Quebec tax incentives
Canadian Tax Alert, November 17, 2011
New Act respecting the sectoral parameters of certain fiscal measures
Quebec’s tax regime is recognized for its large number of tax incentives. The non-tax parameters pertaining to some of these measures are partially administered by public-sector organizations other than Revenu Québec. In 2007, Quebec’s finance department (Ministère des Finances du Québec) announced its intention to introduce legislation consolidating all of the non-tax parameters involving such public-sector organizations. On November 2, 2011, Quebec’s Revenue Minister finally tabled Bill 32 in the National Assembly introducing the Act respecting the sectoral parameters of certain fiscal measures (the “new Act”) to fulfill the intentions expressed in 2007.
A few years ago, the administration of the non-tax parameters of certain fiscal measures was delegated to various public-sector organizations and government departments other than Revenu Québec.
These non-tax parameters were not all contained within a single law or regulation. This led to potential issues, particularly in regards to interpretation, since the rules were not contained in a set of legislative or regulatory provisions, but rather in administrative documents made available by these organizations and government departments. One example would be the detailed fact sheets published by Investissement Québec concerning fiscal measures administered in part by that public-sector organization, such as refundable tax credits for e-business development, processing activities in resource regions and multimedia title production.
On November 2, 2011, Quebec’s Finance Minister rectified the situation by tabling Bill 32 concerning the Act giving effect to the Budget Speech delivered on 17 March 2011 and to certain other budget statements and enacting the Act respecting the sectoral parameters of certain fiscal measures in the National Assembly.
For many companies and practitioners, the introduction of this bill was long awaited.
Without going into a detailed analysis, it should be noted that the new Act introduced by Bill 32 has various appendices containing all non-tax parameters relating to various fiscal measures.
Public-sector organizations and government departments
The public-sector organizations and government departments covered by the new Act are as follows (the appendices of the proposed new Act are indicated in parentheses, together with the number of tax incentives covered by each appendix):
- Investissement Québec (Appendix A – 12 fiscal measures)
- Ministère de l’Agriculture, des Pêcheries et de l’Alimentation (Appendix B – 1 tax measure)
- Ministère du Développement économique, de l’Innovation et de l’Exportation (Appendix C – 9 fiscal measures)
- Ministère de l’Éducation, du Loisir et du Sport (Appendix D – 2 fiscal measures)
- Ministère des Finances (Appendix E – 4 fiscal measures)
- Ministère des Ressources naturelles et de la Faune (Appendix F – 1 tax measure)
- Ministère des Transports (Appendix G – 1 tax measure)
- Société de développement des entreprises culturelles (Appendix H – 7 fiscal measures)
Proposed framework of the new Act
The new Act formally establishes a set of provisions concerning the non-tax parameters of certain tax incentives. Among other things, it defines the process for requesting and issuing certifications, certificates or other documents required in connection with these measures, in addition to setting out various administrative practices.
In this regard, it should be noted that the new Act includes a uniform procedure for reviewing decisions made by these public-sector organizations and government departments. In the past, individuals could file a decision review request, although that was a purely administrative procedure with often vague and imprecise rules.
In the future, if applicants would like a review of a decision rejecting a request to issue a document or modifying or revoking a document, they will be able to write to the organization or government department concerned within 60 days of notification of the decision being contested. Applicants must state the reasons for the review request.
Upon receipt, the organization or government department will be required to process the review request with due diligence. In addition, the applicant and any other interested parties must be given an opportunity to present their arguments or to file relevant documentation. After conducting the review, the organization or government department will be able to maintain, reverse or modify the contested decision. As with the initial rejection, the organization or government department must issue the new decision in writing stating the reasons for the decision.
Although the framework for the review procedure has been long awaited, it will nevertheless be the focus of additional questions.
For example, the new Act does not indicate who will be in charge of conducting the review within the public-sector organization or government department. Will the requested review of a rejection be conducted by a third party who was not involved in the decision that led to the initial rejection? Will the review be conducted by a committee? The new Act is silent on these matters, although it does state that review requests must be processed diligently. These questions may be addressed when the regulations pertaining to the new Act are adopted with a view to better defining the review process. However, another question remains: if the new decision maintains the initial rejection, what will be the subsequent review process? The new Act is also silent in this regard.
Upon receiving royal assent, Bill 32 will take effect retroactively to March 31, 2010 or January 1, 2011, depending on the measure.
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