The Minister of Finance, Mr. Eric Girard, confirmed on November 7, 2023 in the Economic and Financial Update, additional investments totaling $4.3 billion over the next five years to provide better access to housing, fight homelessness, improve food aid, support training in specific fields, adapt to climate change and promote business investment.
Demers Beaulne presents a summary of the various important tax measures presented in this economic and financial update.
Measures affecting companies
Changes to the investment and innovation tax credit (C3i)
In summary, the investment and innovation tax credit is currently available to an eligible corporation that acquires, after March 10, 2020 and before January 1, 2025, eligible manufacturing or processing equipment, universal electronic data processing equipment or a management software package. It is calculated on the portion of specified expenses incurred to acquire a specified property that exceeds $5,000 or $12,500, depending on the nature of the property.
C3i extension
C3i will be extended for a further five years for companies eligible for the tax credit. In this way, C3i can be claimed on “specified assets” acquired and “specified expenses” incurred before January 1, 2030 (instead of January 1, 2025).
Improving C3i parameters
The C3i base rates normally in force in 2024 will be increased for credit claims applicable from January 1, 2024. The subsidized rates are still lower than those applicable between March 25, 2021 and December 31, 2023.
| Applicable rates | |||
| Territory in which the asset is acquired for primary use | After March 10, 2020 and before March 26, 2021 | After March 25, 2021 and before January1, 2024 | After December 31, 2023 and before January 1, 2030 |
| Territory with low economic vitality | 20 % | 40 % | 25 % |
| Territory with intermediate economic vitality | 15 % | 30 % | 20 % |
| An area of high economic vitality | 10 % | 20 % | 15 % |
Announced Easing of C3i Rules
More flexible rules for C3i starting on November 8, 2023:
- “Specified expenses” may be claimed in the year they are paid, but no later than 18 months after the end of the taxation year in which they were incurred.
More flexible rules for C3i starting on January 1, 2024:
- The tax law will be amended to make the tax credit refundable to any eligible corporation, regardless of its assets or gross income.
- The cumulative cap on specified fees of $100 million will be calculated over a four-year period, instead of five.
More flexible C3i rules:
- Extension of the deadline for submitting the prescribed form in cases where the initial application has been refused, in whole or in part, by the Minister on the grounds that the expenses claimed were not claimed in the year in which they were incurred.
Abolition of the additional 30% capital cost allowance
The additional 30% capital cost allowance will be abolished as of January 1, 2024.
This deduction applied to manufacturing or processing equipment, clean energy production equipment, electronic equipment and certain intellectual property.
It will be possible for a corporation to claim the deduction on eligible property acquired no later than December 31, 2023, as long as the property acquired meets the following conditions:
- The property is new at the time of purchase;
- The property has not been acquired from a related party;
- The asset is put into service within a reasonable time of acquisition;
- The property is used primarily (more than 50% of the time) by the taxpayer in the course of carrying on a business during a period of 730 consecutive days following the beginning of its use;
- The property is also used mainly in Quebec throughout this 730-day period.
Summary of specific measures affecting the construction industry
Launch of the “Training Offensive” under construction.
- Introduction, as of January 2024, of short courses leading to an Skills Training Certificate (STC) for the trades of carpenter, shovel operator, heavy equipment operator, tinsmith and refrigeration technician.
- Increased capacity for programs of study leading to a Diploma of Vocational Studies (DVS) in electricity and plumbing and heating.
- Increased government financial support for STC and DVS training programs for carpenters, shovel operators, heavy equipment operators, tinsmiths and refrigeration technicians.
Summary of measures for individuals
- 5.08% indexation of personal income tax (including increases in several deductions and tax credits) and social assistance benefits.
- Increased exemptions from the calculation of the premium payable to the public prescription drug insurance plan to exempt certain low-income taxpayers.
- Improvements to the Shelter Allowance program for low-income households with at least one dependent child or a person aged 50 or over.
