2022 Quebec Budget Highlights

On March 22, 2022, Quebec Minister of Finance Éric Girard tabled the Province’s 2022 Budget. Titled Your Government, the Budget contains measures to address the rising cost of living, as well as support for the post-pandemic healthcare system, education, green initiatives, housing, and infrastructure projects.

A. Income Tax Measures

Business Tax Measures

Corporate Tax Rates

No new corporate income tax rate changes were announced in this year’s Budget. The current corporate income tax rates for 2022 are summarized below:

M&P – Manufacturing and Processing

Extension of the temporary increase in the tax credit relating to investment and innovation

The tax credit relating to investment and innovation is granted to a qualified corporation that acquires manufacturing or processing equipment, general-purpose electronic data processing equipment, or certain management software packages after March 10, 2020, and before January 1, 2025. The tax credit may be refundable, in whole or in part, or non-refundable.

A temporary increase to double the tax credit rates was introduced in Budget 2021 to encourage investment projects, resulting in available tax credits ranging from 20-to-40 percent (based on the territory where the acquired property is primarily used). This year’s Budget proposes to extend the temporary increase by one year, until December 31, 2023.

Introduction of the refundable tax credit for the production of biofuel in Quebec

A qualified corporation will be able to claim this tax credit in respect of eligible biofuels produced in Québec, for sale and use in Québec, up to a maximum of 300 million litres per year. The tax credit will be available from April 1, 2023, to March 31, 2033.

A qualification certificate issued by the Minister of Energy and Natural Resources certifying the biofuel is an eligible biofuel for the purposes of the tax credit will be required by the corporation in order to claim this refundable credit.

Extension of and changes to the refundable tax credit for the production of pyrolysis oil in Quebec

Introduced in the 2018 Budget, the refundable tax credit, at a rate of $0.08 per litre, is available to qualified corporations in respect of the production of pyrolysis oil in Québec. This tax credit will be extended for a period of 10 years, until March 31, 2033.

Other changes impacting the level of assistance available to qualified were announced and are expected to take effect April 1, 2023.

A qualification certificate issued by the Minister of Energy and Natural Resources certifying the pyrolysis oil is an eligible pyrolysis oil for the purposes of the tax credit will be required by the corporation in order to claim this credit.

Personal Tax Measures

Personal Tax Rates

No new personal income tax rate changes have been announced in this year’s Budget. The top marginal personal income tax rate for Quebec is 25.75 percent for 2022. The current top combined federal and Quebec marginal rates for 2022 are summarized below:

Refundable tax credit to mitigate the increase in the cost of living

The Budget introduces a refundable tax credit, granting a one-time amount to mitigate the increase in the cost of living. Eligible adults residing in Québec will be entitled to an amount of up to $500 in the 2022 calendar year if the individual’s personal net income for the 2021 calendar year does not exceed $100,000. The amount will be reduced where the individual’s personal net income for the 2021 calendar year exceeds $100, 000 and will be phased out at $105,000.

This lump-sum assistance will be paid to all eligible adults who have filed their income tax return for the 2021 calendar year with Revenu Québec.

Perpetuation of the tax credit for a major cultural gift

The Province previously introduced an additional tax credit of 25 percent for a major cultural gift to increase donation support for the cultural sector. A tax credit of up to $6,250 is available to individuals (excluding trusts) for certain cash donations of $5,000 to $25,000 made to an eligible cultural donee before January 1, 2023. This tax credit may only be claimed for one major cultural gift.

This year’s Budget proposes to make this tax credit permanent.

Extension of the refundable tax credit for the upgrading of residential waste-water treatment systems

The refundable tax credit for the upgrading of residential waste-water treatment systems was introduced on a temporary basis in the 2017 Budget. The maximum value available under this credit is $5,500 per eligible dwelling.

The Budget proposes to extend this credit by five years to March 31, 2027.

B. Other Tax Measures

Action Plan to Ensure Tax Fairness

The Budget outlines the Government’s action plan to ensure tax fairness.

Continuing the Action Plan

The Government is continuing to implement the Tax Fairness Action Plan to preserve the integrity of the Québec tax system and to ensure combatting tax evasion and tax avoidance remains a priority. This includes ensuring tax fairness by minimizing the tax gap, maintaining efforts regarding corporate transparency, maintaining presence on residential construction sites, taking stronger action to combat the illicit cannabis market, and simplifying management of seized alcoholic beverages.

Facilitating taxpayer compliance

The Government aims to continue facilitating taxpayer compliance through significant investments in Project VISION, which is designed to transform the provision of services by Revenu Québec to individuals and businesses through a simplified digital tax administration model.

Stepping up the fight against economic crime

Additional investments will be made by the Government on initiatives to combat tax fraud, as well as to focus attention on economic crime involving crypto assets.

Following up on actions taken to combat tax evasion and fraud against the government

Initiatives involving various government departments and bodies were announced to promote the integrity of the tax system and healthy competition, and to combat fraud and other criminal activities in various sectors.

Amendment to the rules governing the interruption of the prescription period

The Government has announced changes to the Tax Administration Act to enhance fairness for taxpayers whether they have prescribed or non-prescribed tax debts. The effective date of the changes will be determined by the Government after enactment.