Introduction of a Refundable Tax Credit for the Modernization of Tourism Accommodations
A refundable tax credit for the modernization of tourism accommodations of up to $175,000 per taxation year may be granted to corporations that are owners of a hotel establishment, a tourist home, a resort, a bed and breakfast establishment or youth hostel located in Québec, outside the greater Montréal and greater Québec City regions, and that, prior to January 1, 2016, carry out renovation or improvement work on such an establishment.
The tax credit of a qualified corporation, for a taxation year, is equal to 25% of the portion of its eligible expenditures incurred in the year to carry out eligible work that exceeds $50,000.
A qualified corporation is a corporation, other than an excluded corporation, that, in a given taxation year, satisfies the following conditions:
- During the taxation year, it carries on a business in Québec, has an establishment there and owns an eligible tourist accommodation establishment.
- For the taxation year or the preceding one, it has gross revenue of at least $100,000.
The expression “excluded corporation,” for a given taxation year, means
- a corporation that is tax-exempt for the year;
- a Crown corporation or a wholly-controlled subsidiary of a corporation that is tax-exempt for the year; or
- a corporation the amount of whose assets shown in its financial statements submitted to shareholders is
- less than $400,000 for the taxation year preceding the given taxation year, or
- if the corporation is in its first fiscal period, less than $400,000 at the beginning of the fiscal period.
A qualified corporation’s eligible work is
- renovation, improvement, conversion or expansion work on an eligible tourist accommodation establishment of the corporation; and
- the work needed to restore the establishment’s land as it was before the work described above was carried out.
Such work must relate to one or more of the following components of the eligible tourist accommodation establishment:
- the rooms, including bathrooms;
- dining rooms;
- interior facilities that constitute public areas;
- the exterior structure of the building, in particular the facing, roofing, doors and windows.
Execution of the eligible work must be awarded by the qualified corporation to a contractor under the terms of an agreement entered into after March 20, 2012, and before January 1, 2016. At the time such agreement is entered into, the contractor must be a person or a partnership with an establishment in Québec and must operate at arm’s length from the corporation, any specified shareholder of the corporation or, where the corporation is a cooperative, any designated member of the cooperative.
The eligible expenditures of a qualified corporation for a taxation year are equal to the expenditures incurred by the corporation during the taxation year provided they are attributable to the eligible work regarding an eligible tourist accommodation establishment of the corporation. The annual limit for eligible expenditures is $750,000.
A corporation that is a member of a partnership can also receive the tax credit regarding eligible expenditures carried out by the partnership provided the partnership is the owner of an eligible tourist accommodation establishment.
The tax credit applies regarding eligible expenditures incurred after March 20, 2012, for eligible work done before January 1, 2016. Property required for the carrying out of eligible work must be acquired after March 20, 2012, and before January 1, 2016.
For more information, see page 57 in Additional Information on the Fiscal Measures of the Budget, published by the Ministère des Finances.