Change in the non-refundable tax credit conversion rate

Starting in 2017, the conversion rate used to calculate your provincial personal amounts will drop from 20% to 16%. While it might seem that this change will reduce the amount you can claim, in most cases, your tax savings will remain unchanged*. This is because Revenu Québec is increasing the value of the personal amounts to offset the decrease in the conversion rate.

For example, if you claimed the Amount for other dependants in 2016, you’d receive a non-refundable tax credit worth $625:

If you claimed this credit again in 2017, you’d also receive a tax credit worth $625 even though both the personal amount and conversion rate for the credit have changed:

*Unlike the other personal amounts, the value of the Basic amount is increasing from $11,550 in 2016 to $14,890 in 2017 – providing an additional tax savings of $55.

Additional non-refundable credits impacted by these changes:

• Amount for persons living alone
• Amount with respect to age
• Amount for retirement income
• Amount for severe and prolonged impairment in mental and physical functions
• Amount for minor children engaged in vocational training or post-secondary studies
• Amount for the recognized parental contribution

Note: Despite the changes made to the non-refundable credits discussed above, things like medical expenses, medical travel, interest paid on a student loan and the first $200 of your charitable donations will continue to be converted using the 20% tax rate.

Amount for retirement income

Beginning in 2017, there are two main changes to the amount for retirement income. The first, is that your eligible retirement income must be increased by 25% before the non-refundable tax credit can be calculated. Secondly, the reduction rate which is used to reduce the value of the credit based on your household income will increase to 18.75% from 15%.

Childcare Expenses

While there’s no change to the credit itself, the definition of eligible child is changing for 2017. For the purposes of this credit, an eligible child is:

• your or your spouse’s child or
• your or your spouse’s dependant whose annual income is less than $9,582

As in earlier years, the eligible child must be under the age of 16 at some point during the year or must be dependant on you or your spouse for assistance due to a mental or physical infirmity.

RénoVert tax credit eligibility period extended

Originally slated to end March 31, 2017, the eligibility period for the RénoVert tax credit (the period during which you can enter into a renovation agreement with a qualified contractor) has been extended to April 1, 2018.

Any renovation agreement that you enter into during this extended period can be for the same type of renovation work currently recognized for the purpose of the credit except work relating to the discharge, collection, and disposal of waste water, toilet effluents, or grey water. The reason for this exclusion is due to the implementation of a new (and temporary) refundable tax credit effective April 1, 2017. 

Temporary tax credit for the upgrading of residential waste water treatment systems

Effective April 1, 2017, this refundable tax credit can be claimed for work completed by a qualified contractor to upgrade the water treatment system of your principal residence or cottage. This temporary tax credit allows you to claim 20% of your qualified expenditures over $2,500. The maximum credit that you can claim for each dwelling is capped at $5,500. To be eligible, the work under the service agreement between you and the contractor must be carried out between April 1, 2017 and April 1, 2022.

Tax credit for workers 63 or older

The eligibility age for this credit has been lowered from 64 in 2016 to 63 for 2017.

Health contribution

The heath contribution has been eliminated for 2017. For more information, refer to the Finances Québec website.