THE QUÉBEC ECONOMIC PLAN - …

1 THE QU BECECONOMICPLANM arch 2018 ADDITIONALINFORMATION 2018-2019 Budget 2018-2019 Additional Information 2018-2019 Legal deposit March 27, 2018 Biblioth que et Archives nationales du Qu becISBN 978-2-550-80933-3 (Print)ISBN 978-2-550-80934-0 (PDF) Gouvernement du Qu bec, 2018 ADDITIONAL INFORMATION Section A Additional Information on the Fiscal Measures Section B Plan to Ensure Tax Fairness Section C Cannabis Framework Section D Report on the Application of the Legislation Respecting a Balanced Budget and the Generations Fund Section E Measures That Require Legislative Amendment Section F Qu bec s Budgetary Statistics Section G Sensitivity Analysis of ECONOMIC and Fiscal Variables Section H Support for the Taxi Industry Section A A ADDITIONAL INFORMATION ON THE FISCAL MEASURES 1.

2 Measures relating to the Qu bec sales tax and e-commerce .. Mandatory registration .. Applicable concepts .. Other measures .. Application 2. Measures concerning individuals .. Introduction of a first-time home buyers tax credit .. New extension, to March 31, 2019, of the eligibility period for the R noVert tax credit .. Greater access to the tax shield .. Enhancement of the tax credit for experienced workers .. Changes to the refundable tax credit for informal caregivers of persons of full age .. More flexible refundable tax credit conditions to further recognize informal caregivers .. Recognition of nurse practitioners respecting certifications required for the purposes of the refundable tax credit for informal caregivers of persons of full age.

3 Enhancement of the refundable tax credit for volunteer respite provided to informal caregivers .. Enhancement of the refundable tax credit for the acquisition or rental of property intended to help seniors live independently longer .. Broadening of the tax credit for persons living alone, in order to encourage intergenerational cohabitation .. Enhancement of the refundable tax credit for childcare expenses .. Increase in the annual limits applicable to childcare expenses .. Adjustment of all annual limits applicable to childcare expenses .. Extension of the tax credit for a first major cultural gift .. Correlative amendments respecting the implementation of the Aim for Employment Program .. Change to the rates of the dividend tax credit.

4 3. Measures concerning businesses .. Tax relief for small and medium-sized businesses (SMBs) .. Gradual reduction of the Health Services Fund contribution rate for all small and medium-sized businesses .. Standardization of the tax rates for SMBs .. Replacement of the additional capital cost allowance of 35% by an additional capital cost allowance of 60% .. Introduction of the additional capital cost allowance of 60% .. Elimination of the additional capital cost allowance of 35% .. Broadening the sectors of activity eligible for the tax holiday for large investment projects .. Enhancement of the refundable tax credit for on-the-job training periods .. Introduction of a refundable tax credit to encourage qualifying training for workers employed in SMBs.

5 Introduction of a refundable tax credit to support the digital transformation of print media companies .. Change to the refundable tax credit for film dubbing .. Changes to the refundable tax credit for Qu bec film or television production .. Eligibility of online-only productions .. Excluded amounts of assistance .. Change to the refundable film production services credit .. Change to the refundable tax credit for the production of multimedia events or environments presented outside Qu Extension of and changes to the refundable tax credit for the production of ethanol in Qu bec .. Extension of and changes to the refundable tax credit for cellulosic ethanol production in Qu bec .. Extension of and changes to the refundable tax credit for the production of biodiesel fuel in Qu bec.

6 Introduction of a temporary refundable tax credit for pyrolysis oil production in Qu bec .. 4. Other measures .. Changes to various parameters of Capital r gional et coop ratif Desjardins .. Temporary maintenance of the increased rate of the tax credit in respect of the acquisition of shares in Fondaction .. Adjustments to the compensation tax for financial institutions .. Introduction of an environmental studies allowance in the Mining Tax Act .. Temporary increase in the refundable tax credit for holders of a taxi driver s permit .. 5. Federal legislation and regulations .. Harmonization with News Release 2017-124 of the Department of Finance Canada .. Harmonization with certain measures announced in the federal budget of February 27, 2018.

7 Additional Information on the Fiscal Measures A SECTION 1. MEASURES RELATING TO THE QU BEC SALES TAX AND E-COMMERCE Currently, there are no special rules under the Qu bec sales tax (QST) system for online transactions. That being so, the general rules under the system apply to e-commerce. Consequently, as in the case of supplies made according to the traditional transactional model, supplies of movable property or services made over the Internet are generally subject to the QST if the property or services are supplied for consumption in Qu bec (destination principle), regardless of whether the supplier is located in Qu bec, elsewhere in Canada or outside Canada. However, suppliers that make supplies of taxable movable property or services over the Internet in Qu bec are generally required to register for the QST, for the purpose of collecting the tax and remitting it to Revenu Qu bec, only if they have a physical presence (permanent establishment) or a significant presence (carrying on of a business) in Qu bec.

8 Issues: suppliers that do not have a physical or significant presence in Qu bec In 1992, when the QST system was introduced, Quebecers acquired movable property and services almost exclusively from suppliers that had a place of business in Qu bec. At that time, transactions involving suppliers with no physical or significant presence in Qu bec were quite rare. Today, e-commerce is changing the way Quebecers acquire movable property and services. E-commerce enables them to acquire movable property and services from suppliers located outside Qu bec just as easily as if the suppliers were located in Qu bec. The context of the digital economy therefore poses application-related difficulties respecting the collection of the QST by suppliers with no physical or significant presence in Qu bec.

9 These non-resident suppliers are not required to register for the QST, for the purpose of collecting the tax and remitting it to Revenu Qu bec, even when their supplies in Qu bec are taxable. In the case of incorporeal movable property and services, Qu bec consumers are therefore required to self-assess the QST payable, which is seldomly done. In the case of corporeal movable property from outside Canada, the QST is, in theory, collected by the Canada Border Services Agency. In practice, with the advent of e-commerce, there has been a considerable increase in the number of parcels going through customs clearance centres, and the QST is collected on only a fraction of the property thus brought into Qu bec.

10 Budget 2018-2019 Additional Information In the case of corporeal movable property from other Canadian jurisdictions, Qu bec consumers are required to self-assess the QST payable, since there is no customs examination respecting such property. However, this requirement is complied with as seldomly as in the case of incorporeal movable property and services. Other consequences stem from these situations. First, since consumer self-assessment compliance is practically non-existent, the Qu bec government sustains substantial tax revenue losses. Second, since the QST is not paid by consumers, suppliers outside Qu bec have a competitive advantage over Qu bec businesses, given that the latter are generally required to collect and remit the QST on their supplies in Qu bec.