Contact

(Français)

Services Curriculum Vitae Links
TAX BULLETIN - ARCHIVES 2018
  • Interest rates for the 3rd calendar quarter

  • Reduction of the health services fund contribution rate for SMBS

  • Extracts from the The Québec Economic Plan and the Additional Information:

    • (...) a gradual reduction from 8% to 4% in the tax rate of SMBs in the service and construction sectors, representing tax relief of nearly $1 billion. (...) In Québec, the general tax rate applicable to corporations is 11.7%.This tax rate will decrease to 11.6% in 2019; subsequently, it will be 11.5%. (...) The 3.7% SBD rate will be raised so that the maximum rate available to a corporation is the following: for the period that begins on the day following the day of the budget speech and ends on December 31, 2018: 4.7%; for the period that begins on January 1, 2019 and ends on December 31, 2019: 5.6%; for the period that begins on January 1, 2020 and ends on December 31, 2020: 6.5%; as of January 1, 2021: 7.5%.

    • (...) the HSF contribution rate applicable to businesses with a payroll of $1 million or less will be reduced gradually as of January 1, 2022 to: 1.25% for the primary and manufacturing sectors, a reduction of nearly 55% compared to the rate in effect before June 2014; 1.65% for the service and construction sectors, a reduction of nearly 40% compared to the rate in effect before June 2014. Also, the March 2018 Québec Economic Plan provides for a $2-million increase in the payroll threshold giving entitlement to the reduced HSF contribution rate for SMBs, which will gradually rise from $5 million currently to $7 million as of January 1, 2022.

    • (...) an increase from 35% to 60% in the additional capital cost allowance rate for investments made after the day of Budget Speech 2018-2019; a one-year extension of the measure, to March 31, 2020.

    • (...) in 2018-2019: making the collection of the Québec sales tax (QST) mandatory for suppliers outside Québec;

    • The QST system will be changed to require suppliers with no physical or significant presence in Québec (hereinafter, “non-resident suppliers”) to register with Revenu Québec, under a new specified registration system, for the purpose of collecting and remitting the QST applicable to their taxable supplies of incorporeal movable property and services made in Québec to specified Québec consumers. Moreover, in the case of non-resident suppliers located in Canada, this registration requirement will also apply to the collection and remittance of the QST applicable to their taxable supplies of corporeal movable property made in Québec to specified Québec consumers (...) The measures stemming from the implementation of the new specified registration system will apply as of: January 1, 2019, in the case of non-resident suppliers outside Canada (...); September 1, 2019, in the case of non-resident suppliers located in Canada.

  • Extracts from the Budget Plan and the Tax Measures: Supplementary Information of the Minister of Finance of Canada:

    • In October 2017, the Government announced it would lower taxes on small businesses from 10.5 per cent to 9 per cent by 2019.

    • It is proposed that the small business deduction limit be reduced by $5 for every $1 of investment income above the $50,000 threshold. Under this proposal, the tax applicable to investment income remains unchanged—refundable taxes and dividend tax rates will remain the same, unlike the July 2017 proposal. No existing savings will face any additional tax upon withdrawal, thereby maintaining the Government’s commitment to protect the tax treatment of all past savings and investments

    • Budget 2018 proposes that CCPCs no longer be able to obtain refunds of taxes paid on investment income while distributing dividends from income taxed at the general corporate rate. Refunds will continue to be available when investment income is paid out.

    • To better align the refund of taxes paid on passive income with the payment of dividends sourced from passive income, Budget 2018 proposes that a refund of RDTOH be available only in cases where a private corporation pays non-eligible dividends. An exception will be provided in respect of RDTOH that arises from eligible portfolio dividends received by a corporation, in which case the corporation will still be able to obtain a refund of that RDTOH upon the payment of eligible dividends. The different treatment proposed regarding the refund of taxes imposed on eligible portfolio dividend income will necessitate the addition of a new RDTOH account

    • The two measures will apply to taxation years that begin after 2018.

  • Interest rates for the 2md calendar quarter

  • 2018 Automobile Deduction Limits and Expense Benefit Rates

  • EI premium rates and maximums

  • Reduced rate of the contribution to the health service fund for small and medium size businesses

  • Rates, thresholds and amounts related to source deductions and contributions for 2018

  • Interest rates for the first calendar quarter

  • Extract from CCH Tax Reference Booklet 2017-2018
     

    Personal Income Tax Rates - Québec (2017)        
    Income Tax Bracket       $ Effective Rate      %       Marginal Rate        
    Interest & Ordinary Income  % Capital Gains % Canadian Dividends   Corporate Income Tax Rate - Québec (12/31) 2018 2017
    Eligible      % Non-Eligible %     % %
    11 635   0.00 12.53 6.26 -0.02à 0.00 4.38   Income eligible to SBD 1    
    14 890 2.74 28.53 14.26 5.64 à 5.66 14.85   >/= 5500 hours 18.00 18.50
    42 705 19.53 32.53 16.26 11.16 à 11.18 19.53   </= 5000 hours 21.70 21.80
    45 916 20.44 37.12 18.56 17.49 24.90   Investment income of a CCPC    
    85 405 28.15 41.12 20.56 23.01 29.58    Net of dividend tax retund 19.70 19.90
    91 831 29.06 45.71 22.86 29.35 34.95    Without dividend tax refund 50.37 50.57
    103 915 31.00 47.46 23.73 31.77 37.00   Other income 26.70 26.90
    142 353 35.44 49.97 24.98 35.22 39.93        
    202 800 39.77 53.31 26.65 39.83 43.84        

    1 Qc's SBD included (2017 3.8% & 2018 3.7%) is conditional to a minimum payment of 5500 hours to employees of the corporation during the current or previous taxation year; it is cancelled gradually between 5000 and 5500 hours.

     

  • Comparison of salary vs dividend:

Income Tax Bracket       $ 1 Salary vs Dividend Scenarios 2
Salary Dividend Advant. Div.
Company Employee Company Shareholder  
Inc  Bef Sal Ben 3 Sal Inc Tx 1 Ben 3 Net Inc Bef Sal Inc Tx Div Inc Tx 1 Net  
11 635 100.00 -8.817% -91.18 -12.53% -5.948% 74.33 100.00 -18.00% 82.00 -4.38% 78.41 4.08
14 890 100.00 -8.817% -91.18 -28.53% -5.948% 59.74 100.00 -18.00% 82.00 -14.85% 69.82 10.08
42 705 100.00 -8.817% -91.18 -32.53% -5.948% 56.10 100.00 -18.00% 82.00 -19.53% 65.99 9.89
45 916 100.00 -8.817% -91.18 -37.12% -5.948% 51.91 100.00 -18.00% 82.00 -24.90% 61.58 9.67
85 405 100.00 -1.950% -98.05 -41.12%   57.73 100.00 -18.00% 82.00 -29.58% 57.74 0.01
91 831 100.00 -1.950% -98.05 -45.71%   53.23 100.00 -18.00% 82.00 -34.95% 53.34 0.11
103 915 100.00 -1.950% -98.05 -47.46%   51.52 100.00 -18.00% 82.00 -37.00% 51.66 0.14
142 353 100.00 -1.950% -98.05 -49.97%   49.05 100.00 -18.00% 82.00 -39.93% 49.26 0.21
202 800 100.00 -1.950% -98.05 -53.31%   45.78 100.00 -18.00% 82.00 -43.84% 46.05 0.27

1  Extract from CCH Tax Reference Booklet 2017-2018.

2 Taking into account the company income tax rate of 18% in 2018 and the cost of salary benefits3, assuming also that the company meets the 5500 hours criterion and that $100 before tax is available for distribution to its shareholders owning 40% or more of shares, the advantage of a dividend  other than eligible over a salary is shown in the last column of the table. Note that the advantage of the dividend would be higher for a shareholder owning less than 40% of shares due to the fact that he would have to contribute to EI but that it would be negative from the $85k bracket in the following cases: -$2.18 on average if the 5500 hours criterion is not met or -$1.50 on average if the taxable income was > $500k (although the excess  generates eligible dividends). Note also that the higher advantage in the first 4 levels of income tax bracket does not take into account the return on investment of QPP contributions.

3 The cost of salary benefits of 5.948% for the employee and 8.817%4 for the employer  in 2018 details as follows: QPP 5.4% for the employee and 5.4% for the employer  up to $55 900, QPIP 0.548% for the employee and 0.767% for the employer up to $74000, QHIP 1.95% for the employer & CNT 0.7% for the employer up to $74000 but not taking into account EI 1.66% for the employee and 2.324% for the employer.

4  On March 27, 2018, the QHIP rate changed from 2.30% to 1.95%.