Tax credit for career extension: $1,000 less for many workers

Older workers will become the first victims of the return to balanced budgets. Quebec is raising the minimum age of the tax credit for career extension to 65, thus depriving 200,000 people of around $1,000 annually.

In his economic update, Minister of Finance Éric Girard ends this incentive for workers aged 60 to 65.

Established in 2012, the credit aims to keep older employees employed by providing savings of up to $1,540 on their tax return.

On average, the real impact will be $973 for 194,683 taxpayers.

Conversely, workers aged 65 and over will be entitled to a bonus of $210.

To justify raising the eligibility age, the government argues that Quebecers are retiring later and later. The average age was 61.3 years in 2011, it is now 64.7 years.

Be careful, however, the government is also changing the calculation method to penalize better-off employees. From now on, all income will be included in the calculation, not just salary.

Previously, the tax credit gradually decreased from $42,090 in work income.

From now on, the tax credit will begin to decrease if total income (salary, retirement pensions, investments, etc.) exceeds $56,500.

Expenditure review

This modification is one of the first resulting from the revision of 277 tax expenditures. Quebec plans to recover $886 million over five years.

Last March, the government forecast in its budget a deficit of $11 billion for the current year, which constitutes a record in absolute figures.

This amount is maintained with the update, but Minister Girard had to find new sources of revenue in order to achieve it, in particular to offset some new expenses.

Quebec is focusing in particular on the harmonization of capital gains taxation with Ottawa. As announced in the spring, the Legault government increased the inclusion rate for capital gains above $250,000 for individuals.

According to Quebec’s calculations, this change will allow it to find $972 million more in state coffers for this year alone.

Collective transportation

The Legault government is also taking advantage of its economic update to settle a dispute with municipalities, by extending $879 million over four years in order to better finance public transport companies. With the amounts previously announced, the total aid amounts to $1.1 billion, it is argued.

It remains to be seen whether this new boost will satisfy the Cities, which are forecasting a deficit of $600 million for next year alone.

The impact of Hurricane Debby is also being felt strongly on public finances: Quebec will release $251 million this year to help disaster victims and rebuild damaged infrastructure.

This envelope will be used in particular to compensate owners flooded due to sewer backup linked to flooding, as promised by Prime Minister François Legault.

Will you lose $1400?

• If you are between 60 and 64 years old and you are still in the job market, you will no longer have access to a credit of up to $1,400 per year.
• Workers aged 65 and over whose retirement income is too high will no longer be entitled to it either. These people will lose up to $1,540 per year.
• So, if your total income exceeds $56,500, the amount you receive will begin to decrease.
• This measure represents an average reduction in tax assistance of $973 for nearly 195,000 people in Quebec.
• In return, the maximum assistance for those who will still be eligible increases by $210, from $1,540 to $1,750.