Canada: Tax measures in 2022 economic update enacted (Quebec)

Quebec Bill 27, which received first reading on 30 May 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. Read TaxNewsFlash

Bill 27 includes various changes to harmonize with certain federal changes 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

Bill 27 includes changes to:

• 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 tax years that begin after 6 April 2022
• Expand access to the income-averaging mechanism for forest producers (which corresponds to the federal expansion of the small business deduction), for tax years that begin after 6 April 2022

Bill 27 also includes personal tax changes to:

• Enhance the refundable tax credit for senior assistance effective for 2022 and onward
• Eliminate the refundable tax credit for seniors’ activities

Read a June 2023 report prepared by the KPMG member firm in Canada

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