Revenu Québec Infos

Effective October 1, 2015, if you make disability assistance payments to a beneficiary of a registered disability savings plan (RDSP) who is resident in Canada, you must withhold income tax of 16% from the taxable portion of those payments, that is, from the portion of the payments in excess of $14,020 per year. 

Generally speaking, sales of property or services in Québec that are made by individuals in business are taxable under the goods and services tax (GST) and Québec sales tax (QST) systems. Therefore, such individuals are required to register for the GST and the QST.

They are also required to collect GST and QST and remit them to us. Form FP-500-V, Detailed Calculations, and form FPZ-500-V, GST/HST – QST Return, are to be used by such individuals to calculate and report the taxes.

In addition, they can claim input tax credits (ITCs) and input tax refunds (ITRs) with regard to the GST and the QST paid in respect of property and services acquired by them to make taxable (including zero-rated) sales of property or services.

Small suppliers

Any individual in business whose total taxable sales do not exceed $30,000 in a given calendar quarter and in the combined four calendar quarters preceding that given calendar quarter is considered a small supplier. The sales referred to are those made worldwide by the individual in business and his or her associates during those periods.

Individuals in business who are considered small suppliers are not required to register for the GST and the QST and do not have to collect or remit those taxes. Also, they cannot claim ITCs or ITRs with regard to the taxes paid in respect of their purchases.

However, small suppliers may choose to register for the GST and the QST, in which case they are required to collect the taxes and remit them to us. Such small suppliers can claim ITCs and ITRs with regard to the taxes paid in respect of their purchases.

Example

An individual sells used property online. His total sales in the combined four calendar quarters preceding a given calendar quarter exceed $30,000. He is required to register for the GST and the QST and to collect those taxes.

In some situations, an individual in business may be required to register for the GST and the QST regardless of the total amount of the individual's taxable sales. For more information in that regard, click on the following links: Registering for the GST and QST and Mandatory QST Registration.

The eligible amount for a donation of eligible agricultural products that is made after March 26, 2015, by a recognized farm producer to a registered charity that is either the Food Banks of Québec or a Moisson member can be increased by 50% for purposes of calculating the deduction for donations and gifts or the non-refundable tax credit for donations and gifts, as the case may be.

A recognized farm producer is an individual or a corporation that carries on a business registered as an agricultural operation with the Ministère de l'Agriculture, des Pêcheries et de l'Alimentation or that is a member of a partnership carrying on such a business at the end of its fiscal period.

The following products are considered eligible agricultural products:

• meat and meat by-products;
• eggs and dairy products;
• fish;
• fruit;
• vegetables;
• grain;
• legumes;
• fines herbes;
• honey;
• maple syrup;
• mushrooms;
• nuts; and
• any other product grown, raised or harvested by a registered agricultural operation, provided the product can be legally sold, distributed or offered for sale—at a place other than where it was produced—as a food or beverage intended for human consumption. 

However, a processed product is not considered an eligible agricultural product unless it has been processed only to the extent necessary to allow it to be legally sold, distributed or offered for sale—at a place other than where it was produced—as a food or beverage intended for human consumption.

For more information, see pages A.117 and A.118 of the document entitled Additional Information 2015-2016 (PDF – 1.96 MB), published by the Ministère des Finances.

Major changes are to be made to the tax credit for salaries and wages (IFC) (hereinafter the "refundable tax credit") (referred to in the Budget Speech as the refundable tax credit for international financial centres). It will be replaced almost entirely by a non-refundable tax credit, except with respect to back-office activities. The refundable tax credit may still be claimed in respect of such activities, which, subject to certain conditions, may be considered qualified international financial transactions (QIFTs). 

Continuation of the refundable tax credit with respect to back-office activities

The Act respecting sectoral parameters of certain fiscal measures will be amended so that an eligible corporation that operates a business, all of whose activities are back-office activities that qualify as QIFTs, may obtain a qualification certificate that recognizes the business as an international financial centre (IFC) and the annual certificate that is required for purposes of the refundable tax credit.

These amendments relating to corporations will apply to taxation years that begin after March 26, 2015.

Replacement of the refundable tax credit with a non-refundable tax credit in respect of activities other than back-office activities

Tax legislation will be amended so that an eligible corporation that operates a business recognized as an IFC by the Minister of Finance may deduct from its income tax otherwise payable for a taxation year an amount representing 24% of the qualified salaries and wages it incurred for the year in respect of its eligible employees. This new non-refundable tax credit cannot be greater than $16,000 per employee, calculated on an annual basis.

All the conditions in tax legislation that apply to the refundable tax credit will apply to the new non-refundable tax credit, with the necessary modifications.

Furthermore, an eligible corporation will be able to carry back over the three preceding taxation years or carry forward over the following 20 taxation years the portion of the tax credit that did not reduce its income tax payable for the taxation year to which the tax credit relates. However, no carry-over is possible in respect of either a taxation year for which the corporation does not have a valid qualification certificate for purposes of the non-refundable tax credit or a taxation year ending before March 27, 2015.

These amendments relating to eligible corporations will apply to taxation years that begin after March 26, 2015.

For more information, see pages A.95 to A.100 of the document entitled Additional Information 2015-2016 (PDF – 1.96 MB), published by the Ministère des Finances.

Tax legislation will be amended to restore the former parameters of the tax credit for the production of performances. However, a new, lower cap will be applicable to a qualified performance that is a comedy show. Consequently, 

• the tax credit rate applicable to a qualified labour expenditure will be 35% (instead of 28%);
• the maximum tax credit in respect of a qualified performance will be 
  • $1.25 million (instead of $1 million), where the qualified performance is a musical comedy,
  • $350,000, where the qualified performance is a comedy show,
  • $750,000 (instead of $600,000) otherwise.

The increase in the tax credit rate will apply to an eligibility period of a qualified performance beginning after March 26, 2015, for which an application for an advance ruling or, where no such application was previously filed in respect of the eligibility period, an application for a certificate is filed with the Société de développement des entreprises culturelles (SODEC) after that day.

The increase in the cap on the tax credit will apply to a qualified performance, other than a qualified performance that is a comedy show, where one of its eligibility periods is not completed on March 26, 2015.

The decrease in the cap on the tax credit will apply to a qualified performance that is a comedy show for which an application for an advance ruling or, where no such application was previously filed in respect of the initial eligibility period an application for a certificate is filed with SODEC:

• after March 26, 2015, where SODEC considers that work on the production of the performance was not sufficiently advanced on March 26, 2015;
• after June 30, 2015, otherwise.

For more information, see pages A.91 and A.92 of the document Additional Information 2015-2016 (PDF – 1.96 MB) published by the Ministère des Finances.

The provisions of the Taxation Act prohibit an individual from obtaining a capital gains exemption on the disposition of qualified shares to a corporation with which the individual is not dealing at arm's length.

The provisions in question will be amended with respect to sellers who receive consideration as full or partial payment.

Moreover, the Act will also be amended so that the provisions will not apply where the seller claims the capital gains exemption in respect of a capital gain realized on the disposition of qualified shares in the primary (agriculture and fishing) and manufacturing sectors to a corporation with which the seller is not dealing at arm's length. The shares must, however, be disposed of in conjunction with the transfer of a qualified family business.

The amendments will apply with respect to dispositions of shares that take place after December 31, 2016.

For more information, see pages A.113 to A. 117 of the document entitled Additional Information 2015-2016 (PDF – 1.96 MB), published by the Ministère des Finances.

As employers, road transport businesses need to be aware of the status of the truck drivers who perform work for them because an employer's tax obligations vary based on a truck driver's status. Furthermore, incorporated truck drivers need to be aware of the distinctive characteristics of personal services businesses.

A truck driver's status

A truck driver who performs work for a road transport business may be considered an employee or a self-employed person. The determination of a truck driver's status is based on a number of criteria, the most important of which is whether a relationship of subordination exists between the driver and the road transport business.

For example, where a truck driver is free to choose the means of performing a contract and no relationship of subordination exists with respect to the performance of the contract, the driver is considered a self-employed person. For more information about the tax obligations of a self-employed person, refer to the publication entitled Are You Self-Employed? Taxation Reference Tool (IN-300-V).

On the other hand, where a truck driver undertakes for a limited time to do work for remuneration, according to the instructions and under the direction or control of a road transport business, the driver is considered an employee.

Meal and lodging expenses: allowances and reimbursements

As an employer, a road transport business is responsible for withholding Québec income tax from all the remuneration (salaries, wages and any other remuneration) it pays to its employees.

Furthermore, if it pays an allowance to an employee or reimburses the employee for meal and lodging expenses paid by the employee, the business must determine whether or not the amount of the allowance or reimbursement is reasonable. If it is not, the employer must include it in the employee's income. For more information, refer to the publication entitled Taxable Benefits (IN-253-V).

If the employer does not pay an allowance or grant a reimbursement that covers all the meal and lodging expenses assumed by a truck driver, the driver can complete form TP-66-V, Employment Expenses of Transport Employees, to claim in his or her income tax return a deduction for the expenses not covered by the employer. In such a case, the employer must complete Part 2 of the form. For more information, refer to the publication entitled Employment Expenses (IN-118-V).

Personal services businesses

A road transport business may retain the services of a subcontractor. Where the subcontractor is an incorporated truck driver, the corporation formed by the driver may be considered to be carrying on a personal services business (PSB).

Such is the case where an analysis of the facts shows that, but for the existence of the corporation, the truck driver would be an employee of the road transport business receiving the services. The determination of whether a corporation formed by a truck driver should be considered to be carrying on a PSB is based on a number of criteria, the most important of which is the degree of subordination that exists between the corporation and the road transport business.

The tax obligations of a corporation formed by a truck driver as well as the tax consequences for such a corporation vary based on whether the corporation is, in fact, constituted as a corporation or whether it is considered to be carrying on a PSB. For example, a corporation carrying on a PSB is subject to restrictions regarding the expenses it can deduct and cannot claim the small business deduction. For more information, refer to interpretation bulletin IMP. 135.2-1/R1, Personal services business.

As employers, road transport businesses need to be aware of the status of the truck drivers who perform work for them because an employer's tax obligations vary based on a truck driver's status. Furthermore, incorporated truck drivers need to be aware of the distinctive characteristics of personal services businesses.

A truck driver's status

A truck driver who performs work for a road transport business may be considered an employee or a self-employed person. The determination of a truck driver's status is based on a number of criteria, the most important of which is whether a relationship of subordination exists between the driver and the road transport business.

For example, where a truck driver is free to choose the means of performing a contract and no relationship of subordination exists with respect to the performance of the contract, the driver is considered a self-employed person. For more information about the tax obligations of a self-employed person, refer to the publication entitled Are You Self-Employed? Taxation Reference Tool (IN-300-V).

On the other hand, where a truck driver undertakes for a limited time to do work for remuneration, according to the instructions and under the direction or control of a road transport business, the driver is considered an employee.

Meal and lodging expenses: allowances and reimbursements

As an employer, a road transport business is responsible for withholding Québec income tax from all the remuneration (salaries, wages and any other remuneration) it pays to its employees.

Furthermore, if it pays an allowance to an employee or reimburses the employee for meal and lodging expenses paid by the employee, the business must determine whether or not the amount of the allowance or reimbursement is reasonable. If it is not, the employer must include it in the employee's income. For more information, refer to the publication entitled Taxable Benefits (IN-253-V).

If the employer does not pay an allowance or grant a reimbursement that covers all the meal and lodging expenses assumed by a truck driver, the driver can complete form TP-66-V, Employment Expenses of Transport Employees, to claim in his or her income tax return a deduction for the expenses not covered by the employer. In such a case, the employer must complete Part 2 of the form. For more information, refer to the publication entitled Employment Expenses (IN-118-V).

Personal services businesses

A road transport business may retain the services of a subcontractor. Where the subcontractor is an incorporated truck driver, the corporation formed by the driver may be considered to be carrying on a personal services business (PSB).

Such is the case where an analysis of the facts shows that, but for the existence of the corporation, the truck driver would be an employee of the road transport business receiving the services. The determination of whether a corporation formed by a truck driver should be considered to be carrying on a PSB is based on a number of criteria, the most important of which is the degree of subordination that exists between the corporation and the road transport business.

The tax obligations of a corporation formed by a truck driver as well as the tax consequences for such a corporation vary based on whether the corporation is, in fact, constituted as a corporation or whether it is considered to be carrying on a PSB. For example, a corporation carrying on a PSB is subject to restrictions regarding the expenses it can deduct and cannot claim the small business deduction. For more information, refer to interpretation bulletin IMP. 135.2-1/R1, Personal services business.

As employers, road transport businesses need to be aware of the status of the truck drivers who perform work for them because an employer's tax obligations vary based on a truck driver's status. Furthermore, incorporated truck drivers need to be aware of the distinctive characteristics of personal services businesses.

A truck driver's status

A truck driver who performs work for a road transport business may be considered an employee or a self-employed person. The determination of a truck driver's status is based on a number of criteria, the most important of which is whether a relationship of subordination exists between the driver and the road transport business.

For example, where a truck driver is free to choose the means of performing a contract and no relationship of subordination exists with respect to the performance of the contract, the driver is considered a self-employed person. For more information about the tax obligations of a self-employed person, refer to the publication entitled Are You Self-Employed? Taxation Reference Tool (IN-300-V).

On the other hand, where a truck driver undertakes for a limited time to do work for remuneration, according to the instructions and under the direction or control of a road transport business, the driver is considered an employee.

Meal and lodging expenses: allowances and reimbursements

As an employer, a road transport business is responsible for withholding Québec income tax from all the remuneration (salaries, wages and any other remuneration) it pays to its employees.

Furthermore, if it pays an allowance to an employee or reimburses the employee for meal and lodging expenses paid by the employee, the business must determine whether or not the amount of the allowance or reimbursement is reasonable. If it is not, the employer must include it in the employee's income. For more information, refer to the publication entitled Taxable Benefits (IN-253-V).

If the employer does not pay an allowance or grant a reimbursement that covers all the meal and lodging expenses assumed by a truck driver, the driver can complete form TP-66-V, Employment Expenses of Transport Employees, to claim in his or her income tax return a deduction for the expenses not covered by the employer. In such a case, the employer must complete Part 2 of the form. For more information, refer to the publication entitled Employment Expenses (IN-118-V).

Personal services businesses

A road transport business may retain the services of a subcontractor. Where the subcontractor is an incorporated truck driver, the corporation formed by the driver may be considered to be carrying on a personal services business (PSB).

Such is the case where an analysis of the facts shows that, but for the existence of the corporation, the truck driver would be an employee of the road transport business receiving the services. The determination of whether a corporation formed by a truck driver should be considered to be carrying on a PSB is based on a number of criteria, the most important of which is the degree of subordination that exists between the corporation and the road transport business.

The tax obligations of a corporation formed by a truck driver as well as the tax consequences for such a corporation vary based on whether the corporation is, in fact, constituted as a corporation or whether it is considered to be carrying on a PSB. For example, a corporation carrying on a PSB is subject to restrictions regarding the expenses it can deduct and cannot claim the small business deduction. For more information, refer to interpretation bulletin IMP. 135.2-1/R1, Personal services business.

As employers, road transport businesses need to be aware of the status of the truck drivers who perform work for them because an employer's tax obligations vary based on a truck driver's status. Furthermore, incorporated truck drivers need to be aware of the distinctive characteristics of personal services businesses.

A truck driver's status

A truck driver who performs work for a road transport business may be considered an employee or a self-employed person. The determination of a truck driver's status is based on a number of criteria, the most important of which is whether a relationship of subordination exists between the driver and the road transport business.

For example, where a truck driver is free to choose the means of performing a contract and no relationship of subordination exists with respect to the performance of the contract, the driver is considered a self-employed person. For more information about the tax obligations of a self-employed person, refer to the publication entitled Are You Self-Employed? Taxation Reference Tool (IN-300-V).

On the other hand, where a truck driver undertakes for a limited time to do work for remuneration, according to the instructions and under the direction or control of a road transport business, the driver is considered an employee.

Meal and lodging expenses: allowances and reimbursements

As an employer, a road transport business is responsible for withholding Québec income tax from all the remuneration (salaries, wages and any other remuneration) it pays to its employees.

Furthermore, if it pays an allowance to an employee or reimburses the employee for meal and lodging expenses paid by the employee, the business must determine whether or not the amount of the allowance or reimbursement is reasonable. If it is not, the employer must include it in the employee's income. For more information, refer to the publication entitled Taxable Benefits (IN-253-V).

If the employer does not pay an allowance or grant a reimbursement that covers all the meal and lodging expenses assumed by a truck driver, the driver can complete form TP-66-V, Employment Expenses of Transport Employees, to claim in his or her income tax return a deduction for the expenses not covered by the employer. In such a case, the employer must complete Part 2 of the form. For more information, refer to the publication entitled Employment Expenses (IN-118-V).

Personal services businesses

A road transport business may retain the services of a subcontractor. Where the subcontractor is an incorporated truck driver, the corporation formed by the driver may be considered to be carrying on a personal services business (PSB).

Such is the case where an analysis of the facts shows that, but for the existence of the corporation, the truck driver would be an employee of the road transport business receiving the services. The determination of whether a corporation formed by a truck driver should be considered to be carrying on a PSB is based on a number of criteria, the most important of which is the degree of subordination that exists between the corporation and the road transport business.

The tax obligations of a corporation formed by a truck driver as well as the tax consequences for such a corporation vary based on whether the corporation is, in fact, constituted as a corporation or whether it is considered to be carrying on a PSB. For example, a corporation carrying on a PSB is subject to restrictions regarding the expenses it can deduct and cannot claim the small business deduction. For more information, refer to interpretation bulletin IMP. 135.2-1/R1, Personal services business.

Tax legislation will be amended to restore the former parameters of the tax credit. Thus, 

• the tax credit rates applicable to a qualified expenditure will be 35% and 27%, respectively; and
• the maximum tax credit in respect of an eligible work or a work that is part of an eligible group of works will be $437,500.

These amendments will apply to an eligible work and to a work that is part of an eligible group of works for which an application for an advance ruling or, where no such application was previously filed in respect of the work or group of works, for which an application for a certificate was filed with the Société de développement des entreprises culturelles (SODEC) after March 26, 2015.

For more information, see page A.93 of the document entitled Additional Information 2015-2016 (PDF – 1.96 MB), published by the Ministère des Finances.

Tax legislation will be amended to restore the former rate of 35% applicable to a qualified film dubbing expenditure.

This amendment will apply in respect of a qualified production the dubbing of which is completed after March 26, 2015.

For more information, see pages A.92 and A.93 of the document entitled Additional Information 2015-2016 (PDF – 1.96 MB), published by the Ministère des Finances.

Tax legislation will be amended to restore the former rates applicable to labour expenditures that qualify for the tax credit for multimedia titles and the tax credit for corporations specialized in the production of multimedia titles. As such, the rates will be 

• 30% in respect of a multimedia title intended to be commercialized that is not a vocational training title, with a 7.5% premium if such a title is available in a French version;
• 26.25% in respect of any other multimedia title, including a title that is a vocational training title.

Tax legislation will also be amended to provide that a qualified labour expenditure in respect of an eligible employee may not exceed $100,000, calculated on an annual basis. Consequently, the maximum tax credit for a taxation year cannot exceed $37,500, $30,000 or $26,250 annually, as the case may be, per eligible employee. 

Subject to the exception below, this limit will apply to the tax credit for multimedia titles and the tax credit for corporations specialized in the production of multimedia titles, for a taxation year, in respect of each eligible employee of a corporation or of a subcontractor with which the corporation was not dealing at arm's length at the time the subcontract was entered into.

For a taxation year of a corporation, the $100,000 limit will not apply to a qualified labour expenditure incurred in the year and paid in respect of an eligible employee of the corporation or of the subcontractor with which the corporation was not dealing at arm's length, up to the number of such eligible employees to whom the highest qualified labour expenditures, corresponding to 20% of the total number of eligible employees, will be attributable.

The amendments to the tax legislation will apply to both the tax credit for multimedia titles and the tax credit for corporations specialized in the production of multimedia titles in respect of a qualified labour expenditure incurred after March 26, 2015, or in respect of a qualified labour expenditure incurred under a contract entered into after March 26, 2015, as the case may be. 

For a corporation's taxation year that includes March 26, 2015, the $100,000 limit will be calculated, according to the usual rules, in proportion to the number of days in the taxation year that follow that date.

For more information, see pages A.77 to A.80 of the document entitled Additional Information 2015-2016 (PDF – 1.96 MB), published by the Ministère des Finances.

The Regulation respecting the determination of total payroll will be amended to provide that, as of 2015, only employers whose total payroll for a year exceeds $2 million will be required to participate in the development of workforce skills for that year.

For more information, see page A.118 of the document entitled Additional Information 2015-2016 (PDF – 1.96 MB), published by the Ministère des Finances.

Starting July 1, 2015, the GST and QST will no longer apply to products marketed exclusively for feminine hygiene purposes. The supply of sanitary napkins, tampons, sanitary belts, menstrual cups or other similar products will be zero-rated. The GST and QST will continue to apply, however, to the supply of deodorants, douches, sprays, syringes and feminine wipes.

Starting July 1, 2015, the GST and QST will no longer apply to products marketed exclusively for feminine hygiene purposes. The supply of sanitary napkins, tampons, sanitary belts, menstrual cups or other similar products will be zero-rated. The GST and QST will continue to apply, however, to the supply of deodorants, douches, sprays, syringes and feminine wipes.

Starting July 1, 2015, the GST and QST will no longer apply to products marketed exclusively for feminine hygiene purposes. The supply of sanitary napkins, tampons, sanitary belts, menstrual cups or other similar products will be zero-rated. The GST and QST will continue to apply, however, to the supply of deodorants, douches, sprays, syringes and feminine wipes.

Starting July 1, 2015, the GST and QST will no longer apply to products marketed exclusively for feminine hygiene purposes. The supply of sanitary napkins, tampons, sanitary belts, menstrual cups or other similar products will be zero-rated. The GST and QST will continue to apply, however, to the supply of deodorants, douches, sprays, syringes and feminine wipes.

The Act respecting the sectoral parameters of certain fiscal measures will be amended to provide that, in order to obtain a qualification certificate for purposes of the refundable tax credits designed to promote the creation of new financial services corporations, a corporation must show that none of its activities is the continuation, in whole or in part, of an activity previously engaged in by another person or a partnership.

Also, a corporation that has a valid qualification certificate for purposes of the above-mentioned tax credits will have to show the Minister of Finance that all the activities it carried on throughout the taxation year or the part of the taxation year (as applicable) for which an application for a certificate is made constitute activities that were not previously engaged in by another person or a partnership. Otherwise, an annual certificate will not be issued.

The amendments to the Act will be declaratory in nature.

For more information, see pages A.110 to A.112 of the document entitled Additional Information 2015-2016 (PDF – 1.96 MB), published by the Ministère des Finances.

The tax credit for Québec film productions (referred to in the Budget Speech as the refundable tax credit for Québec film and television production) will be reorganized so that a higher basic rate will apply in respect of a film, including a television program, that is not developed from a foreign concept or a foreign format.

New class of eligible films

The Act respecting the sectoral parameters of certain fiscal measures (hereinafter the "sectoral act") will be amended to introduce a new class of films. That class will include any film that is already eligible for the basic tax credit under the current rules and that is developed from a foreign concept or a foreign format.

This amendment will apply to film and television productions for which an application for an advance ruling or, where no such application has previously been filed in respect of the production, for which an application for a certificate is filed with the Société de développement des entreprises culturelles (SODEC) after March 26, 2015.

Increase in the basic rates

In addition, tax legislation will be amended to provide for an increase in the basic rates of the tax credit for Québec film productions in respect of eligible films that are not adapted from a foreign format.

Moreover, the current basic rates will continue to apply in respect of eligible films that are adapted from a foreign format. The various increases will remain the same in respect of all eligible films.

This amendment will apply to film and television productions for which an application for an advance ruling or, where no such application has previously been filed in respect of the production, for which an application for a certificate is filed with SODEC after March 26, 2015.

Other amendments

Furthermore, tax legislation and the sectoral act will be amended to restore the former rules pertaining to the criterion of "non-arm's length," thereby replacing the rules pertaining to the criterion of "associated corporations." Consequential amendments relating to the tax credit for film production services will also be made to tax legislation and the sectoral act.

With regard to corporations, the amendments to tax legislation will apply to labour expenditures or production costs, as the case may be, incurred in a taxation year that begins after March 26, 2015.

Also with regard to corporations, the amendments to the sectoral act will apply to taxation years that begin after March 26, 2015.

For more information, see pages A.84 to A.90 of the document entitled Additional Information 2015-2016 (PDF – 1.96 MB), published by the Ministère des Finances.