Income Tax in Quebec: Main Changes for 2010

The government of Quebec has made it a priority to rapidly restore fiscal balance. To get there, it prefers raising sales taxes rather than income taxes. The QST increase in 2011, which brought it to 8.5%, and the expected increase for 2012 are examples of the application of the government’s strategy. Few changes have been made to the requirements for individual tax returns, but here is what you need to watch for in Quebec for the 2010 tax year.

Solidarity tax credit. To aid low- and middle-income households, Quebec has established a new solidarity tax credit. It’s a redeemable credit that merges three existing credits: the QST credit, the property tax refund and the tax credit for individuals living in northern villages. It will be paid each month, on request, to eligible Quebec residents 18 years of age and over. To receive this tax credit, you must complete Annex D and be enrolled for direct deposit. Click here for more information on direct deposit.

Health contribution. It was set at $25 for the 2010 tax year. The price of this co-payment will increase to $100 in 2011 and $200 in 2012. The health contribution applies to all Quebec residents 18 years of age or older (in the case of a couple, each spouse must pay the health contribution). An exemption from payment is anticipated for people with low incomes. This contribution will be found in the Quebec tax return on line 448 of page 4 of the TP-1 form.

Relaxing of the tax credit for home-support services for seniors (TCHSSS/CIMDPA). Seniors who pay rent to live in a senior citizens’ residence can receive services eligible under the under the TCHSSS. Two of these services, housekeeping and nursing, have to be performed at frequencies that aren’t necessarily suited to the needs of seniors. To correct this incongruity, the government has revised the frequency of housekeeping services eligible under the TCHSSS to at least once every two weeks, and that of nursing services to at least three hours per day. These relaxations take effect this year.

Deduction of U.S. social security benefits. Did your clients receive social security benefits from the United States in 2010? They may be entitled to a 50% deduction of the benefits received. For more information, see the instructions for line 297.

Possibility of rolling a RRSP or RRIF into a RDSP. Quebec has harmonized its RSDP policies with Ottawa’s. It’s now possible to roll, tax-free, the RRSP or RRIF of a deceased person into the RDSP of a disabled child. The maximum transferable amount is $200,000. Previously, a taxpayer could roll his RRSP or RRIF, but only into the RRSP or RRIF of the disabled person. This harmonized measure will take effect on July 1, 2011 for deaths occurring after March 3, 2010.

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