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Published | Category : Income tax - individuals

Postponing the Application of the Rule Limiting Eligibility for the Non-Refundable Tax Credit For a Labour-Sponsored Fund

Currently, an individual who acquires, as first purchaser, qualifying class shares in the Fonds de solidarité des travailleurs du Québec (FTQ) or Fondaction can claim the tax credit for a labour-sponsored fund (conditions apply). The non-refundable tax credit is equal to 15% of the amount paid to acquire such shares in the year or in the first 60 days of the following year. The total amount of the shares acquired in a labour-sponsored fund that can be taken into account in calculating the tax credit for a year cannot be more than $5,000, for a maximum tax credit of $750.

In the budget speech of March 21, 2023, the government announced a rule limiting eligibility for the tax credit for a labour-sponsored fund to focus on assisting individuals with the greatest need for savings. As of the 2024 taxation year, an individual who acquires shares after December 31, 2023, would no longer be able to claim this tax credit for a taxation year if their taxable income for the reference year (the second calendar year preceding that taxation year) was subject to the highest tax rate in the personal income tax table.

However, so that labour-sponsored funds can attract more capital to increase their investments, particularly in housing construction, the rule limiting eligibility for the non-refundable tax credit for a labour-sponsored fund will not take effect until January 1, 2027. Thus, the rule will now apply when the tax credit is claimed for a taxation year after the 2026 taxation year in respect of shares acquired after December 31, 2026. Consequently, the taxable income for the 2025 taxation year will be used to determine the income limit for the 2027 taxation year.

For more information, see Information Bulletin 2024-3 (PDF – 219 KB) on the Ministère des Finances website.

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