2018-02-07 00:00:00 Accounting News English Understand the new fiscal laws in Quebec starting in 2017 and how they affect personal income tax rates as well as government spending on... https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/02/Accountant-reviews-2018-provincial-tax-changes-with-Quebec-client.jpg https://quickbooks.intuit.com/ca/resources/accounting-news/quebec-small-business-2018-provincial-tax-changes/ What You Should Know About 2018 Provincial Tax Changes in Quebec

What You Should Know About 2018 Provincial Tax Changes in Quebec

2 min read

In November 2017, Quebec’s Finance Minister, Carlos Leitao, announced several fiscal changes to take effect in the 2017 taxation year. The financial update cuts the personal income tax rate on the lowest income bracket by one percentage point, invests millions of dollars in new initiatives to spur the economy and create jobs, and seeks to improve access to quality health care and education. The tax cut was spurred in part by a budget surplus. Leitao reported that the province finished the 2016-2017 fiscal year $2.4 billion in the black, and he indicated that the province will use 50 percent of the surplus as well as future surpluses to ease Quebecers’ tax burden.

Personal Income Tax Rates and Credits

The province has reduced the tax rate on the first $42,705 of income from 16 to 15 percent, enabling taxpayers across the income spectrum to keep an extra several hundred dollars in their pockets each year. For 2018, the 15 percent tax bracket cap rises to $43,055. The marginal rates for the three higher income brackets remain at 20, 24, and 25.75 percent for the time being.

The rate at which taxpayers can apply tax credits, such as for medical expenses, on-the-job training, and childcare expenses, also drops from 16 to 15 percent for the first $42,705 of income ($43,055 in 2018).

Regional Economic Development and Job Creation

With unemployment rates at historic lows and personal incomes rising faster than in Canada as a whole, Quebec’s tax receipts are up, providing the ability to make investments designed to foster sustainable economic growth and the creation of the kinds of jobs the future demands. The financial update seeks to do just that, committing $667 million to growth initiatives that include $367 million to update the province’s digital infrastructure, bringing ultra-high-speed internet to 90 percent of Quebecers by 2022. The government hopes these investments help keep job creation strong; since May 2014, the province has added over 200,000 jobs, most of them private-sector, full-time positions.

Investment in Health Care Services and Education

Quebec is also upping its health care spending as a percentage of the provincial budget by over 4 percent as of 2017. The government seeks to improve access to quality health care for all its citizens, focusing in particular on seniors and other vulnerable populations as well as on addiction recovery, including cannabis addiction. This update coincides with Canada becoming, as of 2018, the first of the G7 countries to fully legalize marijuana for recreational use nationwide.

On the education front, Quebec plans to invest $444 million in improving the quality of education in the province and ensuring more residents have access to good schools. The government also plans to provide Quebec families with a $100-per-year supplement for each school-aged child to help cover the costs of school supplies and other back-to-school expenses.

Quebec has undertaken the challenge of simultaneously lowering taxes and increasing government spending in critical areas such as health care, education, and job creation. The government hopes these fiscal changes will help continue the economic progress the province has enjoyed in recent years.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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