Revenu Québec Infos

The temporary increase in the tax credit for the purchase of shares issued by Fondaction, le Fonds de développement de la Confédération des syndicats nationaux pour la coopération et l'emploi, which came into effect on June 1, 2009, comes to an end on May 31, 2015. As such, the rate of the tax credit for the purchase of shares issued by Fondaction decreases from 25% to 15% for any share or fraction of a share purchased after May 31, 2015. This changes the way income tax is withheld from an employee who pays into the fund through source deductions.

If you use the Source Deduction Table for Québec Income Tax (TP-1015.TI-V) to determine the amount of income tax to withhold, you must subtract from the employee's gross remuneration, for a pay period that begins after May 31, 2015, 75% (rather than 125%) of the amount deducted from the employee's remuneration for the purchase of shares issued by Fondaction. For more information, refer to section 5.4.1 of the Guide for Employers (TP-1015.G-V).

If you use the formulas in the guide entitled Formulas to Calculate Source Deductions and Contributions (TP-1015.F-V) to determine the amount of income tax to withhold, you must take into account the changes to the formulas. For more information, refer to guide TP-1015.F-V.

On January 1, 2015, the tax rate for insurance premiums applicable to automobile insurance premiums will be changed from 5% to 9%, which is the rate applicable to most other types of insurance premiums.

For more information, click New Tax Rate – Tax on Insurance Premiums.

As of 2015, the thresholds for the average monthly remittance based on which you are required to make your remittances of source deductions and employer contributions will increase. The remittance threshold increases

• from $15,000 to $25,000 if the employer's remittance frequency is twice-monthly;
• from $50,000 to $100,000 if the employer's remittance frequency is weekly.

If, after June 4, 2014, you hired an employee to hold a recognized full-time job in Québec, and your total payroll for the year is less than $5 million, you may be able to take advantage of a reduction in the contribution to the health services fund until December 31, 2020, for the increase in your payroll attributable to the hiring of specialized employees. To calculate the reduction and obtain a refund, complete form LE-34.1.12-V, Reduction of the Contribution to the Health Services Fund: Creation of Specialized Jobs, and enclose it with the RL-1 summary.

Allowance for the use of a motor vehicle

For 2014, the per-kilometre rate for the use of a motor vehicle that you pay an employee that we consider reasonable is $0.54 for the first 5,000 kilometres and $0.48 for each additional kilometre.

Operating-costs benefit related to an automobile made available to an employee

For 2014, the per-kilometre rate used to calculate the operating-costs benefit related to an automobile made available to an employee is $0.27. For employees engaged principally in selling or leasing automobiles, the per-kilometre rate is $0.24.

Additional information pertaining to the security option deduction

The additional information for code L-6 (Security option deduction) has been replaced by the following:

• L-9 (Security option deduction under section 725.2 of the Taxation Act);
• L-10 (Security option deduction under section 725.3 of the Taxation Act).

For more information, refer to the document Taxable Benefits (IN-253-V).

As employers, all health and social services centres must determine the status of the workers they hire, as their tax obligations will vary accordingly.

Status of workers

A person working at a health and social services centre can be considered to be either an employee or a self-employed person. The status of a worker is determined mainly on the basis of subordination to an employer, but also on the basis of five other criteria.

For example, a worker is considered to be an employee if, in fact, he or she undertakes to do work for a limited time and for remuneration under the direction or control of an employer.

Conversely, a worker is considered to be self-employed if he or she is free to choose the means of carrying out a contract and there is no relationship of subordination with the employer. For more information on the tax obligations of self-employed workers, refer to the brochure Are you Self-Employed? Taxation Reference Tool (IN-300-V).

Benefits provided to employees

As an employer, a health and social services centre is responsible for withholding Québec income tax at source from all remuneration (salaries, wages and other amounts) it pays to its employees. Furthermore, if it provides taxable benefits to an employee, it must include the value of the benefits in the employee's income. Benefits that an employee receives because of his or her office or employment are generally taxable.

Examples

Parking space

As a rule, an employee receives a taxable benefit in the following circumstances:

• the employer provides him or her with a parking space free of charge or at a price below the fair market value (This link will open a new window) (FMV)
• the employer reimburses him or her for the cost of a parking space

The value of the benefit corresponds to the FMV of the parking space (including GST and QST) minus any amount paid by the employee for its use.

Meals

If an employee is provided with a free or subsidized meal (such as meals in an employee dining room or cafeteria), the meal is generally considered to be a taxable benefit. The value of the benefit corresponds to the result of the following calculation: the cost of the food (including GST and QST) and, where applicable, the cost of preparing and serving the food, minus any amount paid by the employee.

However, there is no taxable benefit if meals are provided or meal expenses are reimbursed to employees who work overtime at the employer's request, where the overtime is expected to last for at least two consecutive hours and is done occasionally.

A health and social services centre is generally free to choose the means, tools and methods it will use to calculate the value of the taxable benefits granted to its employees, as long as they are reasonable and reliable. For example, it can:

• ask its employees to provide supporting documents
• provide its employees with punch cards
• keep records to calculate the value of the benefits provided

For more information on taxable benefits, refer to the guide Taxable Benefits (IN-253-V).

The definition of the term “base wages” has been amended. Base wages, which are used as the starting point in the calculation of employer contributions, now include any amount paid, allocated, granted or awarded to an employee by a person with whom the employer is not dealing at arm's length that would have been included in the base wages had these been paid, allocated, granted or awarded by the employer.

For example, an employer is required to include in an employee's salary or wages, the value of a benefit related to a security option that the employee receives from a foreign corporation with whom the employer is not dealing at arm's length.

Tax legislation will be amended to provide that, for the income splitting mechanism to be applicable in a particular taxation year, the person whose income is split must have reached 65 years of age before the end of the year, or, if the person died or ceased to be resident in Canada in the year, on the date of his or her death or the date on which he or she ceased to be resident in Canada.

This amendment will apply as of the 2014 taxation year.

For more information, see pages 65 to 67 of the document entitled Additional Information on the Fiscal Measures of the Budget (PDF – 795 KB) tabled on June 4, 2014, by the Ministère des Finances.

Canadian-controlled private corporations whose paid-up capital is less than $15 million can claim an additional deduction in calculating their net income to reflect the higher transportation costs attributable to the distance of certain regions from Québec's large urban centres.

The amount of the additional deduction a corporation can claim for a taxation year may vary depending on a number of parameters, that is, the region where it carries out its manufacturing activities, the level of its manufacturing activities, the size of the corporation, its gross income for that taxation year and a regional cap.

The amount of this additional deduction, for a taxation year, may reach 6% of gross income for that taxation year.

Determination of the additional deduction rate

The base rate a corporation can claim for a taxation year will depend on the region where its manufacturing activities are carried out. Rates of 2%, 4% and 6% apply to the “intermediate zone”, the “remote zone” and the “special remote zone” respectively. The rate applicable to other regions, in Québec or elsewhere, is zero.

The additional deduction rate applicable to a corporation for a taxation year is the one applicable to the zone in which the “manufacturing and processing capital cost” (MPCC) is the highest for that taxation year.

A manufacturing SME whose proportion of activities attributable to manufacturing and processing activities, for a given taxation year, is 50% or more, can claim the maximum additional deduction rate applicable to it for that taxation year, that is, the rate depending on the zone where the largest share of its manufacturing activities are carried out.

Moreover, where such proportion, for a given taxation year, is between 50% and 25%, the additional deduction rate the manufacturing SME can claim, for that taxation year, is reduced linearly.

The additional deduction rate applies to a taxation year ending after June 4, 2014. However, where the taxation year of a manufacturing SME includes June 4, 2014, the additional deduction rate applies in proportion to the number of days of the taxation year that follow June 4, 2014.

Determination of the additional deduction cap

The additional deduction is limited to a percentage of the manufacturing SME's gross income for the taxation year. This percentage is the additional deduction rate applicable to the manufacturing SME for that taxation year.

The additional deduction thus obtained is, however, limited to a regional cap for manufacturing SMEs benefiting from a rate of 4% and 2%, that is, those that carry out the largest share of their manufacturing activities in the remote zone or the intermediate zone. These caps will be $250,000 and $100,000 respectively. No regional cap is applied for manufacturing SMEs that carry out the largest share of their manufacturing activities in the special remote zone.

Moreover, the additional deduction calculated according to the rules set out above is reduced depending on the corporation's size. Canadian-controlled private corporations with paid-up capital of $10 million or less enjoy a reduced income tax rate of 8% on the first $500,000 of annual income — the small-business income ceiling — from an eligible business.

The additional deduction a manufacturing SME can claim for a taxation year is reduced on the basis of the size parameters applicable to the reduced income tax rate.

For more information, see pages 3 to 7 of the Additional Information on the Fiscal Measures of the Budget (PDF – 795 KB) tabled by the Ministère des Finances on June 4, 2014.

Two new fiscal measures are being added to the refundable tax credits for the construction or conversion of a ship.

Creation of a tax-free reserve

The first measure enables a Québec shipowner to set up a tax-free reserve to award the execution of construction, renovation and maintenance work on vessels of the shipowner's fleet to a Québec shipyard.

This measure applies in relation to a tax-free reserve set up after June 4, 2014, pursuant to a certificate issued by the Ministère de l'Économie, de l'Innovation et des Exportations after June 4, 2014.

Additional capital cost allowance of a vessel

Under the second measure, a Québec shipowner that awards work to a Québec shipyard can claim an additional deduction for the depreciation of a vessel.

This measure applies, for a taxation year, to the cost of work done by a qualified shipyard in relation to a Canadian vessel, pursuant to a contract a taxpayer enters with such a shipyard after June 4, 2014, but before January 1, 2024.

For more information, see pages 14 to 20 of the document entitled Additional Information on the Fiscal Measures of the Budget (PDF – 795 KB) tabled on June 4, 2014, by the Ministère des Finances.

A 20% reduction in tax assistance intended for businesses was announced in the Budget Speech delivered on June 4, 2014. The following measures are affected by this reduction:

• Tax credit for technological adaptation services
• Tax credits for a design activity
• Tax credits for production of multimedia titles
• Tax credit for major employment-generating projects
• Tax credit for job creation in the resource regions, Vallée de l'aluminium, Gaspésie and certain maritime regions of Québec
• Tax credit for job creation in Gaspésie and certain maritime regions of Québec: marine biotechnology, mariculture and processing of marine products
• Tax credit relating to resources
• Tax benefits relating to flow-through shares
• Tax credit for salaries and wages (IFC)
• Tax credit for new financial services corporations
• Tax credit for the hiring of employees by new financial services corporations
• Tax credit for the diversification of markets of a Québec manufacturing company
• Tax credit for the modernization of a tourist accommodation establishment
• Tax credit for Québec film productions
• Tax credit for film production services
• Tax credit for film dubbing
• Tax credit for the production of sound recordings
• Tax credit for the production of performances
• Tax credit for book publishing
• Tax credit for the production of events or multimedia environments staged outside Québec
• Tax credit for an on-the-job training period
• Tax credit for training in the manufacturing forestry and mining sectors

Measures tightening tax assistance were also introduced for the following:

• Tax credits for scientific research and experimental development
• Tax credit for the development of e-business
• Tax credit for investment
• Tax credit relating to a building used by a small or medium-sized manufacturing business in manufacturing or processing activities
• Tax credit relating to information technologies in small and medium-sized manufacturing businesses
• Tax credit relating to resources

For more information, see pages 31 through 61 and 78 of the Additional Information on the Fiscal Measures of the Budget (PDF – 795 KB) published on June 4, 2014, by the Ministère des Finances.

Low- to moderate-income individuals age 70 or older who register for recognized programs of activities may claim a maximum refundable tax credit of $40 per year.

Determination of the tax credit

An individual (other than an excluded individual) who, at the end of December 31 of a particular taxation year (or, if the individual dies during the year, on the day he or she dies), is resident in Québec and age 70 or older may claim the refundable tax credit for that year. The tax credit is equal to 20% of the lesser of $200 and the total eligible expenses paid during the year by the individual or the person who is the individual's spouse at the time of payment.

Excluded individual

For a particular taxation year, an excluded individual is

• an individual whose income for the year is more than $40,000 (which amount, beginning January 15, 2015, is to be indexed automatically each year according to the usual rules), or
• an individual who is exempt from income tax for the year or who is the eligible spouse of such an individual for the year.

Eligible expenses

An eligible expense of an individual for a particular taxation year is any amount paid by the individual to a person or partnership during the year as his or her registration or membership fee for a recognized program of activities offered by the person or partnership. However, at the time of payment, the individual must not be living in a private residence for seniors operated by the person or partnership and, unless the person or partnership is a Québec sales tax (QST) registrant, the individual must not be related to the person or partnership.

The registration or membership fee for a program of activities offered by a person or partnership includes the costs related to the administration of the program, to the courses, to the rental of required facilities, and to the uniforms and equipment that participants in the program are unable to acquire for less than their fair market value at the time they are acquired.

However, a registration or membership fee must not include any costs related to lodging, travel, food or beverages.

Proof of payment

To be able to claim an amount as an eligible expense for purposes of the tax credit, an individual must have proof of payment in the form of a receipt that contains the prescribed information and that is issued by the person or partnership that provided the recognized program of activities to the individual.

Recognized program of activities

For purposes of the refundable tax credit for seniors' activities, the following are considered recognized programs of activities:

• a weekly program running for at least eight consecutive weeks, where either physical activities or artistic, cultural or recreational activities are a significant part of all or substantially all the activities offered;
• a program running for at least five consecutive days, where either physical activities or artistic, cultural or recreational activities are a significant part of more than 50% of the daily activities;
• a program running for at least eight consecutive weeks that is offered to seniors by a club, an association or a similar organization and that allows participants to select from a variety of activities, where
  • either physical activities or artistic, cultural or recreational activities are a significant part of more than 50% of the activities offered to seniors by the entity, or
  • more than 50% of the time allowed for the activities offered to seniors is reserved for activities of which either physical activities or artistic, cultural or recreational activities are a significant part;
• a membership in a club, an association or a similar organization for a period of at least eight consecutive weeks, where either physical activities or artistic, cultural or recreational activities are a significant part of more than 50% of the activities offered to seniors by the entity;
• a part of a program (other than a recognized program of activities), where the part runs for at least eight consecutive weeks, is offered to seniors by a club, an association or a similar organization, allows participants to select from a variety of activities and represents
  • the portion of the activities offered to seniors by the entity that are activities of which either physical activities or artistic, cultural or recreational activities are a significant part, or
  • the portion of the time allowed for activities of the program that is reserved for activities of which either physical activities or artistic, cultural or recreational activities are a significant part;
• a part of a membership in a club, an association or a similar organization (other than a membership that constitutes a recognized program of activities), where the part covers a period of at least eight consecutive weeks and represents the portion of the activities offered to seniors by the entity that are activities of which either physical activities or artistic, cultural or recreational activities are a significant part.

Effective date

Any amount paid after June 4, 2014, as an eligible individual's registration or membership fee for a recognized program of activities is eligible for the tax credit for seniors' activities, provided such amount is attributable to activities that take place after that date.

For more information, see pages 25 to 30 of the document entitled Additional Information on the Fiscal Measures of the Budget (PDF – 795 KB) tabled on June 4, 2014, by the Ministère des Finances.

Certain businesses not resident in Québec that do business online are not required to collect Québec sales tax (QST) when they sell property or services. In such a situation, QST on the value of the property or service must be calculated and paid to us by the recipient (by self-assessment). That rule applies to both digital property and corporeal movable property.

If you are an individual who purchased taxable property or a taxable service online from a non-resident business and QST was neither paid by you nor collected at customs, then generally speaking, you must calculate the tax in respect of the property or service and pay it to us. Your payment must be enclosed with a duly completed copy of form FP-505-V, Special-Purpose Return, which must be filed on or before the last day of the month following the month in which you purchased the property or service. The circumstances in which no tax has to be paid are set out in form FP-505-V.

As a rule, where QST registrants would be entitled to claim an input tax refund (ITR) were they to pay QST on the purchase of property or a service, they are not required to pay the QST. Therefore, if you are a QST registrant who purchased taxable property or a taxable service online from a non-resident business for consumption or use exclusively (90% or more) in the course of your commercial activities, you are not required to pay us the QST. However, if you purchased the property or service for purposes other than for consumption or use exclusively in your commercial activities, you must pay us the QST.

For more information, see the booklet entitled General Information Concerning the QST and the GST/HST (IN-203-V).

Unless the employer's total payroll for the year is $5 million or more, an eligible employer that has paid, allocated, granted or awarded salary or wages to one or more eligible employees in a given year prior to 2021 is deemed to have paid an excess contribution to the health services fund for the year equal to the rate of reduction applicable for the year multiplied by the lesser of

• the total eligible salary or wages paid in the year to eligible employees for the year; and
• the increase in the employer's total payroll for the year represented by the amount by which the employer's adjusted total payroll for the year exceeds the employer's adjusted total payroll for the employer's reference year.

Where an employer's total payroll for a year is $1 million or less, the rate of reduction applicable for the year is 2.7%; in all other cases, the rate is determined using the following formula:

 

Eligible employer

An eligible employer for a year is any employer, other than an excluded employer, that, during the year, carries on a business in Québec and has an establishment there. The employer can be a legal person, a partnership or an individual.

Eligible employee

An eligible employee is an employee who, under an employment contract, was hired for a recognized job in Québec requiring at least 26 hours of work per week for either an undetermined period or a minimum of 40 weeks, provided the employee has the degree or diploma ordinarily required for the recognized job and was hired

• after June 4, 2014, where the employer's reference year is the 2013 calendar year; or
• after the end of employer's reference year in all other cases.

Eligible salary or wages

An employee's eligible salary or wages for a given year correspond to the portion of the employee's salary or wages used to determine the employer contribution to the health services fund for the year, other than any amount that represents the value of a benefit the employee received by reason of an office or employment previously held by the employee.

Reference year

An employer's reference year corresponds to the first post-2012 calendar year in which the employer carried on a business throughout the entire year.

Total payroll

The same rules used to determine an employer's contribution to the health services fund for a year are used to determine an eligible employer's total payroll for the year.

Increase in the total payroll

In determining the increase in an eligible employer's total payroll for a given year, the total payroll and the attributes of all employers associated with the eligible employer and each other at the end of the year, other than any employer for which the reference year has not ended by the start of the year, must be taken into account.

For more information, see pages 8 to 14 of the document entitled Additional Information on the Fiscal Measures of the Budget (PDF – 795 KB) tabled on June 4, 2014, by the Ministère des Finances.

Québec small and medium-sized manufacturing businesses can benefit from an additional reduction of up to four percentage points from their tax rate.

Small and medium-sized manufacturing businesses

For the purposes of this measure, small and medium-sized manufacturing businesses are corporations at least 25% of whose activities consist of manufacturing and processing activities in a given taxation year.

Two items are considered in determining the proportion of a corporation's activities attributable to manufacturing and processing activities: assets and labour.

Determining the rate of the additional reduction

Small and medium-sized manufacturing businesses whose proportion of activities attributable to manufacturing and processing activities, for a given taxation year, is 50% or more, can benefit from the maximum additional reduction rate applicable for that taxation year.

Where such proportion, for a given taxation year, is between 50% and 25%, the additional reduction rate from which the business in question can benefit, for that taxation year, is reduced linearly.

The maximum rate of the additional reduction that applies with respect to a taxation year ended after June 4, 2014, is two percentage points. The maximum rate that applies with respect to a taxation year ended after March 31, 2015, is four percentage points.

However, where the taxation year of a small or medium-sized manufacturing business includes June 4, 2014, or March 31, 2015, the additional reduction rate applies in proportion to the number of days in the taxation year that follow June 4, 2014, or March 31, 2015.

For more information, see pages 1 through 3 of the Additional Information on the Fiscal Measures of the Budget (PDF – 795 KB) published on June 4, 2014, by the Ministère des Finances.

On June 4, 2014, the Minister of Finance announced that the rates of the specific tax on alcoholic beverages would be standardized as of 6 a.m. on August 1, 2014. As a result, the rates applicable to alcoholic beverages sold for home consumption (for example, at a grocery or convenience store) will increase, while the rates applicable to alcoholic beverages sold for consumption on the premises (for example, in a restaurant or bar) will decrease.

Businesses selling alcoholic beverages on which the specific tax was (or should have been) collected in advance must take inventory of all the alcoholic beverages they have in stock at 6 a.m. on August 1, 2014.

Alcoholic beverages sold for home consumption

Businesses that are required to take inventory and that sell alcoholic beverages for home consumption must, no later than August 29, 2014, file form VDZ-505-V, Alcoholic Beverage Inventory, and pay an amount equal to the difference between the specific tax applicable at the new rate and that applicable at the rate in effect before 6 a.m. on August 1, 2014.

Alcoholic beverages sold for consumption on the premises

Businesses that are required to take inventory and that sell alcoholic beverages for consumption on the premises must file form VDZ-505-V no later than October 31, 2014, if they are claiming a refund.

Note

Any business that files form VDZ-505-V after October 31, 2014, will not be entitled to a refund.

For more information, click Standardization of the Rates of the Specific Tax on Alcoholic Beverages.

Tax legislation will be amended to provide that, as of the 2015 taxation year, the tax credit for workers 65 or older will be calculated on the worker's first $4,000 of eligible work income in excess of the first $5,000 of such income.

For more information, see page 25 of the Additional Information on the Fiscal Measures of the Budget (PDF – 795 KB) tabled by the Ministère des Finances on June 4, 2014.

On January 1, 2014, a new policy came into effect respecting insufficient Québec Pension Plan (QPP) contributions or insufficient Québec parental insurance plan (QPIP) premiums. Under the new policy, if we observe that you, as an employer, have calculated such amounts incorrectly, we can, under certain circumstances, make the necessary corrections without communicating with you beforehand. Where such corrections are made, we will send you a notice of assessment showing the details of the corrections.

If the data in your file does not allow us to make the corrections, we will send you a Statement of Employee and Employer QPP Contributions (form LMU-141-V) or a Statement of Québec Parental Insurance Plan Premiums (form LMU-150-V) for you to complete.

For more information about QPP contributions and QPIP premiums, see the Guide for Employers (TP-1015.G-V).

Note that the new policy is one of many efforts being made by Revenu Québec to reduce the administrative burden on businesses.

Between April 7 and May 29, 2014, a number of mandataries were mistakenly sent form FPZ-2034.3-V, Online Filing of the GST/HST and QST Returns, or form FPZ-34.3-V, Online Filing of the GST/HST Returns. Even though the forms instructed them to file their returns online, they can in fact do so on paper using form FPZ-500-V, GST/HST – QST Return, or form FPZ-34-V, GST/HST Return.

To correct the error, we will send the mandataries in question the proper forms (FPZ-500-V or FPZ-34-V) so that they can file their returns for the month of May on paper.

Mandataries that have already filed their return for the period in question can disregard the notice and destroy the form.

The source of the error has been corrected. Mandataries will receive their next return at the usual time.

The Minister of Finance today announced an increase in the tobacco tax. The increase is effective as of 12:01 a.m. on June 5, 2014.

Retail dealers and collection agents that, at 12:01 a.m. on June 5, 2014, have tobacco products in stock on which they paid (or should have paid) an amount equal to the tobacco tax must take inventory of those products at that time. They must then remit, no later than July 4, 2014, an amount equal to the difference between the tobacco tax applicable at the new rate and the tax applicable at the rate in effect before June 5, 2014.

A copy of form TAZ-7.12-V, Inventory of Tobacco Products in Stock, which includes a remittance slip, will be mailed to retail dealers and collection agents on June 5, 2014. If you sell tobacco products and you do not receive a copy of the form, please contact Revenu Québec.

For more information, click Increase in the Tobacco Tax.