Published | Category : Source deductions and contributions
Clarifications on the Reduction in the Rate Applicable to Personal Tax Credits
As of 2018, the rate applicable to variable E (the value of personal tax credits in guide TP-1015.F-V, Formulas to Calculate Source Deductions and Contributions) is reduced from 20% to 15% (not from 16% to 15%).
In the Budget Speech of March 28, 2017, changes to the rates and amounts used to calculate personal tax credits for 2017, including the rate reduction from 20% to 16%, were announced. However, the Ministère des Finances stated that these changes would not apply to the calculation of income deducted at source for 2017.
Therefore, the rate applicable to variable E in the formulas used to calculate source deductions of Québec income tax was 20% for all of 2017. This is despite reductions to the conversion rate for amounts used to determine personal tax credits for purposes of calculating income tax: first to 16% (for 2017) in the Budget Speech and then to 15% (for 2017 and 2018) in the update to the Québec Economic Plan on November 21, 2017.
For more information, see:
- Tax News article General Tax Reduction – Increase in the Basic Tax Credit (published on May 3, 2017)
- “Clarifications concerning source deductions of income tax” on page A.13 of the Additional Information 2017-2018 published by the Ministère des Finances
- Information Bulletin 2017-11 (published as part of the update to the Québec Economic Plan)