Quebec 2023 Budget Highlights

On Mar. 21, 2023, the Quebec Minister of Finance published Quebec’s 2023 budget. This article covers the measures that will impact you the most.

Business Tax Measures

There are no changes to corporate income tax rates.

Budgets 2023 introduces a new tax holiday (with a 10-year duration) associated with large investment projects (minimum of $100 million in depreciable property). A “tax holiday” rate of up to 25% will be applied to the cumulative total eligible expenditures related to the project. The former tax holiday for carrying out a large investment project has been eliminated, but this will not impact companies that have already qualified for it.

The budget includes modifications to the refundable tax credit for Quebec film or television production. The Sectoral Act will be updated to incorporate the aggregator’s commitment to making the film accessible in Quebec as part of the exploitation requirements. Additionally, the Act will be revised to exclude expenses associated with stock footage from the production cost criteria, applicable to both non-interprovincial co-productions and interprovincial co-productions.

Improvement of the refundable tax credit for book publishing: The amendment will raise the cap on eligible labor expenses related to preparation and digital publishing costs from 50% to 65%. Furthermore, changes will be made to increase the refundable tax credit rate for book publishing from 27% to 35% concerning qualified labor expenditure associated with printing and reprinting expenses.

Improvement of the refundable tax credit for multimedia events or environments showcased outside Quebec: The definitions of “eligible employee” and “eligible individual” will be updated to eliminate the necessity for services to be provided in connection with nine specific roles. Additionally, changes will be made to increase the cap on qualified labor expenditure related to preparation and digital publishing costs from 50% to 65%.

Personal Tax Measures

For the 2023 tax year, amendments to the tax legislation will be made:

The tax rate for the initial taxable income bracket, up to $49,275, will be decreased from 15% to 14%.
The tax rate for the second taxable income bracket, ranging from $49,275 to $98,540, will be decreased from 20% to 19%.

The housing component values of the solidarity tax credit, applicable from July 2022 to June 2023, will be indexed at a rate of 12.88% (rather than 6.44%) for the payment period starting on July 1, 2023.

For the 2023 tax year, the amount used to calculate the non-refundable tax credits for volunteer firefighters and search and rescue volunteers tax credits will be raised from $3,000 to $5,000. The tax credits will be equivalent to the amount resulting from multiplying $5,000 by the rate of the first taxable income bracket of the personal income tax table.

Decrease in Quebec Pension Plan contributions: For workers aged 65 or older, an option will be introduced allowing those aged 65 and above to cease making Quebec Pension Plan (QPP) contributions, as long as they are also receiving a QPP or Canada Pension Plan (CPP) retirement pension. Furthermore, starting from 2024, workers over 72 years of age will no longer be required to contribute to the QPP. Employers will also be exempt from contributing to the QPP beginning on the same date as applicable to the salaried employee.

As of the 2024 tax year, anyone in the highest Quebec tax bracket will no longer qualify for the non-refundable tax credit for investments in Labour-Sponsored Funds.

Supporting the Healthcare System, Infrastructure, Education and Communities

Budget 2023 makes financial commitments in several areas, including the healthcare system, infrastructure and education, and communities:

$5.6 billion for healthcare spending, focusing on making the healthcare system more efficient and flexible.
$649 million by 2027-28 to promote the French language.
$2.3 billion over five years for developing the potential of youth, including the promotion of vocational training.
$1.4 billion to promote tourism and the growth of the bio-food sector.
$565 million to provide support for mental health and addiction services and create new places for respite care for parents of children with disabilities.
$1 billion to improve housing affordability.

We can help!

Wondering how the tax changes in this year’s budget will impact you? We can explain everything you need about income tax changes and changes to tax credits – call us today!