Quebec Budget 2018 Highlights

The 2018 Quebec Budget, tabled on March 27, 2018, reports accelerated gross domestic product (GDP) growth from 1.4% in 2016 to 3% in 2017 and proposes several measures and investments that will impact businesses in Quebec including:

Innovation

  • Increasing the additional capital cost allowance rate from 35% to 60% for investments in computer equipment and manufacturing and processing equipment made after March 27, 2018.
  • Expanding tax holiday eligibility for large investment projects to include the development of digital platforms (“a computing environment that enables content management or use of a service that serves as an intermediary in accessing information, services, or property supplied or edited by the corporation or partnership, or by a third party, and which is not a tax-exempt platform”).
  • Broadening the tax credit for film and television production to include digital platforms.
  • Providing $348.7M for the implementation of a new biofood policy, including:
    • $180M to spur investment in biofood production and processing;
    • $62.8M to stimulate the development of the biofood industry; and
    • $29.7M to enhance efforts in innovation and training.
  • Committing $171.5M over 4 years to increase the appropriation and marketing of innovations including:
    • $120M to promote mobilizing projects in Québec;
    • $22.5M Support the restructuring the business model of the Centre de recherche industrielle du Québec (CRIQ);
    • $3.5M increase in financial support for niches of excellence in the regions;
    • $5M to support creation of the World Artificial Intelligence Organization in Montréal; and
    • $20.5M Support the Université de Sherbrooke’s project of an integrated innovation chain for digital prosperity.

Business Growth 

  • Reducing payroll taxes through:
    • A $1.2B reduction in the Health Services Fund (HSF) contribution for all small to medium-sized businesses (SMBs); and
    • A gradual reduction of the tax rate of SMBs in the service and construction sectors from 8% to 4%. The tax rate of SMBs in the manufacturing sector was reduced from 8% to 4% effective April 1, 2015, and was likewise reduced for SMBs in the primary sector effective January 1, 2017.
  • Stimulating growth of SMBs via:
    • $10M over 5 years for the creation of Réseau200, which will bring together entrepreneurs and their peers from the business world;
    • $35.4M for initiatives to support accelerators and incubators for Québec businesses;
    • An additional $2.4M over 3 years to support the creation of centres of excellence in the information and communication technologies (ICT) and digital technologies sectors; and
    • $3.4M to support SMBs in their growth projects.
  • Providing additional sums for specialized investment funds in collaboration with other investors, namely:
    • $61.5M for Teralys Capital, a private fund manager investing in innovative businesses;
    • $2M for the Accélérateur de création d’entreprises technologiques (ACET) Capital II fund to help technological entrepreneurs find adequate financing for starting their business; and
    • Support for development of social economy enterprises including continued support for the Chantier de l’économie sociale Trust and support for activities of tax-advantaged funds.
  • Enhancing electricity discounts for major projects, including:
    • An adjustment in the maximum duration of the discount for large projects, which is extended from four to six years; and
    • A 4 year deferral of the discount application period end date, which is moved back to December 31, 2028.

Workforce Development

  • Contributing $810M for a National Workforce Strategy to meet the challenges of the labour market, including:
    • Commitments to improve the flexibility of vocational and technical studies programs; and
    • Implementation of a new process for receiving and processing immigration applications under the Regular Skilled Worker Program which, once implemented, will also provide business and employment integration support (more details will be released in April 2018).
  • Creating a new refundable tax credit for training workers, via enrollment in a training program that leads to a diploma, employed in SMBs to support 30% of eligible training expenditures incurred between March 27, 2018 and January 1, 2023, with up to $5,460 provided per year for each eligible employee (30% rate is linearly reduced where total payroll exceeds $5M, reaching 0% at a total payroll of $7M).
  • Improving refundable tax credits for on-the-job training periods (internships) through:
    • Increasing maximum hourly rates and weekly caps;
    • Increasing base and increased tax credit rates for businesses that operate in remote resource regions, to encourage training young people; and
    • Increasing base and increased tax credit rates for Aboriginal people, to encourage Québec businesses to facilitate their employment integration.
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