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Wednesday, November 21, 2012

Quebec Provincial Budget – November 20, 2012

Quebec Provincial Budget – November 20, 2012

A new progressive health contribution

As of the 2013 taxation year, the current health contribution will be replaced by a progressive health contribution based on net individual income.

Health contribution amount

  • No health contribution will be applied to individual income of $18 000 or less. The contribution will gradually reach $100 for income between $18 000 and $20 000.
  • It will be $100 for all taxpayers with income of $20 000 to $40 000, and will gradually reach $200 for those whose income is between $40 000 and $42 000.
  • It will be maintained at $200 for taxpayers with income of $42 000 to $130 000.
  • It will rise gradually from $200 to $1 000 for taxpayers with income of $130 000 to $150 000, and will reach $1 000 for taxpayers whose income is $150 000 or more.

Indexation

The amounts of $18 000, $40 000 and $130 000 used to calculate the new health contribution will be automatically indexed each year as of 2014.

Source deductions

As of 2013, the health contribution will be subject to a source deduction. Changes will therefore be made to the Québec income tax source deduction table and the formulas for calculating source deductions, in order to reflect the fact that, as a rule, all adults are required to pay the new health contribution. Thus, the amounts payable will be paid over the course of the year according to taxpayers’ pay periods.

Exempt adult

Adults will be able to request, on the prescribed Source Deductions Return (TP-1015.3-V) form, not to be deducted with respect to the health contribution, in order to reflect the fact that they are not required to pay the contribution.

Impact on payroll production: We will inform you of the procedural requirements as soon as they become available. The Payroll will undergo a major update in December 2012.

Addition of a fourth level to the personal income tax table

To finance the tax relief granted to middle-class households through the new progressive health contribution, the tax rate applicable to taxable income over $100 000 will be raised to 25.75% as of the 2013 taxation year.

Impact on payroll production: The Payroll will undergo a major update in December 2012.

Introduction of a refundable tax credit for physical, artistic and cultural activities for young people aged 5 to 16

The tax credit will be implemented over a period of five years, as of the 2013 taxation year, with initial eligible expenses of $100. The expenses eligible for the tax credit will be raised by $100 each year and will reach the full amount of $500 in 2017.

Impact on payroll production: None.

Bolstering our retirement income system

Concerning the inadequacy of retirement savings, the government will table, by the spring of 2013, a bill to implement the new voluntary retirement savings plans (VRSP).

It should be noted that VRSPs are designed to facilitate retirement savings for workers who are not saving enough for their retirement. They will also enable the two million Quebecers with no pension plan to have access to a savings vehicle offering the benefits of a group plan.

Impact on payroll production : DWe will inform you of the procedural requirements as soon as they become available. An update of the Payroll might be required in the course of 2013..

Maximum amount of the tax credit for experienced workers maintained

Budget 2011-2012 stipulated the gradual implementation of a tax credit for experienced workers beginning January 1, 2012 to encourage more of these workers to hold a job. Currently, the tax credit eliminates Québec tax for maximum earned income of $3 000. The maximum amount of earned income was to have risen gradually to reach $10 000 as of 2016.

However, as of January 1, 2013, the maximum earned income threshold applicable to the tax credit for experienced workers will be maintained, for an indefinite period, at the 2012 level of $3 000.

Impact on payroll production: None.

Deferral of the entry into force of the payroll tax rebate to foster employment for workers age 65 or over

Budget 2012-2013 stipulated the implementation, as of January 1, 2013, of a reduction in contributions to the Health Services Fund for employers employing workers age 65 or over.

To help achieve a balanced budget, the government is deferring, for an indefinite period, the entry into force of the reduction in contributions to the Health Services Fund for employers employing workers age 65 or over.

Impact on payroll production: None.

New measures to fight tax evasion

Studies will be conducted in order to expand the use of sales recording modules to activity sectors other than restaurant industry.

Impact on payroll production: We will inform you of the procedural requirements as soon as they become available. An update of the Payroll might be required in the course of 2013.

For more details, visit: http://www.budget.finances.gouv.qc.ca/Budget/2013-2014/index.asp