As you know, the provincial government instituted a tax credit for insurance firms for the 2013, 2014 and 2015 calendar years.

When finance minister Nicolas Marceau's latest budget was adopted by the National Assembly, a new provision was implemented. Virtually all tax credits are now taxable, with the exception of a handful described on Revenu Québec's website.

Please be advised that the tax credit obtained for insurance firms is a taxable credit. As such, it must be included in the calculation of your firm's taxable income for the tax year in which it was received.

At first sight, the fact that this credit is taxable may seem disadvantageous. However, the end result will be almost the same as when brokerage firms were entitled to input tax reimbursements (ITR).

Previously, ITRs were used to offset QST expenditures incurred by a firm. These expenditures, less the ITR received, were then deducted when calculating taxable income in accordance with the usual applicable rules.

Currently, the tax credit is calculated based on a percentage of certain expenditures incurred during the reference year. Obtaining the credit means that a firm is partially compensated for the shortfall associated with the lost ITR on these expenditures. The credit must be taxable in order to arrive at a similar result to that calculated prior to the QST/GST harmonization.

If you have any specific questions regarding your firm, please contact your tax specialist so you can determine which procedure applies to your situation.

Yours truly,

RCCAQ