The 2017-2018 Quebec budget tabled March 28, 2017, by Finance Minister Carlos Leitão focuses on balancing the budget. And that is a good thing because balancing the budget was one of the major priorities identified by CFIB members on the pre-budget survey conducted in January of this year. This survey also showed that a vast majority of you wanted to see a tax cut for taxpayers and investments in health and education. We have good news: the government will be investing in each of these sectors!
Measures affecting all SMEs
- Continuation of the previously announced Health Services Fund (HSF) rate cut
If your company has a payroll of $1 million or less, your HSF contributions will continue to decrease over the next few years. This translates into total savings of $900 million for SMEs over a five-year period!
CHANGES IN HSF CONTRIBUTION RATE FOR SMEs
|Primary and Manufacturing||2.70%||1.60%||1.60%||1.55%||1.50%||1.50%||1.50%||1.45%|
|Services and Construction||2.70%||2.70%||2.70%||2.50%||2.30%||2.15%||2.05%||2.00%|
- Continuation of the previously announced general corporate income tax rate reduction
Businesses making profits in excess of $500,000 will be entitled to a gradual reduction of their tax rate over a five-year period.
CHANGES IN THE GENEREAL CORPORATE INCOME TAX RATE
January 1, 2017
income tax rate
- Lower taxes for individuals
New measures will mean more money in taxpayers’ pockets—and that will certainly be beneficial for business!
- The basic personal amount (the first portion of income that is exempt from personal income tax) goes from $11,635 to $14,890.
- The health contribution has been eliminated, and any contributions made in 2016 will be refunded.
- Thanks to these new measures, personal income tax will be cut by more than $600 million in 2017.
- Help to encourage businesses to make the digital shift
SMEs will be able to fully amortize their investments in modern production equipment and state-of-the-art computer hardware over a three-year period.
Is your industry sector targeted?
Several pieces of good news specifically targeting various sectors were announced. Below are some of the measures that might be relevant to you:
The RénoVert program, which supports individuals making energy-friendly renovations, will be extended until March 31, 2018. This could be an opportunity for you to secure more contracts.
Greenhouse owners who invest more than $150,000 to convert to or adopt electric heating could benefit from a new program giving them up to a 20% discount on their electricity bills over a four-year period. Start getting your applications ready and be sure to submit them between September 30, 2017, and December 31, 2018.
- Restaurants and Bars
Will the government be modernizing the Régie des alcools, des courses et des jeux (RACJ) [Quebec liquor, racing and gambling control board]? We have long called for changes, particularly changes aimed at speeding up the implementation of the single liquor permit! The budget announced that the following changes will begin next year:
- Modernization of the RACJ’s practices.
- Review of regulatory and monitoring measures affecting alcoholic beverages.
- Better follow-up with the industry.
- Businesses in remote regions
Businesses in all sectors can now claim a higher deduction for transportation costs. The rate for SMEs in the Îles-de-la-Madeleine has been raised and, in some regions, SMEs in industries other than the manufacturing sector are now eligible.
The budget announced total investments of nearly $125 million to encourage expansion of the tourist industry.
- Quebec distillers and brewers
Thanks to a relaxation of the rules, craft brewers and distillers will be able to promote and sell their products more easily. The program includes $5.2 million over five years to support the positioning of Quebec spirits.
A flurry of good news!
- Small Claims Court can now be used for disputes with Revenu Québec
Companies with 10 or fewer employees will now be able to go to the Small Claims Division of the Court of Quebec to dispute:
- decisions following a challenge.
- tax assessments under $15,000.
In addition, Revenu Québec is now required to send its arguments to taxpayers prior to the hearing.
- Balanced budget and debt repayment
This is the third consecutive balanced budget, and it is estimated that this trend will continue for the next five years. That’s good news because today’s deficits are tomorrow’s taxes! The government also plans to continue repaying the debt over each of the next several years.
The fight continues for businesses with fewer than three employees
If your company has fewer than three employees and works in sectors other than the manufacturing and primary industries, there is a possibility that you are no longer eligible for the reduced SME tax rate that came into effect on January 1, 2017.
You can find out by calculating the number of paid hours in your business, as opposed to the number of hours worked:
- If the number of paid hours exceeds 5,500, all is well and good! You will continue to enjoy the 8% tax rate.
- If the number of paid hours is fewer than 5,000, unfortunately you will have to pay the general 11.8% tax rate.
- If the number of paid hours is between 5,000 and 5,500, your rate increases gradually from 8% to 11.8%.
- If you are a company shareholder, you may include in your calculation some of the hours you work, even if you were not compensated.
In other words, this decision means that an additional 48% tax is imposed on our smallest businesses. CFIB is fighting to change this!
For further information on the Quebec budget, please do not hesitate to contact a CFIB Counsellor; he or she will be pleased to answer your questions.