The Quebec tax season for 2024 is gearing up with several notable updates announced by Revenu Québec, promising to significantly impact taxpayers across the province. With filing deadlines looming, it’s more important than ever for residents to stay informed about how these changes could affect their provincial tax returns.
For starters, Quebec's personal income tax system is taking inflationary pressures seriously. This year, the tax system is indexed at 5.08%, closely aligning with the province's consumer price index. This inflation indexation translates to revised tax brackets, income thresholds, and increased amounts for various benefits and tax credits.
According to the new tax brackets, the system is structured as follows: for 2024, residents will pay 14% on income up to $51,780, 19% on income from $51,780 to $103,545, 24% for income between $103,545 and $126,000, and 25.75% on income exceeding $126,000. While the tax rates remain unchanged, the newly adjusted brackets mean many taxpayers may see lower taxation on the same income levels compared to previous years.
Personal income tax credits are also seeing notable enhancements. The basic personal amount, which is exempt from income tax, has been raised to $18,056 this year. Other key credits benefiting from this increase include the family allowance, the solidarity tax credit, and tax credits for childcare and medical expenses, among others. This means eligible beneficiaries will enjoy improved financial support through the tax system.
Changes to Quebec Pension Plan (QPP) contributions are set to occur imminently as well. Starting this year, individuals with incomes exceeding $68,500 will incur additional contributions reaching up to $73,200. Interestingly, self-employed individuals aged 65 to 72 can choose to opt out of contributions if they are already receiving their retirement pension, and contributions will cease automatically upon turning 73.
Those planning to dip their toes in the real estate market for the first time will benefit from changes to the Home Buyers' Plan (HBP). The RRSP withdrawal limit for first-time homebuyers has been increased from $35,000 to $60,000 — allowing buyers to leverage more funds from their registered savings for their future homes.
For senior citizens utilizing home-support services, the tax credit rate will rise from 37% to 38% this year, providing much-needed financial support for those eligible for covered expenses.
A particularly significant update for crypto investors is the new requirement to file a Cryptoasset Return (TP-21.4.39-V) starting this year. If taxpayers acquire, hold, or use cryptoassets within the tax year, this filing will become mandatory alongside their regular tax return.
June 25, 2024, marks another important date, as the inclusion rate for capital gains will jump from 50% to 66.67%, impacting how gains are calculated for taxes. Thankfully, gains realized after this date of up to $250,000 may qualify for a reduction back to the previous 50% inclusion rate, easing some of the tax burdens.
Further, deduction rates associated with certain expenditures will decrease from 50% to 33.33%, as of the same date, which may have financial repercussions for various taxpayers. This includes deductions related to specific security options and shares received for services under certain conditions.
For business owners, there’s good news surrounding capital gains from business transfers. If entrepreneurs sell their businesses to an employee ownership trust, they can claim capital gains deductions of up to $10 million under specific conditions starting this year — potentially providing significant tax relief on sales.
Finally, the changes extend to expand the disability supports deduction, which now includes new eligible expenses to help those with disabilities navigate the financial aspects of their living situations more comfortably.
Overall, the tax changes announced for 2024 by Revenu Québec are poised to influence how Quebec residents manage their finances and prepare their tax returns this season. By staying informed and adapting to these changes, citizens can make the most of the support offered through the province's tax system.