2024-2025 Quebec Budget Highlights

Quebec Minister of Finance Éric Girard tabled the province’s 2024-2025 budget on Tuesday, March 12, 2024. This year’s budget, titled Priorities Health | Education, is focused on investments to provide Quebecers with quality public services, primarily in health and education. It also includes investments to support citizens and communities, pursue efforts in sustainable development, and ensure the growth of the provincial economy.

Business tax measures

Corporate income tax rates

No new corporate income tax rate changes were announced in this year’s budget. The current corporate income tax rates for 2024 are summarized below:

M&P – Manufacturing & Processing

* Rates applicable to income not eligible for the temporary rate reduction for manufacturers of qualifying zero-emission technology.

Tax credits for the development of e-businesses

The budget proposes to modify the tax credits currently available to businesses in the information technology sector that carry out e-business activities. Proposed changes include:

• Introducing an exclusion threshold so that the credits will apply to wages exceeding this threshold amount. The threshold amount will generally correspond to the amount used to determine the basic personal tax credit for that calendar year (2024 - $18,056).
• Removing the $83,333 limit currently applicable to the qualified wages of an employee.
• Increasing the non-refundable tax credit by one percent per year (currently six percent) until it reaches 10 percent. A corresponding reduction to the refundable tax credit will eventually bring it down to 20 percent (currently 26 percent).

The proposed changes to the exclusion threshold and removal of the limit to qualified wages will apply for taxation years beginning after December 31, 2024. The changes to the tax credit rates will take effect on January 1 of each calendar year, beginning January 1, 2025.

Tax credits for production of multimedia titles

The budget proposes to modify the refundable tax credits currently available to businesses in the production of multimedia titles. The proposed changes mirror those for e-businesses, which include:

• Introducing an exclusion threshold so that the credits will apply to wages exceeding this threshold amount. The threshold amount will generally correspond to the amount used to determine the basic personal tax credit for that calendar year (2024 - $18,056).
• Removing the $100,000 limit currently applicable to the qualified labour expenditure of an eligible employee.
• Introducing a non-refundable credit for each existing component at an initial rate of two percent in 2025. This will increase by 2.5 percentage points per year to a maximum of 10 percent, with a corresponding reduction in the existing refundable tax credits.

The proposals also include measures allowing for the carry-back and carry-forward of unused non-refundable credits in a given year. 

The proposed changes to these tax credits will apply to tax years that begin after December 31, 2024. The changes to the tax credit rates will take effect on January 1 of each calendar year, beginning January 1, 2025. 

Refundable tax credit for Quebec film or television productions

The budget announces an increase in the limit of eligible production costs, from 50 percent to 65 percent of production costs incurred and directly attributable to film production.

This measure will apply to film productions for which a request for an advance ruling or a request for a certificate is filed with the Société de développement des entreprises culturelles (SODEC) after March 12, 2024.

Refundable tax credit for film production services

The budget proposes enhancements to the existing tax credit for foreign film production in Quebec. The proposed changes include:

• An increase to the basic tax credit rate to 25 percent (currently 20 percent)
• Limiting the eligible cost of a contract with a service provider for computer-aided special effects and animation to 65 percent of the total for the purpose of calculating the basic tax credit and the bonus for special effects.

These changes will apply in respect of a qualified production for which an application for an advance ruling or an application for a certificate is submitted to SODEC, either:

1. as of March 13, 2024, provided SODEC deems that work on the production was not sufficiently advanced on March 12, 2024; or
2. after May 31, 2024, in all other cases.

Cancellation of the tax credit for retention of experienced workers

Initially introduced in 2019, this credit is currently granted to eligible corporations that employ individuals aged 60 or over. The credit is currently calculated on the employer contributions paid by the corporation in relation to the employee and varies based on the individual’s age and the corporation’s total payroll.

Citing the low impact this credit has had on the retention and attraction of experienced workers, the budget proposes to cancel this credit effectively immediately. Any employer contributions made in respect of salary or wages paid after March 12, 2024, will no longer be eligible for this tax credit.

Personal tax measures

Personal income tax rates

No changes were announced to personal income tax rates. The top marginal personal income tax rate for Quebec is 25.75 percent for 2024. The current top combined federal and Quebec marginal rates for 2024 are summarized below:

Personal tax credits and other amounts

The refundable tax credit granting an allowance to families (Family Allowance) is designed to help families support children under 18.

The budget introduces several technical changes to update eligibility factors and improve eligibility for the two Family Allowance supplements for disabled children. Accessibility has been extended to disabled children under two years of age. These measures will apply after June 30, 2024.

Changes to the Quebec Pension Plan

Amendments will be proposed to eliminate the retirement pension reduction for seniors with disabilities who reach the age of 65. The proposed change will take effect on January 1, 2025.

The budget also proposes to protect the benefits of disability pension recipients between the ages of 60 and 64. This protection will ensure their benefits are at least as high as they were prior to the payment of their retirement pension and will apply retroactively to January 1, 2024.

Consumption tax measures

Increase in the specific tax on tobacco products

The budget announced two increases in the specific tax on tobacco products, adding $2 per carton of 200 cigarettes. The increase will be implemented in two stages, with the first change effective on March 13, 2024, and the second on January 6, 2025.

Tax administration and other tax measures

Ensuring tax fairness

The government has stated that it is essential that all Quebec taxpayers pay their fair share of taxes to ensure the best possible public services. As part of the budget, investments of $96.5 million are planned over five years to:

• Strengthen tax control and collection at Revenu Quebec. $75.9 million in funding to hire additional staff will enable the government to recover nearly $405 million, representing a $5.33 return per dollar invested.
• Counter under-reporting of the sale price of used vehicles over 10 years old.
• Step up the fight against economic crime and smuggling.

Over the past few years, the government has implemented several initiatives to ensure tax fairness for all Quebecers, notably by tackling aggressive tax planning. These measures include:

• Collaborating with the Canada Revenue Agency to discuss strategies for combatting aggressive tax planning and obtaining the necessary information.
• Limiting income-splitting schemes.
• Expanding the mandatory disclosure mechanism to prescribe transactions or series of transactions that must be disclosed, including those involving nominees and shams.
• Ensuring companies and promoters guilty of abusive tax avoidance are ineligible for public contracts.

These measures are expected to increase government revenues by nearly $660 million over the same period.