Quebec Provincial Budget

The Quebec provincial budget was delivered on February 20. The budget introduced provincial changes that match the recently-announced federal changes.

Changes include:

• Eligible medical expenses to mirror the ones announced in the 2014 federal budget
• A new tax credit for search and rescue volunteers
• Elimination of the graduated rates for testamentary trusts after the third taxation year
• Changes to the treatment of donations made in the deceased’s will
• Changes to the carry forward period for gifts of ecologically sensitive land

Parental Funding of Child Care Costs

The budget announced an increase to the cost of child care that will be borne by the parents. The current $7 per day rate has been effect since 2004; it will increase to $8 effective September 1, 2014 and $9 effective September 1, 2015. In subsequent years, the rate will be indexed.

Capital régional et coopératif Desjardins (CRCD)

The tax credit rate for the purchase of CRCD shares will be reduced from 50% to 45% as of the 2014 issue.

Other Tax Changes

Like most provinces, tax brackets and personal amounts are indexed annually in Quebec. The indexation factor for 2014 is 1.0097 (i.e. a 0.97% increase). The increased basic personal amount, for example, is $11,305; roughly average for the provinces.

In July 2013, Quebec announced that it will adopt the 18% gross-up of small business shares starting with the 2014 taxation year. The Quebec dividend tax credit rate was also adjusted. The result is a slight decrease in the provincial tax on small business dividends in 2014.

As a new government was elected in Quebec this week, any of the 2014 budget provisions could be reversed. The new Liberal government, for example, promised to reverse the child care cost increase and eliminate the controversial health care tax  if elected.