07 Mar 2012

On March 5, 2012, Bill 54, An Act respecting the sectoral parameters of certain fiscal measures, was ratified by the National Assembly. This new legislation will have major repercussions on the tax regime of many Quebec businesses.

New Act, New Practices

The purpose of this bill is to consolidate all non-tax parameters and fiscal measures for businesses. This will affect numerous manufacturing and service companies that obtain certificates or authorizations pertaining to the many incentives offered by Quebec government bodies.

Up until now, many Ministries and bodies, other than Revenu Québec, administered non-tax parameters independently (such as Investissement Québec or the Société de développement des entreprises culturelles (SODEC), for example). Going forward, Ministries and bodies will manage these non-tax parameters within a frame.

This new provision includes a formal review process serving to limit the number of non-tax parameter interpretations based on the point of view of applicants or Ministries and bodies administering the credits.

In all, the non-tax parameters of eight Ministries and bodies are affected by this new legislation:

1. The Ministère de l’Agriculture, des Pêcheries et de l’Alimentation;
2. The Ministère du Développement économique, de l’Innovation et de l’Exportation;
3. The Ministère de l’Éducation, du Loisir et du Sport;
4. The Ministère des Finances;
5. The Ministère des Ressources naturelles et de la Faune;
6. The Ministère des Transports;
7. Investissement Québec;
8. SODEC.

Changes

The bill sets out general rules concerning non-tax parameters and measures related to the issuance of documents required for the application of fiscal measures. It also gives the Ministries and bodies in question inspection and inquiry powers.

Therefore, when a Ministry or body rejects or only partially accepts an enterprise’s application, it must also provide a written explanation to the applicant of the reasons behind its decision (which was not the case in the past). Furthermore, applicants can now officially request that Ministries or bodies review an application within 60 days following notification of the decision. Each Ministry or body may develop its own review process.

Any applicant who is not satisfied with a Ministry or body’s decision may avail itself of this process. Ministries or bodies who receive such requests must be diligent in their review. Note that the original decision may be maintained or reviewed, depending on the case. Moreover, an applicant could exercise the right to appeal before the common law courts in the event of disagreement with a reviewed decision.

In this respect, it is hoped that Ministries and bodies will implement a formal review request process monitored by an independent group, other than the group having made the original decision. Such a process would ensure neutrality in decision-making.

What it Means for Businesses

This legislation has been long-awaited by certain businesses that benefit from fiscal measures or incentives since, going forward, the application process will be governed by a legal framework. Also, in the future, case law and opinions submitted by Ministries and bodies will be more detailed and will help avoid legal proceedings due to the interpretation of certain definitions. Moreover, Michel Lefebvre, Attorney, CGA and taxation partner at Raymond Chabot Grant Thornton believes that “decision-making bodies could benefit from studying an objection process such as the one used by the Agence du revenu du Québec”.

In closing, the changes made through this bill may seem abstract, but can have major repercussions on businesses that avail themselves of such funding sources. Our experts are available to help you determine the best tax strategies to maximize the application process, and are proficient in the ins and outs of various related measures, helping you reap the greatest advantage.