Bulletin d information Gouvernement du Québec Ministère des Finances 99-5 November 26, 1999 Subject: Easing of eligibility conditions for the refundable tax credit for home support of older persons and other tax measures This Information Bulletin describes the changes that will be made to the tax credit for home support of older persons to make it accessible to all persons 70 years of age or over, regardless of their degree of autonomy. It also makes public a number of tax measures relating to the knowledge-based economy, such as the increase in floor space of the Centre de développement des technologies de l information (CDTI) de Québec and the designation of a second building in Hull as a CDTI, as well as other changes that will be made to Québec s tax legislation. Most of these other changes are more technical in nature or concern various federal measures which will be incorporated into Québec s tax legislation. For information on the issues covered in this Information Bulletin, interested persons can contact the Direction générale de la fiscalité at (418) 691-2236. The French and English versions of this bulletin are available on the ministère des Finances Web site at: www.finances.gouv.qc.ca
Bulletin d information 99-5 Easing of eligibility conditions for the refundable tax credit for home support of older persons and other tax measures 1. MEASURES CONCERNING INDIVIDUALS...1 1.1 Refundable tax credit for home support of older persons...1 1.1.1 Easing of eligibility criteria...2 1.1.2 Clarifications concerning home support services...2 1.2 Clarification concerning the sanctions applicable in the event of an employer s failure to satisfy obligations regarding wages paid by means of the service employment paycheque...3 1.3 Remission of tax payable by a new Canadian all of whose income consists of assistance of last resort...4 1.4 Acquisition by a qualifying trust of labour-sponsored fund shares...5 1.5 Deductibility of certain payments made to an RRSP...7 2. MEASURES CONCERNING BUSINESSES...9 2.1 Tax measures relating to the knowledge-based economy...9 2.1.1 Scientific research and experimental development...10 2.1.2 Information technology development centres...10 2.1.3 Centre national des nouvelles technologies de Québec and Carrefour de la nouvelle économie of the Québec region...11 2.2 Refundable tax credits for the production of sound recordings and for musical productions...12 2.3 Stock savings plan...14 2.4 Québec Business Investment Companies...14
- 2-2.5 Cooperative Investment Plan...15 2.6 Rate of interest applicable to refunds due by the ministère du Revenu...16 3. HARMINIZATION MEASURES WITH THE GOODS AND SERVICES TAX AND THE HARMONIZED SALES TAX...17
- 1-1. MEASURES CONCERNING INDIVIDUALS 1.1 Refundable tax credit for home support of older persons The March 9, 1999 Budget Speech announced that to assist older persons who choose to remain at home as long as possible, a new refundable tax credit for home support of older persons would be implemented as of January 1, 2000. Essentially, this new tax credit, for a maximum annual value of $2 760, will enable an older person to obtain tax assistance equal to 23% of the eligible expenditures he pays in a year, by means of the service employment paycheque (SEP) mechanism, to obtain certain home support services. Under this payment mechanism, an older person can receive the tax credit as payment is made for his eligible expenditures, until the total of such expenditures for a year reaches $12 000, the administrator of the SEP being authorized to issue him, when such payment is made, an advance on the tax credit. In general, eligible expenditures for the purposes of this tax credit for a taxation year consist of the total of the amounts paid during such year by an older person to obtain certain home support services provided or to be provided after such person turns 70. The home support services which may, under certain conditions, entitle the taxpayer to this tax credit fall into two categories, namely direct personal services and household services. The first category includes such services as meal preparation, nonspecialized supervision, civic support and, in certain special cases, non-professional assistance for daily living activities. The second category includes services such as housekeeping, upkeep of clothes, shopping for everyday necessities and other errands, as well as minor work outside the home. Changes will be made to this tax credit to ease the eligibility criteria applicable to an older person and clarify the scope of certain home support services that may give rise to the tax credit.
- 2-1.1.1 Easing of eligibility criteria According to the rules that have been announced, an older person may claim this tax credit for a taxation year if, at the end of such year, he satisfies the following conditions: he resides in Québec; he is 70 or over; he has been designated by a local community service centre (CLSC) as a person losing its autonomy. To provide older persons with easier access to this tax credit, the condition concerning the designation by a CLSC as being a person losing its autonomy will be withdrawn. Accordingly, the tax credit will be accessible to all persons 70 years of age or over, regardless of their degree of autonomy. 1.1.2 Clarifications concerning home support services The home support services which may, under certain conditions, entitle the taxpayer to the tax credit include, in the category of direct personal services, non-professional assistance services for daily living activities, provided the following requirements are satisfied : the services are considered, according to the assessment by a CLSC of the degree of autonomy of an older person, as essential to his remaining at home; the CLSC is not able or is not required to provide access to them. These requirements will be withdrawn in conjunction with the withdrawal of the eligibility criterion applicable to an older person concerning his designation by a CLSC as being a person losing its autonomy.
- 3 - In addition, under the rules that have been announced, direct personal services will include, apart from non-professional services for daily living activities, non-specialized supervision services in particular. More specifically, to be considered as a non-professional assistance service or a non-specialized supervision service, as the case may be, the service must not be provided by a person who is a practitioner i.e. a person exercising a profession recognized by the Minister of Revenue for the purposes of the tax credit for medical expenses. Accordingly, recognition as a non-professional assistance service or non-specialized supervision service will not be granted if such service is provided in particular by a nurse or a therapist. 1.2 Clarification concerning the sanctions applicable in the event of an employer s failure to satisfy obligations regarding wages paid by means of the service employment paycheque Under Québec s tax legislation, employers are required to withhold, from the wages paid to their employees, the prescribed amount of tax and the contribution to the Québec Pension Plan payable by such employees. Employers are also required to pay various assessments on the wages paid to their employees. These amounts must be remitted to the Minister of Revenue periodically and according to very specific procedures. In addition, a summary of source deductions and employer contributions, and Relevé 1 slips must be produced. Employers are also required to keep records and books of account containing the information needed to establish source withholdings and employer contributions. These records and books of account must generally be held for six years after the last year to which they refer. The tax legislation stipulates various penalties and fines for employers who fail to comply with these obligations. Compliance with these obligations may prove to be relatively complex, especially for individuals who employ a worker from the social economy sector, given that their administrative resources are often limited. Accordingly, to lighten the burden on these employers, the service employment paycheque (SEP) mechanism was implemented in September 1997.
- 4 - Currently, SEP using is restricted to recipients of the direct allowance, a program of the ministère de la Santé et des Services sociaux. However, as of January 1, 2000, the SEP mechanism will also be available to older persons, as part of the application of the refundable tax credit for home support of older persons. The SEP mechanism plays a role similar to a payroll service, with the additional feature that the administrator of the SEP undertakes by contract with the Minister of Revenue to satisfy, regarding the wages paid under this mechanism, the various obligations which should, under Québec s tax legislation and regulations, be assumed by the employers regarding such wages. To recognize this feature, the tax legislation will be changed so that the various penalties and fines stipulated to sanction a failure to comply with the various employer obligations do not apply to an individual, regarding the wages he has paid by means of the SEP mechanism, provided the information he sends to the administrator of the SEP to process such payment is accurate. This change will apply regarding any event generating a penalty or fine and occurring after December 31, 1999. 1.3 Remission of tax payable by a new Canadian all of whose income consists of assistance of last resort The 1997-1998 Budget Speech announced that assistance of last resort benefits included in the calculation of a recipient s income would no longer give rise, as of taxation year 1998, to a corresponding deduction in calculating his taxable income. However, in view of the harmonization that exists between taxation thresholds and transfer programs, it was stipulated, at the time, that recipients whose assistance of last resort was their only source of income for a taxation year would have no income tax to pay for such year. An individual who begins to reside in Canada during a year may, if he satisfies the conditions stipulated by Québec legislation, receive assistance of last resort.
- 5 - The fact that a new Canadian may receive, during the last month of the taxation year during which he begins to reside in Canada, assistance of last resort benefits attributable to the month of January of the following year, together with the fact that most of the personal tax credits to which such individual is entitled for such taxation year must be reduced in proportion to the number of days of presence in Canada, may mean that such new Canadian is required to pay tax in Québec even if the total amount of his income for the year stems from assistance of last resort. To ensure that all recipients for whom assistance of last resort is their only source of income for a taxation year have to pay no income tax for such year, the tax legislation will be changed to stipulate that remission will be made of the tax, interest and penalties payable under the part I of the Taxation Act, for a taxation year, by a person who begins to reside in Canada during such year, if all his taxable income for the year is derived from assistance of last resort. In addition, the tax legislation will be changed to stipulate that a person who receives such a remission for a taxation year will also receive a remission of the contribution to the Fonds de lutte contre la pauvreté par la réinsertion au travail, interest and penalties payable by him under part VII.1 of the Taxation Act for such year. These remissions will be granted for taxation year 1998 and subsequent taxation years, i.e. as of the first taxation year when the reception of assistance of last resort benefits ceased to entitle the taxpayer to a corresponding deduction in calculating taxable income. 1.4 Acquisition by a qualifying trust of labour-sponsored fund shares Under Québec s tax legislation, an individual is entitled, for a taxation year, to a non-refundable tax credit equal to 15% of the amount, up to $5 000, he paid, or which was paid by a qualifying trust regarding the individual, in the year or the sixty days following the end of the year for the purchase, as first purchaser, of qualifying shares issued by the Fonds de solidarité des travailleurs du Québec (FSTQ) or the Fonds de développement de la Confédération des syndicats nationaux pour la coopération et l emploi (Fondaction).
- 6 - For the purposes of this tax credit, the expression qualifying trust regarding an individual means, briefly, a trust governed by a registered retirement savings plan (RRSP) of which the individual or his spouse is the annuitant and whose funds used to purchase qualifying shares stem from premiums paid to the trust by the individual. For taxation years prior to taxation year 1999, this definition was similar to the one applicable for determining the tax credit relating to a labour-sponsored fund granted under the federal tax legislation. On June 17, 1999, the federal tax legislation was changed to stipulate that, retroactively to taxation year 1998, a qualifying trust for an individual in respect of a share means : either a trust governed by an RRSP, under which the individual is the annuitant, that is not a spousal plan in relation to another individual; or a trust governed by an RRSP, under which the individual or his spouse is the annuitant, that is a spousal plan in relation to the individual or his spouse, provided that only the individual may claim the tax credit relative to the share. The changes made by the federal government to the definition of the expression qualifying trust allow an annuitant of an RRSP, which is a spousal plan, to claim the tax credit relating to a labour-sponsored fund regarding the purchase of a share made by the trust governed by his RRSP by means of premiums paid by his spouse, provided the latter does not claim the tax credit regarding the purchase of such share. So that the annuitant of an RRSP, which is a spousal plan, can, following the purchase by the trust governed by his RRSP of a qualifying share of the FSTQ or of Fondaction, have the same opportunity to reduce the tax he must pay to the Québec government, Québec s tax legislation will be changed to incorporate the changes that have been made to the definition of the expression qualifying trust stipulated by the federal legislation. This change will apply as of taxation year 1998.
- 7-1.5 Deductibility of certain payments made to an RRSP In general, a taxpayer must include, in calculating his income for a taxation year, any amount he receives in the year as a benefit from a registered retirement savings plan (RRSP). The home buyers plan (HBP) provides for an exception to this rule by allowing a participating individual to withdraw, free from tax, a maximum of $20 000 from his RRSPs to acquire or build a qualifying dwelling. To prevent any taxation, the amount thus withdrawn, hereunder called the eligible amount, must be repaid over a period of 15 years starting in the second taxation year following that in which it was received. For this purpose, an individual may, for a taxation year, stipulate that the amounts he has paid into an RRSP of which he is the annuitant, during such year or in the 60 days following the end of the year, were repayments of the eligible amount. Such stipulation must be made on a prescribed form which the individual must enclose with his tax return for the taxation year. The amounts thus stipulated do not entitle the individual to a deduction in calculating his income. For the withdrawal of funds from an RRSP to be considered an eligible amount, the annuitant must, in particular, be a first-time home buyer, unless the withdrawal is made by a person having a severe and prolonged mental or physical impairment or on behalf of such a person and that the dwelling is acquired or built to enable such person to live either in a more accessible or better adapted dwelling, or in an environment that is better adapted to his personal needs and the care he requires. Essentially, an individual will be considered as a first-time home buyer if neither he nor his spouse have owned a home in which the individual lived, during the period beginning on the first day of the fourth calendar year preceding that including the date of the withdrawal of funds from the RRSP and which ended on the thirty-first day preceding the date of such withdrawal, hereunder called the five-year reference period.
- 8 - Prior to June 16, 1999, Québec s tax legislation stipulated that the words referring to the spouse of a taxpayer at a given time included the person of the opposite sex who, at such time, cohabited with the taxpayer in a conjugal relationship and either had so cohabited with the taxpayer throughout a period of 12 months ending before that time, or was the mother or father of a child of whom the taxpayer was the father or mother. Since June 16, 1999, the effective date of the Act to amend various legislative provisions concerning de facto spouses, Québec s tax legislation also stipulates that the words referring to the spouse of a taxpayer at a given time include, under the same conditions, a person of the same sex. Accordingly, regarding amounts withdrawn from an RRSP after June 15, 1999, an individual may no longer be considered a first-time home buyer if his de facto spouse of the same sex owned a dwelling as owner-occupant, during the five-year reference period, which was a dwelling which the individual occupied during the de facto union. Consequently, in all cases in which the annuitant of an RRSP must satisfy this condition to participate in the HBP, the amounts withdrawn from his RRSP to acquire a dwelling must, for the purposes of Québec s tax legislation, be included in calculating his income, for the taxation year of their withdrawal. However, in view of the fact that the federal government has not amended its legislation to recognize de facto unions regardless of the sex of the persons, the amounts withdrawn from an RRSP after June 15, 1999 will, in such cases, be considered as an eligible amount for the purpose of the federal tax legislation, provided all the other conditions are satisfied. Considering that the amount a resident of Québec may deduct in calculating his income as premiums paid to an RRSP is equal to the amount deducted as such for the purposes of the federal tax legislation, and that the amounts repaid under the HBP do not constitute a deductible premium for such purposes, the amounts thus repaid will, when withdrawn, be again considered as a taxable benefit under Québec legislation.
- 9 - To prevent double taxation of the same amount, Québec s tax legislation will be amended to stipulate that an individual may deduct, in calculating his income, for a given taxation year, the amounts which, in accordance with the federal tax legislation, have been designated, for the year, as a repayment of an eligible amount received under the HBP, provided the latter amount was included in calculating his income from benefits from an RRSP, for the taxation year of its reception, under Québec legislation. More specifically, an individual may elect the simplified tax system without having to forego deducting such amounts in calculating his income. These changes will apply as of taxation year 1999. 2. MEASURES CONCERNING BUSINESSES 2.1 Tax measures relating to the knowledge-based economy Québec s tax legislation includes a set of measures that favour companies which carry out scientific research and experimental development (R&D) activities and other forms of innovation in activity sectors identified with the knowledge-based economy. This applies, among others, to the measures relating to R&D, information technology development centres (CDTI), the Cité du multimédia, the Centre national des nouvelles technologies de Québec (CNNTQ), new economy centres (CNE) and to the production of multimedia titles. In the field of the measures relating to R&D, two more eligible public research centres will be recognized. In regard of the knowledge-based economy, among other things, the space floor of the Québec CDTI will be increased and a second building will be designated as CDTI in the Hull region.
- 10-2.1.1 Scientific research and experimental development Recognition of new eligible public research centres A tax incentive, in the form of a refundable tax credit or a superdeduction, is currently allowed to a taxpayer, regarding R&D activities carried out by an eligible public research centre, under an eligible university research contract concluded with such a centre. The Laboratoire de recherche en diversification énergétique de Varennes (LRDE) and the Defence Research Establishment Valcartier (DREV) will be recognized as eligible public research centres. Such recognition will apply regarding R&D carried out after the date of publication of this Information Bulletin, under an eligible university research contract concluded after such date. 2.1.2 Information technology development centres The measures relating to CDTIs were introduced in the March 25, 1997 Budget Speech. Briefly, these measures are designed to support corporations which undertake to carry out, within designated buildings, innovative projects in the new information and communications technology field. Hull CDTI Currently, the Hull CDTI is a building located at 490 boulevard St-Joseph with 4 645 square metres of floor space. A second building will receive CDTI designation in Hull. It is the building located at 200 rue Montcalm, on land designated by lot numbers 1 287 482, 1 288 530 and 1 287 720 of the Québec cadastre of the Hull registration division, including the expansions that will be added on these lots. The floor space allocated according to this new designation amounts to 9 300 square metres.
- 11 - Québec CDTI The Québec CDTI is currently located at 390 rue Saint-Vallier Est, on land designated by lot number 5 274 of the cadastre of Québec City, Jacques-Cartier district, Québec City registration division. The building is located within the perimeter of the CNNTQ. It was announced in the March 9, 1999 Budget Speech that the current designation of the Québec CDTI would be replaced by a general designation of premises, not exceeding a total floor space of 7 500 square metres, that may be located in any designated premises of the CNNTQ. However, this general designation does not take effect until the day when all the space of the Québec CDTI is leased to corporations eligible for the CDTI, CNNTQ, or CNE program. The floor space of the Québec CDTI will be increased by 3 200 square metres, bringing the total floor space of the Québec CDTI to 10 700 square metres. The additional space will be located in the building at 390 rue Saint-Vallier Est or in expansions to this building on the land designated by lot number 5 274 of the cadastre of Québec City, Jacques-Cartier district, Québec City registration division. Because of the additional designation, the general designation of premises indicated above will be of a total space floor of 10 700 square metres and will only take effect on the day when all the space of the Québec CDTI, is leased to corporations eligible for the CDTI, CNNTQ or CNE program. 2.1.3 Centre national des nouvelles technologies de Québec and Carrefour de la nouvelle économie of the Québec region The measures relating to the CNNTQ and the CNEs were introduced in the March 9, 1999 Budget Speech. Briefly, eligible corporations which move into designated premises of the CNNTQ or into a designated building of a CNE may claim a refundable tax credit on the salaries of their employees. The CNE of the Québec region is currently located in the Québec CDTI, which is at 390 rue Saint-Vallier Est, within the perimeter of the CNNTQ.
- 12 - Although all the space of the Québec CDTI has yet to be leased, the space currently available for corporations that want to carry out activities eligible for the tax assistance applicable to CNEs is limited. To enable more corporations to benefit from the tax assistance applicable to CNEs, additional space of 7 500 square metres will be available for corporations that want to carry out activities eligible for the tax assistance applicable to CNEs. This additional space will be located within the perimeter of the CNNTQ and drawn from the space currently allocated to the CNNTQ. Accordingly, a portion of the space currently stipulated for the CNNTQ, i.e. 7 500 square metres, may also be used for corporations that want to carry out activities eligible for the tax assistance applicable to CNEs. More specifically, this change does not increase the space allocated to the Québec CDTI. Corporations that want to carry out an innovative project and thus benefit from the tax assistance applicable to CDTIs will be required to move into the space specifically allocated to the Québec CDTI. 2.2 Refundable tax credits for the production of sound recordings and for musical productions In the March 9, 1999, Budget Speech, refundable tax credits were introduced for the production of sound recordings and for musical productions to support the activities of corporations operating in the recording and entertainment fields. Subject to certain special rules, the application details of these two tax credits are similar to those of the refundable tax credit for film and television productions. According to these application details, eligible labour expenditures cover in particular amounts paid to a sub-contractor.
- 13 - More specifically, the portion of remuneration, other than a wage or salary, which the corporation incurred during the year, which is directly attributable either to the production of a sound recording, in relation to the stages of the production of such recording running from the design to the completion of the master tape, including jacket design, or the production of a musical production, in relation to the stages running from the pre-production of the production to its performance before an audience, for a period of three full years beginning on the day of its first performance before an audience, and which the corporation paid during the year or the 60 days following the end of the year, is eligible as a labour expenditure if it is paid to a sub-contractor, provided such portion of the remuneration is attributable, among other things, to the wages of eligible employees of the sub-contractor who provided services in Quebec as part of the production of the eligible sound recording or the eligible performance. Current practices in the recording and entertainment industries, concerning artists subject to the Act respecting the professional status and conditions of engagement of performing, recording and film artists, are such that work entrusted to a sub-contractor is not necessarily carried out by the sub-contractor or its employees, but may, under certain circumstances, be sub-contracted a second time. Consequently, according to the terms and conditions applicable to the new refundable tax credits for the production of sound recordings and musical productions, the portion of remuneration associated with the delivery of services supplied by a second subcontractor does not constitute an eligible labour expenditure for the purposes of these tax credits. To reflect the conditions of engagement of artists in the recording and performing industry, the tax legislation will be changed so that the portion of remuneration associated with the delivery of services supplied by a second sub-contractor constitutes an eligible labour expenditure, when such second sub-contractor is an artist subject to the Act respecting the professional status and conditions of engagement of performing, recording and film artists who has supplied services in Québec as part of the production of the eligible sound recording or the eligible performance. These changes will apply regarding labour expenditures incurred after March 9, 1999.
- 14-2.3 Stock savings plan In general, the stock savings plan (SSP) is a plan that allows an individual to deduct, in calculating his taxable income for a taxation year, the cost of shares he acquired under the plan no later than December 31 of the year. The main objective of the plan is to improve the capitalization of Québec businesses. An eligible corporation which issues shares under the SSP is required to take the necessary measures for these shares to be listed on the Montréal Stock Exchange no later than the 60 th day following the date of the receipt of the final prospectus (or prospectus exemption) relating to their issue. In addition, special rules relating to the definition of an eligible corporation or an eligible share of an eligible corporation require that a class of shares of its capital stock be listed on the Montréal Stock Exchange or, more generally, that the common shares of its capital stock be registered with a stock exchange in Québec. To reflect the proposed restructuring of Canadian stock exchanges, changes will be made to the rules of the SSP requiring the listing of shares on the Montréal Stock Exchange or exchange registering in Québec. These requirements will be replaced by requirements to the effect that the shares must be listed on a stock exchange in Canada, recognized by the tax legislation for the purposes of the notion of a public corporation. This change will apply as of the date of publication of this Information Bulletin. 2.4 Québec Business Investment Companies The Québec Business Investment Company (QBIC) program, which is under the responsibility of Investissement-Québec, is designed to allow small and medium-size Québec corporations to have access to external sources of financing to provide permanent capitalization and secure their long-term development.
- 15 - In general, a QBIC is a private corporation whose activities consist mainly in acquiring and holding shares of the capital stock of small or medium-size private corporations operating in eligible activity sectors. When a QBIC makes an investment in an eligible corporation, the individuals who are shareholders of the QBIC can claim a deduction equal to 150% of the cost of the shares they have acquired. According to the regulations relating to QBICs, a QBIC must hold its investment for a minimum of 24 months. To facilitate the financing of a corporation in which a QBIC makes an eligible investment, this regulation will be changed to grant Investissement-Québec discretionary power to agree to the QBIC s carrying out a merger with the eligible corporation before the expiration of the 24-month period, provided more than twelve months have elapsed since the acquisition of such an investment in the eligible corporation. Changes will be made to the Taxation Act so that the shares of the capital stock of the eligible corporation, or any other shares substituted for them or which replace them because of a merger, may not be part of a public offering under the SSP, during the non elapsed part of the 24-month period described previously, and that the penalty stipulated for an investment which is not held by a QBIC for a minimum of 24 months does not apply in this case. These changes will apply as of the date of publication of this Information Bulletin. 2.5 Cooperative Investment Plan The Cooperative Investment Plan (CIP) is designed to encourage the growth of cooperatives by granting a tax benefit to members and workers who acquire preferred units issued by an eligible cooperative. The rates of deduction range from 100% to 150%, depending on the size of the cooperative and whether or not it has set up a workers investment program. Currently, for a cooperative to be eligible for the CIP, it must in particular be governed by the Cooperatives Act, which is the legislation in Québec stipulating the constitution and operation of cooperatives.
- 16 - To reflect the changes in the structures of the cooperative movement, the CIP will be changed so that a cooperative is eligible for this plan even if it is constituted under the recently adopted federal legislation on cooperatives, provided its central management is in Québec or that more than half the salaries paid to its employees, during its fiscal period ended in the calendar year preceding that in which the preferred units are issued under the CIP, were paid to employees of an establishment situated in Québec. For the purposes of this new rule, definitions similar to those stipulated for the purposes of the stock savings plan, in particular concerning the notions of salaries paid to its employees and establishment, will be incorporated into the CIP, with the necessary adaptations. This new rule will apply as of the date of publication of this Information Bulletin. 2.6 Rate of interest applicable to refunds due by the ministère du Revenu Currently, the rate of interest payable on refunds due by the ministère du Revenu corresponds, for each quarter of a calendar year, to the rate of interest on Québec Savings Bonds (QSBs) published in the Gazette officielle du Québec and in effect on the first day of the third month of the preceding quarter. Since the creation of Placements Québec, the rate of interest applicable to QSBs, more specifically regarding issues of QSBs since June 1, 1997, is not set by order-in-council but rather by a ministerial decision which is not published in the Gazette officielle du Québec. Also, there may be more than one issue of QSBs during the year, as was the case in 1998. In this context, the Regulation respecting fiscal administration will be changed so that the interest rate applicable to refunds due by the ministère du Revenu corresponds, for each quarter of a calendar year, to the interest rate in effect on the first day of the third month of the preceding quarter in relation to the most recent QSB issue. This change will apply to refunds due by the ministère du Revenu as of January 1, 2000. The interest rate for the quarter beginning on that date will accordingly be the rate in effect on December 1, 1999 in relation to the most recent QSB issue relative to the latter date.
- 17-3. HARMONIZATION MEASURES WITH THE GOODS AND SERVICES TAX AND THE HARMONIZED SALES TAX On August 12, 1999, the Minister of Finance of Canada proposed, in a news release (99-072), changes to the Excise Tax Act to improve the operation and fairness of the goods and services tax (GST) and the harmonized sales tax (HST) in the areas of passenger transportation services and multi-employer pension plans. At the same time, he also proposed adding certain organizations to the Federal Book Rebate (GST/HST) Regulations. On October 8, 1999, the Secretary of State for International Financial Institutions, on behalf of the Minister of Finance of Canada, made public, in a news release (99-086), a change regarding the effective date of measures relating to the passenger transportation sector proposed on August 12, 1999, a proposed change relating to the application of the GST and the HST to prescription eyeglasses and contact lenses, as well as the addition of certain organizations to the Federal Book Rebate (GST/HST) Regulations and the Artists' Representatives (GST/HST) Regulations. In accordance with the principle of substantial harmonization of the Québec sales tax (QST) and the GST systems, subject to the specific Québec features and taking the provincial context into account, Québec s tax system will be changed to incorporate, with adaptations based on their general principles, the federal legislative and regulatory measures relating to passenger transportation services, prescription eyeglasses and contract lenses, and artists representatives. However, the regulatory measure concerning the federal rebate on books will not be adopted, because the QST system is satisfactory in this regard. The federal legislative measure regarding multi-employer pension plans is currently being studied by the ministère des Finances du Québec and a decision on harmonization in this regard will be announced at a later date. The harmonization measures that have been retained will be adopted only after the approval of any federal law or adoption of any federal regulation arising from News Releases 99-072 and 99-086, taking into account any technical changes that may be made before their approval or adoption. They will apply on the same dates as those stipulated in the federal tax system.