According to budget estimates, more than 70,000 SMEs are expected to benefit from this measure as of the 2022-2023 fiscal year.
He explained that for a company that declares taxable income of $ 500,000, the reduced tax rate should allow it to reduce its tax bill by 20%. At 3.2%, the income tax rate is the same as in Ontario, says Gerrard’s Budget.
The document says: “This reduction in the tax burden will have a beneficial effect on Quebec’s economy by stimulating the investment of beneficiary companies in their productive capacities while improving their competitiveness.”
Over five years, this measure is expected to deprive the country of an estimated $ 347 million ($ 1 million) in revenue.
The government also decided to maintain the related temporary work program for companies and the emergency assistance program for small and medium-sized enterprises for the next fiscal year. However, SME owners have criticized the administrative requirements to be eligible to take measures to help them absorb fixed costs.
When asked at a press conference, Eric Gerrard seemed to be closing the door to relaxation.
“There are no additional funds in this budget (192 million dollars) so that the programs can continue because the epidemic is not over yet,” he said. We are in charge of the public finances, and naturally we require five pages of information before giving money to companies. “
Many small and medium enterprises are asking for help, especially in hard-hit sectors such as restaurants and retail. A survey conducted by the Canadian Federation of Independent Business earlier this year reported that about 11% of businesses surveyed in Quebec are considered to be at risk of shutdown due to the pandemic.
Gerrard’s budget numbers, when taken into account all the measures in the document, amount to $ 4 billion to be spent on economic measures over the next five years.
About $ 1.3 billion will be allocated from this envelope over the next two years “to connect all Quebec residents with high-speed Internet,” an electoral promise from the Legault government.
Most other measures include expanding or improving tax measures to stimulate productivity and accelerate investment spending by companies.
In order to stimulate business investment, the investment and innovation tax credit, aimed at promoting the acquisition of manufacturing and processing equipment, computer equipment and management software, will be increased.
Currently, the tax exemption rate ranges between 10% and 20%. Until December 31, 2022, the rate will double and could reach 40% in regions facing greater challenges.
“This temporary improvement (…) will encourage more than 10,000 companies to accelerate the realization of their investment projects,” the budget argues.
At a time when telecommuting is occupying an increasingly important place in commercial activities, Quebec has decided to make the tax exemption for digital transformation projects eligible in addition to improving some of its conditions.
Qualifying projects allow companies to obtain income tax exemption and a contribution to the health services fund of up to 15%.
According to the budget, measures deployed to support investments in new technologies would make it possible to “create or directly support” $ 8.4 billion in investments over five years. Over a decade, additional business investment is expected to add nearly $ 900 million to GDP.