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Weekly tax highlights, November 17, 2011

November 17, 2011

New protocol to treaty with Barbados

On November 8, 2011, the Department of Finance announced the signing of a protocol amending the tax treaty between Canada and Barbados. The Protocol includes provisions reflecting the standard developed by the Organisation for Economic Co-operation and Development for the exchange of tax information. The Protocol will enter into force once both countries have notified each other that their respective domestic implementation procedures are complete.

The full text of the Protocol is posted on the Department of Finance website.

Annual indexation of CPP, QPP, and pension contributions

The Canada Revenue Agency (CRA) recently announced that the maximum pensionable earnings under the Canada Pension Plan (CPP) for 2012 will be $50,100 — up from $48,300 in 2011. The basic exemption amount for 2012 remains $3,500. The employee and employer contribution rates for 2012 will be unchanged at 4.95%, and the self-employed contribution rate will remain at 9.9%. The maximum employer and employee contribution to the plan for 2012 will be $2,306.70, and the maximum self-employed contribution will be $4,613.40. The maximums in 2011 were $2,217.60 and $4,435.20, respectively.

Revenu Québec has also announced the Quebec Pension Plan (QPP) rates for 2012. The maximum pensionable earnings under the QPP will be increased from $48,300 to $50,100. The QPP contribution rate will be increased from 9.9% to 10.05% for 2012, which corresponds to employee and employer contribution rates of 5.025%. Thus, the maximum contribution for employees and employers to the QPP for 2012 will be increased from $2,217.60 to $2,341.65 and the maximum contribution for self-employed workers will be $4,683.30 in 2012 ($4,435.20 in 2011). The contribution rate will increase by 0.15% a year, reaching 10.80% in 2017.

The CRA has also announced indexed amounts for various retirement plans. The maximum registered retirement savings plan contribution will be increased to $22,970 in 2012 (to $23,820 in 2013) from $22,450 for 2011 (however, the maximum contribution is restricted to 18% of the prior year’s earned income and is reduced by the prior year’s pension adjustment(s)).

Quebec tax incentives – 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.[1] 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.

Read more in our Canadian Tax Alert.

[1] Ministère des Finances du Québec, “Legislative consolidation of non-tax parameters of certain fiscal measures,” in Information Bulletin 2007-10, December 20, 2007, par. 2.1, p. 16.


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