Quebec Bill 33, which includes a harmonization measure to limit the stock option deduction for certain employees and provide a potential deduction for employers, received Assent on June 8, 2022. This bill also contains other measures to harmonize Quebec rules with certain federal rules, measures previously announced in various information bulletins published between 2020 and 2022 and certain personal tax measures announced in the 2022 provincial budget and Quebec's 2021-2022 fall economic update.
The corporate income tax measures included in Bill 33 are considered enacted for U.S. GAAP purposes as of June 8, 2022 (the date the bill received Assent). These measures were considered substantively enacted for IFRS and Accounting Standards for Private Enterprise (ASPE) purposes on May 12, 2022 (the date the bill received first reading), as Quebec has a majority government.
Note that Bill 33 does not include the one-year extension to the temporary increase in the tax credit related to the investment and innovation (C3i) until December 31, 2023 (as proposed in the Quebec 2022 budget).
Corporate income tax measures
Bill 33 includes a measure to harmonize Quebec rules with recent changes to the federal stock option regime, effective July 1, 2021. Specifically, the measure applies a $200,000 annual cap on the amount of employee stock options that continue to qualify for the stock option deduction. The rules limit the availability of the stock option deduction for certain employees, however employers may be entitled to the deduction, if they meet certain conditions. This measure does not apply to stock options granted by Canadian-controlled private corporations (CCPCs) or non-CCPCs with annual gross revenue in the most recent consolidated financial statements that does not exceed $500 million. For more information on the federal rules, see TaxNewsFlash-Canada 2021-35, "New Stock Option Regime — Takes Effect July 1, 2021".
Bill 33 also includes new qualifications for the eligibility requirements for the Incentive Deduction for the Commercialization of Innovations (IDCI), announced in Information Bulletin 2021-9. These changes apply for taxation years beginning after December 31, 2020.
Personal tax measures
Bill 33 also includes measures to:
- Introduce the refundable tax credit granting a one-time amount of up to $500 in 2022 to mitigate the increase in cost of living
- Enhance the refundable tax credit for child care expenses
- Enhance the refundable tax credit for senior assistance.
Bill 33 also includes measures to harmonize Quebec rules with certain federal rules to:
- Allow a taxpayer to acquire an advanced life deferred annuity through a registered plan
- Facilitate the conversion of Health and Welfare Trusts to Employee Life and Health Trusts
- Treat certain qualifying virtual currency as a financial instrument for the purposes of the Quebec sales tax (QST)
- Adjust the QST rules to reflect the GST/HST rules related to investment limited partnerships.
For more information, contact your KPMG adviser.
Information is current to June 13, 2022. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500