Tax measures to stimulate investment

Tax measures to bolster competitiveness

Further to the initiatives announced by the federal government in November 2018, the Government of Québec announced a series of measures to encourage more investments by businesses.

First, companies will be able to write off the full cost (100%) of computer hardware, manufacturing and processing equipment, clean energy generation equipment as well as intellectual property in the first year.
Furthermore, a permanent additional capital cost allowance of 30% for these same types of investments was announced. This new measure will allow businesses to claim an amount equal to 30% of the capital cost allowance in the previous year. Combined with the 100% increase, this new deduction would allow businesses to deduct 130% of the value of their eligible investment from their taxable income.

Then there’s the introduction of another measure, whereby businesses will be able to claim up to three times the amount of the capital cost allowance normally applicable in the first year for all types of investments not covered by the 100% increase in the depreciation rate.

Lastly, the Electricity Discount Program Applicable to Consumers Billed at Rate L and the Electricity Discount Program to Promote Greenhouse Development will be extended.

In all, these tax measures represent nearly $1.6 billion in additional support to businesses over five years to stimulate investment conducive to higher productivity.

With these tax measures from the Government of Canada and the Government of Québec, Québec’s marginal effective tax rate (METR) would be 8.5% on average in 2018—one of the most competitive among industrialized nations.

For Québec’s various business partners, the METR for 2018 would be:

• 5% on average in Québec
• 8% on average in Canada
• 4% on average in OECD countries
• 7% on average in the United States

Access all fall 2018 economic update documents here