Quebec Overhauls Taxes, Rentals, and Health Costs

Summary#

• Quebec’s Bill 99 is a large tax law that puts into effect measures announced in the Nov. 21, 2024 economic update and the March 25, 2025 budget. It also aligns Quebec rules with recent federal tax changes.

• The law adjusts several personal and business tax credits, adds a new foreign-asset reporting duty, changes rules on short‑term rentals, and updates sales tax rules.

• Key changes:

  • Increases the non‑refundable “career extension” credit for older workers starting in 2025.
  • Lowers the child age limit for the refundable child‑care expenses credit from 16 to 14 (from 2026).
  • Creates a new obligation to report foreign property held outside Canada (cost over $100,000), with significant penalties.
  • Denies most expense deductions for unregistered short‑term rentals; only registered days count.
  • Exempts therapeutic counselling and psychotherapy from QST; expands other QST definitions.
  • Raises the insurance premium tax rate to 9.975% (from 9%) for premiums paid after Dec. 31, 2026.
  • Raises income exemptions used to calculate public drug plan (RAMQ) premiums, lowering what many pay (from 2024).
  • Adopts federal‑style changes: higher Home Buyers’ Plan limit, easier intergenerational business transfers, limits on excessive interest deductions of multinationals, and a strengthened anti‑avoidance rule.
  • Closes access to some business incentives (synergy credit; certain tax holidays for specialized employees) for new applicants after March 25–26, 2025.

What it means for you#

• Older workers

  • Bigger non‑refundable “career extension” credit from 2025. The amount is based on your work income: up to $12,500, starting after $7,500 of eligible work income, and reduced by 7% of income over $56,500. Amounts will be indexed from 2026.

• Parents using child care

  • The refundable child‑care expenses credit will use a lower age limit. From the 2026 tax year, a “child” for this credit means under 15 (not under 17). If your child is 15 or 16, you will no longer be able to claim this credit for that child.

• Short‑term rental hosts (e.g., on platforms)

  • If your Quebec property is a tourist accommodation, you must be properly registered. For expenses after Dec. 31, 2023, you can only deduct expenses in proportion to the days the unit is duly registered. There is a grace rule for 2024 if you register by Dec. 31, 2024.

• First‑time home buyers

  • The federal‑aligned Home Buyers’ Plan withdrawal limit rises from $35,000 to $60,000. Rules for the First Home Savings Account (FHSA) are clarified (for example, interest credited inside the FHSA is not taxed when credited; clearer transfer and survivor options).

• People using therapy services

  • QST no longer applies to therapeutic counselling and psychotherapy (when provided by recognized practitioners). This should lower bills by the QST amount.

• People covered by the public drug plan (RAMQ)

  • Higher income exemptions used in premium calculations apply from 2024. Many individuals and families will see lower public drug plan premiums.

• People with assets abroad

  • New annual Quebec reporting is required if you are a Quebec resident (or a company with a Quebec establishment) and the total cost of your foreign property held outside Canada exceeds $100,000. Deadlines align with your tax filing. Penalties for knowingly failing to file are $500 per month (up to $12,000), or $1,000 per month after a formal demand (up to $24,000). After 24 months, an extra penalty of 5% of the highest total cost may apply. False statements can trigger a penalty of the greater of $24,000 or 5%.

• Insurance customers

  • Insurers will owe a higher insurance premium tax (9.975%) on premiums paid after Dec. 31, 2026. The law also clarifies exemptions, including payments related to the Canadian Dental Care Plan.

• Business owners and employers

  • Intergenerational business transfers: clearer, more flexible rules to transfer shares to adult children, with 36–60‑month timelines to hand over control and management and keep the business “active.”
  • Limits on excessive interest and financing expenses (EIFEL) now apply in Quebec, similar to federal rules. Disallowed amounts can be carried forward and deducted in future years under set limits.
  • Quebec’s general anti‑avoidance rule is updated, adding an “economic substance” test and related penalties.
  • Electronic payment is required for QST remittances of $10,000 or more (unless not reasonably possible).
  • Certain business incentives stop accepting new applications after March 25–26, 2025 (synergy credit, and some tax holidays for recruiting specialized workers). Existing certified cases can continue under prior rules.
  • Print media: refundable credit for digital transformation is extended (technical changes and timelines vary by file).

Expenses#

Estimated fiscal impact: No single total is published; the bill mixes measures that raise and lower revenues and spending.

• No publicly available information.

Proponents' View#

• Helps keep experienced workers in the labour force with a larger credit.
• Makes first‑home saving and buying easier (higher Home Buyers’ Plan limit; clearer FHSA rules).
• Protects housing and levels the playing field by denying tax write‑offs for illegal short‑term rentals.
• Improves affordability of mental health services by removing QST on counselling and psychotherapy.
• Lowers costs for many under the public drug plan by raising premium exemptions.
• Aligns Quebec with federal tax rules, closing loopholes (interest‑deduction limits, stronger anti‑avoidance) and improving fairness.
• Modernizes administration (electronic payments) and targets tax support where it is most needed by ending older, less effective credits.

Opponents' View#

• Adds paperwork and steep penalties for foreign‑asset reporting, increasing compliance burden and risk for taxpayers.
• The lower age limit for the child‑care credit reduces support for families with teens aged 15–16.
• New interest‑deduction limits and a tougher anti‑avoidance rule add complexity and may discourage some investment or financing structures.
• Raising the insurance premium tax could contribute to higher insurance costs for consumers.
• Ending the synergy credit and specialized‑worker tax holidays may make it harder to recruit talent and could hurt certain sectors.
• Denying deductions for unregistered short‑term rentals may hit small hosts hard, especially during the transition.