Highlights from Quebec’s fall economic update

Quebec Minister of Finance Eric Girard delivered the province’s 2024 Economic and Financial Update (Update) on Thursday, November 21, 2024. This year’s Update does not include any new changes to corporate or personal tax rates. However, it does provide clarification on certain tax measures relating to the capital gains rate increase and introduces changes to the career extension tax credit effective 2025.

This year’s Update is focused on promoting access to housing, presenting a financing plan to support public transit bodies, and working to improve public safety throughout Quebec. It also supports the forestry sector and includes measures aimed at optimizing and updating government tax expenditures.

Tax measures announced include:

Measures relating to capital gains

Quebec has already announced its intent to harmonize with federal proposed measures to increase the capital gains inclusion rate from 50 percent to 66.67 percent for capital gains realized on or after June 25, 2024, among other measures.

The Update provides details on certain additional measures to harmonize capital gains taxation with the federal tax system, which considers certain differences specific to Quebec:

• The rate applicable to tax due when a non-resident realizes a capital gain on the disposition of certain taxable Quebec property will be increased from 12.875 percent to 17.167 percent to reflect the increased capital gains inclusion rate. This rate will also apply to circumstances where a person acquires a property that is a specified immovable from an inter vivos trust which the trust is previously deemed to have disposed of.

This rate is effective for dispositions or acquisitions after December 31, 2024.

• Where an individual is eligible to deduct an additional capital gains exemption on the disposition of certain resource properties in computing their taxable income, the rules for calculating an individual’s eligible taxable capital gain amount will be amended to reflect the new inclusion rate.

This change is effective 2024. Transitional rules will apply for the year 2024.

Career extension tax credit

The Update announces several changes to the career extension credit, effective 2025:

• The eligibility age will be increased to 65 years (from 60 years)
• The career extension credit rate will apply to income over $7,500 (from $5,000) and the maximum eligible work income amount is increased to $12,500 (from $11,000).

The Update also announced that the credit for workers aged 65 and over will be reduced by seven percent (from five percent) for eligible work income over $56,500 (from $40,925). The reduction will be based on net individual income and these amounts will be indexed as of the 2026 taxation year.

Indexation of personal income tax system and social benefits assistance

The Update confirms that the province’s personal income tax system and social assistance will be indexed at 2.85 percent, effective January 1, 2025. This is in addition to the indexation of the federal personal income tax system. It increases the amounts of several deductions and tax credits, such as the basic personal amount, the maximum amount of the family allowance, and the maximum amount of the solidarity tax credit.

Review of tax expenditures

The Update also announced that it will continue reviewing 277 tax expenditures (e.g. tax credits) to ensure the measures meet the current need and obtain their objectives. The Minister of Finance will present the results in the 2025-2026 Quebec Budget.

Additional details and highlights from the Quebec 2024 Economic and Financial Update are available here.