Special taxes in Quebec are applicable to both individuals and businesses. These commonly misunderstood taxes have an impact on everything from education savings to specific tax credits.
In this guide, our business tax professionals help to explain what Quebec special taxes are, outlining the different types of special taxes, their implications, and how they are calculated and paid.
Understanding special taxes in Quebec
Special taxes are additional taxes applied in specific situations. Unlike general taxes, they are not based on overall income, but on specific circumstances or activities. These taxes aim to regulate certain economic sectors or behaviors, while contributing to state revenues.
Types of special taxes in Quebec
There are several types of special taxes in Quebec. According to our tax specialists and corporate accountants, the following are the main types of special taxes:
- Special tax for RESPs (Registered Education Savings Plans): Applied when payments supporting education exceed a certain limit.
- Split income tax: Applies to income transferred within a family, generally to reduce tax burdens.
- Special tax for artists: Related to averaging annuities for artists, with specific conditions for tax deductions.
- Special taxes for businesses: Taxes on activities like digital transformation, agriculture, e-commerce, etc.
- Special tax on tax credits: Applicable when there's a failure to meet obligations related to tax credits for donations to support culture.
Special taxes for businesses
Now that you have an overview of the major types of special taxes in Quebec, let’s look at how these can be applied specifically to business tax.
- Taxes on technological adaptation and digital transformation: Apply to specific tax credits for companies that invest in these areas.
- Paid-up capital (PUC) taxes: Apply to companies, related to amounts received for issuing shares.
- Taxes for the development of e-commerce: For companies investing in e-commerce.
- Taxes for cultural activities: Applied to tax credits for film production, book publishing, etc.
Implications for business
Special taxes are essential to a company's business strategy, and will directly influence decisions about its investment and growth. They have a significant impact on the way a company plans and carries out operations.
Companies can benefit from integrating tax considerations into their day-to-day management. Careful tax planning allows you to optimize your returns while complying with regulations, so that you can avoid unpleasant surprises like unexpected tax charges or lost earnings due to missed tax opportunities.
Special taxes for individuals
In addition to businesses, individuals can also be affected by special taxes. Here are a few examples:
- Taxes on RESPs (Registered Education Savings Plans): These apply when education assistance payments, including those from the Quebec Education Savings Incentive, exceed $3,600.
- Tax on split income: Concerning income redistributed within a family to minimize overall tax.
- Special tax for artists: Applicable income averaging annuities for artists, under certain conditions.
- Tax on failure to purchase replacement shares in a labour-sponsored fund: Those who fail to meet HBP or LLP conditions are subject to this tax.
Special tax calculation and payment
To calculate special taxes, the correct method depends on the type and amount of income or transactions involved. Taxpayers can refer to the detailed forms and guidelines provided by Revenu Québec for help.
As for paying special taxes, you can do so easily online or by cheque when you file your annual tax return. Remember to respect declaration and payment deadlines to avoid paying penalties or interest.
Resources and support
- Revenu Québec website: Provides detailed information on special taxes, including guides and forms.
- Canada Revenue Agency: Provides resources for understanding federal tax implications related to special taxes.
- Tax publications and guides: Online documents to help you understand Quebec's tax system.
Getting help
- Accountants and tax advisors: We recommend consulting a chartered accountant for personalized advice specific to your situation.
- Online help services: Many sites offer online consultations on tax issues.
- Professional associations: Organizations such as the Ordre des CPA du Québec can refer you to reliable experts.
T2inc.ca helps companies understand special taxes
It can be difficult to navigate the complex maze of special taxes in Quebec, especially when your goal is to maximize your tax benefits while remaining in compliance with tax laws.
Companies operating in Quebec and across Canada can benefit greatly from the assistance of a reliable tax partner. At T2inc.ca, we have a team of high-performance tax accountants with unrivalled expertise in helping companies manage and optimize their tax obligations.
Whether you need an in-depth understanding of special taxes or you’re looking for assistance to prepare your business tax returns, contact T2inc.ca. We’ll help you find your way within the Canadian tax system.
Frédéric Roy-Gobeil
CPA, M. TAX
As President of T2inc.ca and an entrepreneur at heart, I have founded many start-ups such as delve Labs and T2inc.ca. A former tax specialist at Ernst & Young, I am also a member of the Ordre des comptables professionnels agréés CPA and have a master's degree in taxation from the Université de Sherbrooke. With a passion for the world of entrepreneurship and the growth mindset, I have authored numerous articles and videos on the industry and the business world, as well as on accounting, taxation, financial statements and financial independence.
