Quebec Economic and Financial Update – Fall 2024

On November 21, 2024, Quebec’s Minister of Finance, Mr. Éric Girard, provided an update on Quebec’s economic and financial situation.

Optimization of the Career Extension Tax Credit

To encourage experienced workers to remain in or return to the labour market, the tax system currently grants individuals aged 60 or over a tax credit that may reduce tax payable on employment income exceeding $5,000. Additionally, this tax credit is gradually reduced when the applicant’s annual income exceeds $40,925.

To adapt the tax credit to the new labour market context and improve its effectiveness, the government announced several changes effective January 1, 2025:

• Eligibility age will increase from 60 to 65 years;

• The exclusion amount of the first dollars of income will increase from $5,000 to $7,500 (indexed starting in 2026);

• The maximum eligible employment income amount will be increased from $11,000 to $12,500 (indexed starting in 2026);

• The reduction threshold will be raised from $40,925 to $56,500 (indexed starting in 2026);

• The reduction will now be based on individual net income;

• The applicable reduction rate will increase from 5% to 7%;

• The grandfathering rule applicable to workers born before January 1, 1951, will be abolished.

Harmonization of Capital Gains Taxation with the Federal Regime

In its 2024 budget, the federal government announced several changes to the Canadian tax system, notably increasing the capital gains inclusion rate effective June 25, 2024.

To maintain consistency between the two systems, the Quebec government announced harmonization of Quebec’s tax regime with the new federal measures:

• The capital gains inclusion rate will increase from 50% to 66.7%;

• Individuals will benefit from an annual threshold of $250,000 for which the inclusion rate remains at 50%;

• The capital gains exemption will increase to $1,250,000 for both eligible small business corporation shares and farm and fishing property;

• An Entrepreneur Incentive will be created (with a ceiling of $400,000 starting in 2025 and gradually increasing to $2,000,000 in 2029).

Increase in Work Income Supplements for Social Assistance Recipients

The government announced changes to the work income supplement rate starting in 2025 as follows:

• The rate will increase from 10% to 25% for social assistance and social solidarity recipients. Thus, the maximum supplement for a single person receiving social assistance will increase from $995 to $2,487;

• The rate will increase from 20% to 25% for participants in the employment objective program.

Revaluation of Exemptions for Calculating the Premium Payable under the Public Prescription Drug Insurance Plan

The general prescription drug insurance plan guarantees all taxpayers equitable access to the medications they require. However, adults whose income is primarily composed of social assistance benefits are exempt from contributing to this plan.

For 2024, the government will revalue the amount of each exemption currently granted according to the following table:

Indexation of the Tax System by 2.85%

Starting January 1, 2025, taxpayers will benefit from a 2.85% indexation of tax system parameters and social assistance programs, as shown below:

For more information on the measures announced in the Fall 2024 Economic Statement, please contact your FBL representative.

Sources:
Finances Québec, Update on Quebec’s Economic and Financial Situation – Fall 2024
Information Bulletin 2024-9 – Tax Measures Announced in the Update on Quebec’s Economic and Financial Situation and Adjustments to Other Measures, November 21, 2024