Couillard government cuts tax creditsFacing the prospects of a much larger deficit than anticipated, the Couillard government tabled its first budget on June 4, 2014. Given the realities of the current environment, it comes as no surprise at all that he announced major spending cuts, as he has to meet his balanced budget objective. Businesses will be particularly hard hit. Welcome to the era of austerity!
20% reduction in tax creditsThe most significant measure is the generalized 20% cut in business tax credits. This will allow the province of Quebec to save upwards of $625 million between now and March 2017. However, it could prove a risky gamble in industries whose jobs are easily transferable from one jurisdiction to another. For example, the credit for the production of multimedia titles will be reduced from 37.5% to 30% for products that have a French version, whereas the equivalent tax credit in Ontario is 40% (with no restrictions on the language of the product). We may thus end up witnessing an exodus of video game companies to Toronto.
|Tax Credit Program||Before June 5, 2014||After June 4, 2014|
|SR&ED salary||17.5% to 37.5%||14% to 30%|
|Multimedia titles||26.25% to 37.5%||21% to 30%|
|Industrial design||15% to 30%||12% to 24%|
|Before June 5, 2014||After June 4, 2014||Difference|
|Quebec SR&ED Credit||$37,500||$30,000||– $7,500|
|Federal SR&ED Credit||$41,125||$43,750||+ $2,625|