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Quebec Harmonizes With 2012 R&D Federal Budget Measures 

Canadian Tax Adviser

 

November 26, 2013

 

Quebec has announced in an information bulletin that it will harmonize with certain research and development (R&D) measures in the 2012 federal budget. The four-page Information Bulletin, which also announced adjustments to the exemptions allowed for the purposes of calculating the premium for Quebec's public prescription drug insurance plan, was released on November 8, 2013.

Background
The 2012 federal budget was tabled on March 29, 2012. Although there were no changes in the corporate, personal, or GST tax rates, the budget proposed more direct support for R&D in Canada and scaled back the benefits of the Scientific Research and Experimental Development (SR&ED) tax incentive program. For details, see TaxNewsFlash-Canada 2012-15, "2012 Federal Budget Highlights". Quebec announced it would state its position on various 2012 federal budget proposals at a later date.

 

In December 2012, Quebec announced harmonization measures with certain federal measures included in federal budget bills C-45 and C-48, including proxy amounts for R&D, pooled registered pension plans and retirement compensation arrangements.

 

R&D measures
According to the Information Bulletin, Quebec will harmonize with the following 2012 federal budget R&D measures:

 

  • Allow only 80% of arm's-length contract payments to be used for purposes of calculating the SR&ED tax credits
  • Remove capital expenditures from the base of eligible expenditures (all other expenditures such as salary and wages, materials, overhead expenses and contract payments remain eligible)
  • "Any other change necessary to give effect to the various changes to the R&D program".

 

The changes to the Quebec's tax system will apply on the same dates as those for the purposes of the federal measures with which they are harmonized to.

 

For more information, contact your KPMG adviser.

 

 

 

 

 

Information is current to November 26, 2013. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500