As you will see from this chronicle, the electoral wind acts as a source of inspiration for the respective authorities when preparing their annual budget. Certain measures are to be emphasized in each of these budgets.
Federal Budget of February 27, 2018
This year is not an election year, hence this budget is rather purified.
Eligible medical expenses
The costs of a specially trained animal for a person with a severe mental disability have been added to the list of eligible medical expenses.
Flow-Through Shares
The Mineral Exploration Tax Credit has been extended for one year.
Investment income of companies
Two new measures are planned to limit the tax deferral on investments held by a corporation: the progressive reduction of the business limit for investment income greater than $ 50,000, and a tightening of the current refundable dividend tax on hands (RDTOH) system.
Québec Budget of March 27, 2018
With elections scheduled for the fall of 2018, a significant number of measures have been announced in this budget.
Purchase of a first home
A new 15% non-refundable tax credit of $ 5,000, or $ 750, will be implemented as early as 2018. This credit can be shared between spouses but cannot exceed the maximum value of 750$.
The qualifying home must meet the following criteria:
-was acquired after December 31, 2017
-the principal place of residence of the individual, his spouse or a disabled defined
person in respect of the individual no later than one after the acquisition
The individual must meet the following criteria to be eligible:
-resident in Québec at the end of the taxation year
-not to have owned, alone or jointly, a dwelling in the year or the previous four years
Rénovert
This tax credit is extended by one year until March 31, 2019.
Tax Shield
Maximum working income will be increased to $ 4,000 per household member in 2018.
Experienced workers
It will be possible to qualify for this tax credit from the age of 61 in 2018 for a maximum working income of $ 3,000. The maximum amount of work income will be increased by $ 1,000 as of 2018 for people aged 62 and over.
Caregivers
A new component will be added in 2018 for family members who do not cohabit with the person.This non-refundable tax credit can reach $ 533 per eligible relative of the individual.
It will not be possible to obtain this credit if the relative is dependent on another person in the same year.
An attestation of the need for assistance must be obtained from a doctor or a nurse practitioner.
Purchase or lease of property to extend seniors’ independence
The threshold of expenses eligible for this refundable tax credit (20%) is reduced to $ 250 and the list of eligible properties is increased as of 2018.
Childcare expenses
The limits of expenses eligible for this refundable tax credit will be increased to $ 9,500 ($ 13,000 for children with severe and prolonged disabilities) as of 2018.
Annual indexation will be applied to the ceilings starting in 2019.
Dividend tax credit
The rates for this credit will be reduced because of the lower general tax rate and the increase in small business deduction.
For eligible dividends, the rate will be 11.9% from January 1 to March 27, 2018, 11.86% from March 28 to December 31, 2018, 11.78% in 2019 and 11.7% thereafter.
For the non-eligible dividends, the rate will be 7.05% from January 1st to March 27th 2018, from 6.28% from March 28th to December 31st 2018, 5.55% in 2019, and 4.77% in 2020. and 4.01% thereafter.
Desjardins regional capital
A new class of shares will be offered to current shareholders for at least seven years that never requested redemption. The acquisition of these new shares will be in exchange for current shares.
A new refundable tax credit of 10% of the value of the converted shares (maximum $ 15,000) will be offered. This credit will not affect the acquisition cost of new shares.
For current shares acquired after February 28, 2018, the credit rate is reduced from 40% to 35% while the maximum amount is reduced from $ 2,000 to $ 1,750.
Fondaction CSN
The credit rate increased to 20% is extended by three years.
Health Services Fund (HSF)
Reductions are planned for the different companies until 2022.
Tax on split income
Quebec will align with new federal measures once the federal law is adopted.
We will be pleased to help you take advantage of these new measures while optimizing your personal financial and tax situation.