General Tax Reduction – Increase in the Basic Tax Credit
Under the Québec tax system, individuals can claim refundable tax credits that reduce—and in some cases even cancel—their income tax payable. These include the basic tax credit granted to all individuals (except trusts) as well as a variety of other credits individuals can claim depending on their particular situation.
The basic tax credit is calculated by multiplying the basic personal amount for the year by 20%, the same rate used to convert the following amounts into tax credits:
- the age amount, the amount for a person living alone and the amount for retirement income;
- the amount for dependants and the amount transferred by a child 18 or over enrolled in post-secondary studies;
- the amount for a severe and prolonged impairment in mental or physical functions.
Beginning with the 2017 taxation year, the conversion rate will be reduced from 20% to 16%. However, there will be no corresponding increase in income tax because:
- the basic personal amount has been increased such that income tax is actually reduced;
- the other amounts mentioned above have also been increased.
The basic personal amount has been increased from $11,635 to $14,890. The basic tax credit has therefore been increased from $2,327 ($11,635 × 20%) to $2,382 ($14,890 × 16%), resulting in a $55 reduction in income tax.
Indexation of the basic personal amount and the other amounts will resume in 2018.
Source deductions and instalment payments
For 2017, the income tax reduction will be applied when individuals file their personal income tax returns.
Beginning in 2018, it will be reflected in the source deductions made on salaries and wages and other amounts (such as retirement benefits).
Individuals who are required to pay their income tax in instalments can adjust, as per usual, any instalment payment due after March 15, 2017, in order to take into account the general tax reduction.
For more information, see pages A.4 to A.14 of the Additional Information 2017-2018 (PDF – 2.71 MB) published by the Ministère des Finances.