Quebec Bill 27, which received first reading on May 30, 2023, includes previously announced measures to amend several provincial tax credits and deductions, as well as to harmonize with certain federal tax measures, including to broaden eligibility for the small business deduction and support the use of the new international accounting standard for insurance contracts (IFRS 17) for income tax purposes. These measures, and others included in this bill, were previously announced in Quebec's 2022 Fall Economic Update and in various provincial information bulletins published in 2021, 2022 and 2023.
The corporate income tax measures included in Bill 27 are considered substantively enacted for IFRS and Accounting Standards for Private Enterprise (ASPE) purposes on May 30, 2023, the date the bill received first reading (as Quebec has a majority government). The corporate income tax measures are not considered enacted for U.S. GAAP purposes until the date the bill receives Assent.
Harmonization measures
Bill 27 includes various changes to harmonize with certain federal changes (which were announced in information bulletin 2022-04) to:
- Broaden eligibility for the small business deduction by increasing the upper limit of the range to $50 million (from $15 million) of taxable capital before the small business deduction is reduced to nil
- Support the use of the IFRS 17 standard for income tax purposes, subject to certain adjustments
- Update the rules that address tax planning related to allocations to redeeming fund unit holders in the mutual fund industry
- Eliminate the flow-through share regime for oil, gas and coal activities
- Introduce a Tax-Free First Home Savings Account
- Increase the Home Buyers’ Tax Credit to $10,000 (from $5,000)
- Introduce a Residential Property Anti-Flipping Rule
- Expand the Medical Expense Tax Credit for surrogacy and other related expenses.
Quebec corporate tax measures
Bill 27 includes changes announced in Quebec information bulletins published in 2021, 2022 and 2023 to, among other things:
- Expand the additional deduction for transportation costs incurred by remote small and medium-sized businesses by increasing the upper limit to $50 million (from $15 million) of paid-up capital before the additional deduction is reduced to nil (which corresponds to the federal expansion of the small business deduction), for taxation years that begin after April 6, 2022
- Expand access to the income-averaging mechanism for forest producers (which corresponds to the federal expansion of the small business deduction), for taxation years that begin after April 6, 2022.
Quebec personal tax measures
Bill 27 also includes personal tax changes announced in Quebec’s 2022 Fall Economic Update to:
- Enhance the refundable tax credit for senior assistance effective for 2022 and onward
- Eliminate the refundable tax credit for seniors’ activities.
For more information, contact your KPMG adviser.
Information is current to June 5, 2023. 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
The way you get your tax news is changing – Starting January 1, 2024, all tax news will be delivered exclusively through our TaxNewsFlash publication. If you're a current TaxNewsNow subscriber, you'll automatically receive TaxNewsFlash — no additional steps needed. If you're not subscribed but want insights from KPMG's Canadian tax professionals, subscribe to TaxNewsFlash.
