However, a PRPP administrator must not use an RL-2 slip to report

  • the total of the transferable payments of a PRPP made directly to
    • another PRPP, a registered pension plan (RPP), a registered retirement savings plan (RRSP), a registered retirement income fund (RRIF) or a deferred profit-sharing plan (DPSP) in the name of the annuitant or in the name of the annuitant's spouse,
    • a licensed annuities provider for the acquisition of a qualifying annuity;
  • the value of property transferred directly from a RRIF, an RRSP, an RPP or a DPSP to a PRPP in the name of the same annuitant.

For more information, contact us.

Additional information

The following changes were made to the additional information related to the RRIF:

  • Code B-1 was changed from "Amount exceeding the minimum amount" to "Payment from a RRIF exceeding the minimum amount"
  • Code B-2 was changed from "Excess amount transferred in whole or in part" to "Payment from a RRIF that was transferred"
  • Code B-3 was changed from "Designated benefit" to "Designated benefit exceeding the minimum amount"

Deduction Limits and Rates for 2014 Applicable to the Use of an Automobile

Tue, 01/28/2014 - 12:59

In calculating the taxable benefits related to the use of an automobile or the automobile expenses that can be deducted for income tax purposes, you must take into account certain limits and prescribed rates. The limits and rates for 2014, which are the same as those for 2013, are listed below:

  • For purposes of capital cost allowance (CCA), the ceiling on the capital cost of passenger vehicles is $30,000 (plus GST and QST) for vehicles purchased after 2013.
  • The limit on deductible leasing costs is $800 per month (plus GST and QST) for leases entered into after 2013. Under a separate restriction, deductible leasing costs are prorated where the value of the passenger vehicle exceeds the capital cost ceiling.
  • The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes remains 54 cents per kilometre for the first 5,000 kilometres and 48 cents for each additional kilometre.
  • The maximum allowable interest deduction for amounts borrowed to purchase a passenger vehicle is $300 per month for loans related to vehicles acquired after 2013.
  • The prescribed rate used to determine the taxable benefit respecting the portion of operating expenses which relates to an employee's personal use of an automobile provided by the employer remains 27 cents per kilometre. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate remains 24 cents per kilometre.

Application of the GST and QST to Residential Elevators

Thu, 01/23/2014 - 08:20

Note

The following is an interim administrative position that is under review. It provides a description of rules that are currently in place.

Residential elevator

The supply of an elevator installed in the residence of an individual who uses a wheelchair is zero-rated (that is, taxable at the rate of 0%) if the elevator is a wheelchair lift or similar aid to locomotion that is specially designed to be operated by an individual with a disability for his or her locomotion. 

For the supply of a residential elevator to be zero-rated, the elevator must be designed to accommodate an individual using a wheelchair and have a sufficient number of the following features so as to distinguish itself from an ordinary elevator:

  • The width of the platform is set to accommodate the turning radius of a wheelchair (unless it is a flow through elevator).
  • The clearance between the landing edge and the platform is appropriately set to prevent the wheelchair from getting caught.
  • Accessibility to the operating control panel and call stations is adjusted for an individual in a wheelchair.
  • The elevator contains:
    • appropriate handgrips or handrails for use by an individual in a wheelchair
    • anti-skid or similar flooring
    • key-controlled continuous pressure buttons
  • Flush mount door and floor frames are installed allowing for easy entry and exit from the cab.
  • Accordion doors are removed and light curtains or similar closure are installed.
  • Two to five levels are served.
  • The maximum capacity is 454 kg (1,000 lbs).
Installation service and parts

If the supply of a residential elevator is zero-rated, its installation is also zero-rated. However, services that are related to, or that accommodate the installation of, the residential elevator are taxed at 5% under the GST and 9,975% under the QST. For example, a service of installing a residential elevator does not include architectural services, delivery services, demolishing services and construction and renovation services of the home, including services relating to renovating an area in or adjacent to the home (for example, a hallway or a garage) to accommodate the elevator.

However, the parts required for the installation of the elevator (for example, a hoistway) are zero-rated when supplied in conjunction with the installation service.

Refund of taxes paid in error

Under this interim administrative position, a supplier can refund or credit clients for amounts of GST and QST collected and remitted in error on zero-rated supplies. Alternatively, individuals can apply to Revenu Québec for a rebate of the taxes paid in error, provided that the application is made within two years of the date on which the taxes were paid.  

Suppliers are required to retain documentation proving that the elevator has some of the features listed above and is therefore zero-rated. Individuals applying for a rebate of taxes paid in error on a residential elevator must provide documentation proving that the elevator has some of the features listed above. No rebate will be issued for taxes paid on residential elevators that do not have these features.

To apply for a rebate of consumption taxes paid in error, complete forms FP-189-V General GST/HST Rebate Application, and VD-403-V, General Application for a Québec Sales Tax (QST) Rebate, and send them to Revenu Québec. For more information, consult the Guide to the General GST/HST Rebate Application (FP-189.G-V).

New QST Rebate for Municipalities and Organizations Designated as a Municipality

Wed, 01/15/2014 - 13:13

Beginning January 1, 2014, municipalities (and organizations designated as a municipality) are entitled to a rebate of 62.8% of the QST paid on property and services acquired to make exempt supplies. The rebate mechanism is similar to that provided for under the GST system.

The 62.8% QST rebate applies to supplies of property and services for which the QST became payable after December 31, 2013, and was paid after that date.

For information on which municipal entities are eligible for the rebate or on the changes to the QST system, see information bulletin 2013-12, published on December 2, 2013, by the Ministère des Finances et de l'Économie.

For examples of situations in which the rebate may or may not apply, click QST Rebate for Municipalities and Organizations Designated as a Municipality.

Trustees: Are You Required to Report Income or Information?

Tue, 01/07/2014 - 10:51
Are you required to file the Trust Income Tax Return (form TP-646-V)?

A trust, other than an excluded trust, that satisfies one of the new conditions below is now also required to file an income tax return for any taxation year that begins after November 20, 2012.

  • In calculating its income for the taxation year, the trust is deducting an amount allocated to a beneficiary, regardless of the beneficiary's place of residence.
  • If the trust is resident in Québec on the last day of the taxation year, it owns, at some time in that year, property the total of whose cost amounts is more than $250,000.
  • If the trust is not resident in Québec on the last day of the taxation year, it owns, at some time in that year, property that it uses in carrying on a business in Québec and the total of whose cost amounts is more than $250,000.

For more information, see the Guide to Filing the Trust Income Tax Return (TP-646.G-V) for 2013.

Are you required to file the Trust Information Return (form TP-646.1-V)?

For any taxation year that begins after November 20, 2012, a trust, other than an excluded trust, that is resident in Canada, outside Québec, and that, at some time in the taxation year concerned, owns a specified immovable (or is a member of a partnership that owns such an immovable) is required to file an information return for that year. The trust must complete the new Trust Information Return (form TP-646.1-V).

Voluntary Retirement Savings Plan

Wed, 12/18/2013 - 15:56

The information in sections 2.13 and 5.4.1.6 of the 2014 Guide for Employers published in November 2013 has been updated to reflect the provisions of the Voluntary Retirement Savings Plans Act, which was assented to on December 4, 2013.

Contribution to a VRSP or a PRPP

You must deduct the voluntary retirement savings plan (VRSP) or pooled registered pension plan (PRPP) contribution from the employee's gross remuneration for a pay period and remit the amount to the VRSP or PRPP administrator. If you contribute to a VRSP or a PRPP on behalf of an employee, the contribution does not constitute a taxable benefit for the employee.

The rules related to a VRSP will apply as of July 1, 2014.

PRPPs are offered by employers whose business activities are under federal jurisdiction.

Zero-Rating of Mucus Suction Apparatuses

Thu, 12/05/2013 - 09:25

As a rule, the GST and QST apply to medical and assistive devices intended for consumers, health-care institutions and health-care professionals. However, certain devices may be zero-rated if they meet certain conditions.

The supply (This link will open a new window) of a mucus suction apparatus is zero-rated where the apparatus can form part of a tracheostomy supply that a person can use in his or her home, regardless of the use for which it was purchased.

Limits and Rates Related to the QPP for 2014

Wed, 11/27/2013 - 09:18

The limits and rates related to the Québec Pension Plan (QPP) for 2014 are as follows:

  • The maximum pensionable earnings have been increased from $51,100 to $52,500.
  • The basic exemption is $3,500.
  • The maximum contributory earnings have been increased from $47,600 to $49,000.
  • The contribution rate has been increased from 5.10% to 5.175% for both employers and employees.
  • The maximum employee contribution has been increased from $2,427.60 to $2,535.75.
  • The maximum employer contribution has been increased from $2,427.60 per employee to $2,535.75 per employee.
  • The contribution rate for self-employed persons has been increased from 10.20% to 10.35%.
  • The maximum contribution for a self-employed person has been increased from $4,855.20 to $5,071.50.

Merchandise discounts on sales to employees

Tue, 11/26/2013 - 13:41

We wish to remind you that if you sell merchandise to an employee at a reduced price, we do not, as a rule, consider this a taxable benefit, as long as the discount is reasonable under the circumstances.

However, the employee receives a taxable benefit in the following situations:

  • If merchandise that is neither outdated nor unfit for sale is purchased from you by the employee at below-cost prices.
  • If you have made a special agreement with the employee or a selected group of employees, allowing for the purchase of merchandise at a discount.

Where the benefit is taxable, its value is equal to the difference between the FMV of the merchandise (including GST and QST) and the price paid by the employee.

Calculation of the QPP contribution of an employee who was transferred from an establishment subject to the CPP to an establishment subject to the QPP

Fri, 11/22/2013 - 08:19

As of January 1, 2014, where an employee is transferred from an establishment subject to the CPP to an establishment subject to the QPP, you must multiply the total CPP contributions withheld since the beginning of the year by a weighting factor to determine the maximum employee QPP contribution to withhold. To obtain the factor, divide the QPP contribution rate for the year by the CPP contribution rate for the year. See the example in section 6.13 of the Guide for Employers (TP-1015.G-V).

Reminder concerning the application of the fuel tax on the sale of butane

Thu, 11/21/2013 - 08:10

For the purposes of the Fuel Tax Act, butane is considered to be gasoline.

The sale of butane is exempt from the fuel tax when sold to a consumer in a container

  • used exclusively for supplying the heating system of an immovable; or
  • used for any purpose other than supplying an internal combustion engine.

This exemption is applicable only at the time of the retail sale of butane, as it is impossible for the vendor to determine whether the above conditions are met under any other circumstances.

Consequently, the fuel tax does apply to the sale of butane for resale purposes. The holder of a collection officer's permit must report all such butane transactions and collect an amount equal to the tax on these transactions, as with the sale of any other fuel.  Information relating to butane should be entered in the fields reserved for gasoline on fuel tax returns.  

However, Revenu Québec considers the sale of butane for resale purposes to be exempt from the fuel tax if

  • the butane is sold in the same container in which it will be sold to consumers; and
  • the container is used exclusively for supplying the heating system of an immovable or for any purpose other than supplying an internal combustion engine.

For example, the sale for resale purposes of butane canisters used for camping purposes is exempt from the fuel tax.

Changes to the Formulas to Calculate Source Deductions and Contributions (TP-1015.F-V)

Tue, 11/19/2013 - 08:10

The changes to the Formulas to Calculate Source Deductions and Contributions (TP-1015.F-V) for 2014 are given below.

Variable E

The indexation factor used to calculate the value of personal tax credits for 2014 is 0.97%.

Variables F and F2

The voluntary retirement savings plan (VRSP) contribution and the pooled registered pension plan (PRPP) contribution have been added to variables F and F2. For more information, see section 2.13 of the Guide for Employers (TP-1015.G-V) for 2014.

Variables H, H1 and H2 – Deduction for employment income

For 2014, the maximum deduction for employment income has been increased from $1,100 to $1,110. Consequently, the maximum amount of variables H, H1 and H2 has been increased from $1,100 to $1,110.

Variable K – The constant for adjusting the income tax rate

For 2014, the income tax rates applicable to taxable income brackets remain unchanged and the income thresholds for these brackets have been indexed. Specifically,

  • the 16% rate applies to taxable income of $41,495 or less (previously $41,095); 
  • the 20% tax rate applies to taxable income of more than $41,495, but not more than $82,985 (previously $82,190); 
  • the 24% tax rate applies to taxable income of more than $82,985, but not more than $100,970 (previously $100,000); 
  • the 25.75% applies to taxable income of more than $100,970.

Consequently, the values of variable K are now $1,659 (increased from $1,644), $4,979 (increased from $4,931) and $6,746 (increased from $6,681).

Variable M – QPP

The QPP contribution rate has been increased from 10.20% to 10.35% for 2014, which corresponds to a rate of 5.175% for an employee and of 5.175% for an employer. In addition, the maximum pensionable earnings for the purposes of the QPP have been increased from $51,100 to $52,500. Variable M has therefore been increased from $2,427.60 to $2,535.75.

Variables N and N1 – QPIP

For 2014, the maximum insurable earnings subject to QPIP premiums have been increased from $67,500 to $69,000. The employee premium rate remains 0.559% and the employer premium rate remains 0.782%. Consequently, variable N has been increased from $377.33 to $385.71 and variable N1 has been increased from $527.85 to $539.58.

Variable Z – Health contribution

For 2014, the net income thresholds, the rates and the amounts used to calculate the value of the health contribution (variable Z) remain unchanged.

Estimated annual net income (R) Health contribution (Z) $18,175 or less $0 More than $18,175 but no more than $40,390

Whichever is less:

  • $100;
  • 5% × (R - $18,175).
More than $40,390 but not more than $131,260

Whichever is less:

  • $200;
  • $100 + [5% × (R - $40,390)].
More than $131,260

Whichever is less:

  • $1,000;
  • $200 + [4% × (R - $131,260)].

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