This afternoon, Finance Quebec Minister Eric Girard presented the first budget of his government’s second mandate. Although we are in the midst of a period of high inflation, it is a spending budget.
As promised in the recent election campaign, the budget contains a universal tax cut, as well as benefits to seniors. Here are our annual top 5 budget highlights:
1% Tax Reduction
Starting in 2023, the tax on the first and second income tax brackets, which applies to the first $98,540 of income, will be reduced by 1%. This results in a maximum tax savings of $814 for individuals earning $98,540 or more.
Quebec Pension Plan (QPP) for workers over 65 years-old
Starting January 1, 2024, employees or self-employed individuals, aged 65 and older, who are already receiving a QPP or Canadian Pension Plan (CPP) pension can file an election to stop making QPP contributions on their salaries or self-employment income.
Also, the same individuals aged 72 years and older, will no longer make QPP contributions on their salaries.
Furthermore, individuals can delay receiving their QPP pension by an additional 2 years, from age 70 to 72.
Limitation to Non-Refundable Tax Credits for Labour-Sponsored Funds
Individuals whose taxable income exceeds $112,655 in 2022 will no longer be eligible for the non-refundable tax credit of up to $750 on contributions made to a labour-sponsored fund. This is effective for contributions made after December 31, 2023.
New Tax Holiday for Large Investment Projects
The former Tax Holiday for Large Investment Projects (TH-LIP) program will be abolished and replaced by a new ten-year tax holiday. It will be calculated by applying a rate of 15%, 20% or 25%, according to the location of the project and on total eligible expenditures, up to a maximum of one billion dollars.
The program has been expanded to include additional industrial sectors and must be for a minimum investment of one hundred million dollars.
Tax Fairness Initiatives
The Government is pursuing its initiatives to ensure tax fairness on many aspects. It will, among other things, invest an amount of $116,9 millions over a period of five years to:
- ensure tax fairness;
- increase Revenu Quebec’s services to businesses and individuals;
- intensify the fight against economic crimes and frauds.
Different measures are taken, such as requesting information on the owning of crypto assets, pursuing initiatives in the construction sector, offering more support to individuals and businesses with respect to their tax obligations and regrouping all receivables due to the Government under Revenu Quebec’s responsibility.
How Can BDO Help
If you have any questions about the impact of the above-mentioned budget measures on you and your business, please do not hesitate to contact us.