The Parti Quebecois (PQ) has released its much-anticipated November 20th, 2012 budget. Speculation had been surrounding how they would cap spending and maintain the $1.5 billion budgetary deficit objective set in March 2012.
Below are the most important aspects of the budget for businesses in Quebec.
Taxation of refundable tax credits
For businesses, refundable tax credit amounts from the list below that are received after November 20th 2012 will now be considered income and taxed accordingly. Prior to the budget, they were not taxed provincially. Included in this list is the refundable credit for scientific research and experimental development, and:
- The refundable tax credit for university research and research carried on by a public research centre or consortium.
- The refundable tax credit for fees and dues paid by a research consortium.
- The refundable tax credit for private partnership pre-competitive research.
- The refundable credit for on-the-job training periods.
- The refundable credit for design.
- The refundable credit for the construction or conversion of vessels.
Refundable tax credit for Biopharmaceutical R&D
Large biopharmaceutical corporations and SMEs with expenditures over $3 million and that were previously claiming the lower 17,5% tax credit will now be entitled to a 27.5% tax credit over the next five years. Eligibility must be obtained on an annual basis.
New Tax Holiday for Large Investment Projects
The previous tax holiday for large investment projects has been scrapped in favor of a new program called the “THI”. In this new program certain corporations and partnerships that begin to carry out a large investment project (over $300 million) in Québec after November 20, 2012 may, under certain conditions, obtain a ten year tax holiday. This tax holiday is applicable to large investment projects in the manufacturing (including the mineral and wood processing), data processing and storage, wholesale trade or warehousing sectors.
Tax Credit for M & P Equipment
A qualified corporation that acquires a qualified property may receive a tax credit for investments relating to manufacturing and processing equipment. The tax credit applies to certain property acquired before January 1, 2016 whereas for other qualified property the acquisition has to occur before January 1, 2018. The base rate of the credit is 5%, but for certain businesses operating in more rural areas of Quebec the credit can be increased to 40%.
Other interesting business related announcements included the establishment of the Banque de développement économique du Québec (BDEQ) to improve guidance and support to companies wishing to grow and invest in all regions of Quebec and a commitment to the venture capital industry and green technologies. More details are expected on these commitments.
How R&D Partners Can Help
If you have questions or comments about these tax credits, please do not hesitate to contact Sahar Ansary at 1-800-500-7733 for more information.