The corporate tax rate for small businesses in Quebec has been aligned with that in Ontario. The new 20 percent reduction for taxpayers eligible for small business deduction, which will lower the tax rate to 3.2 percent, was announced in the provincial 2021 budget last week.
“Small and medium-sized enterprises play a key role in the economic fabric of all regions of Québec,” said Treasury Secretary Eric Girard in the budget speech. “The government wants local small businesses to become medium-sized businesses and local medium-sized businesses to become large businesses. We help companies with this. “
The Quebec government estimates that the new measure, which went into effect March 25 on Budget Day, will result in collective annual tax savings of around $ 70 million for around 70,000 qualified businesses. This marks the second corporate tax cut since January 1, when a 4 percent tax rate was introduced on the first $ 500,000 of taxable income.
The 2021 budget also includes a temporary doubling of the C3i tax credit for spending on computer hardware, management software, or manufacturing and processing equipment. Small and medium-sized businesses enrolled in the 2020 budget are eligible for a refundable tax credit at a cost of more than $ 5,000 on purchases of computer hardware and / or management software, or at a cost of more than $ 12,500 on manufacturing and processing equipment. Large businesses can apply for non-refundable tax credits for the same expenses.
The tax credit is pro-rated based on regional economic vitality and will be increased from 10 percent to 20 percent for applicants in the Montreal and Quebec City metropolitan areas for purchases made between March 25 and December 31, 2022. Taxpayers in most of the province’s other urban centers will increase the tax credit from 15 to 30 percent, while in some more remote areas it will increase from 20 to 40 percent.
“This temporary increase will encourage more than 10,000 companies in all areas of activity to accelerate their plans to purchase new technology,” continued Girard.
The Quebec government has budgeted around $ 290 million for the top-up measure. From January 1, 2023, the tax credit will remain on the original tax rate scale for purchases through December 31, 2024.