Tax credit for retaining experienced workers
QC, Canada
The "Tax Credit for Retaining Experienced Workers" incentivizes employers to maintain employment for older workers, thus ensuring workforce stability.
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- grant_single|timelineUnspecified
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Tax Credits
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- Revenu Québec
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The "Tax Credit for Retaining Experienced Workers" is designed to encourage companies to retain experienced workers aged 60 or older by offering tax credits for employer contributions. Eligible activities include paying employer contributions related to the salaries or wages of these targeted employees, provided the company meets specific payroll and operational criteria.
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This grant supports a company's expenditures for maintaining employment of experienced workers aged 60 and above. Eligible activities include the employer’s contributions related to salaries or wages paid during the specified period.
- Employer contributions for employees aged 65 or older as of January 1st of the applicable year.
- Employer contributions for employees aged between 60 and 64 as of January 1st of the applicable year.
grant_single_labels|admissibility
This grant is available to eligible corporations in Quebec that meet specific conditions regarding payroll and the employment of experienced workers.
- The corporation must have an establishment in Quebec and operate a business there.
- The corporation's total payroll must be less than the applicable payroll threshold for the given year.
- The corporation's previous year's paid-up capital, including that of associated companies, must be less than $15 million if requesting for the year before December 31, 2022.
- The corporation must have more than 5,000 paid hours in the taxation year, unless it is in the primary or manufacturing sector.
- The corporation must not be exempt from tax for the fiscal year concerned.
- The corporation must not be a Crown corporation or wholly controlled subsidiary.
- If the corporation is associated with other eligible corporations, they must agree on the allocation of expenses and file form CO-1029.8.33.TF.
- If the corporation is a member of an eligible partnership, it can claim the credit for its share of eligible expenses incurred by the partnership.
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To be eligible for the Credit for Promoting the Retention of Experienced Workers, a company must have an establishment in Quebec and operate a business there. Additionally, it must meet specific criteria related to its capital and the number of hours worked by employees.
- Must have an establishment in Quebec and operate a business
- Capital of less than $15 million if the credit is claimed for a tax year ending before December 31, 2022
- Number of paid hours for employees must exceed 5,000 unless it is in the primary or manufacturing sector
- Not exempt from tax for the tax year in question
- Not a Crown corporation or a wholly-owned subsidiary of such a corporation
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The following types of companies are not eligible for the credit favoring the retention of experienced workers:
- Companies exempt from tax for the targeted taxation year
- Crown corporations or subsidiaries wholly controlled by such corporations
grant_eligibility_criteria|eligible_expenses
The eligible expenses for the credit include employer contributions for employees aged 60 and above. These expenses must relate to their remuneration during the fiscal year.
- Employer contributions for employees aged 60 to 64.
- Employer contributions for employees aged 65 and above.
- Expenses must relate to remuneration in the relevant fiscal year.
grant_eligibility_criteria|zone
The eligible geographic zone for this grant is Quebec. The grant aims to support companies operating within this specific region.
- Quebec
grant_single_labels|criteria
There are specific conditions and criteria that must be met for a society to be eligible for the Crédit d'impôt favorisant le maintien en emploi des travailleurs d'expérience, but no distinct evaluation and selection criteria have been mentioned.
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- Step 1: Determine Eligibility
- Ensure the society has an establishment and operates an enterprise in Quebec.
- Verify that the society is not tax-exempt and is not a Crown corporation or wholly controlled by one.
- If the fiscal year ends before December 31, 2022, ensure that the society's capital is under $15 million and it has more than 5,000 paid hours.
- Step 2: Collect Information on Employees
- Identify employees who are eligible (65 years or older by January 1 of the relevant year) and determined (60-64 years by January 1 of the relevant year).
- Ensure these employees do not fall under the definition of excluded employees.
- Step 3: Calculate Eligible Expenses
- Calculate the total employer contributions paid for eligible and determined employees for the relevant calendar year.
- Compute the expense using the lesser of the actual contributions or the capped amounts divided by the relevant credit rates.
- Step 4: Calculate the Credit Rates
- Use the formula provided to calculate the rate for eligible (75% adjusted) and determined (50% adjusted) employees.
- Determine the lower limit for the total payroll compared to the applicable threshold for that year.
- Step 5: Complete the Credit Application Form
- Fill out the form "Crédit d'impôt favorisant le maintien en emploi des travailleurs d'expérience (CO-1029.8.33.TE)" to calculate and report the credit.
- If applicable, complete the supplementary form for associated societies "Entente concernant le crédit d'impôt favorisant le maintien en emploi des travailleurs d'expérience (CO-1029.8.33.TF)" to agree on the allocation of credit.
- Step 6: Submit the Application
- Submit the completed application form(s) as part of the society's tax filing for the fiscal year in question.
- Ensure all documentation and calculations are accurate and retain copies for future reference or audits.
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A society eligible for the tax credit must have an establishment in Quebec and operate a business there. The credit excludes employer contributions for salaries paid after December 31, 2022.
- The society must not be exempt from tax for the relevant tax year.
- The society must not be a crown corporation or a wholly controlled subsidiary of such a corporation.
- Societies must agree on the distribution method for the admissible or determined expense relative to an eligible employee if they were associated at the end of the relevant calendar year.
- Members of partnerships can also apply for their share of eligible and determined expenses incurred by the partnership towards employees aged 60 or above.
Apply to this program
Crédit d'impôt favorisant le maintien en emploi des travailleurs d'exp érience
The Crédit d'impôt favorisant le maintien en emploi des travailleurs d'expérience is a tax credit designed to support Quebec-based companies in retaining experienced employees aged 60 and over. To be eligible, a company's total payroll must be below the specified annual threshold, and it must have paid employer contributions on salaries to employees within the stipulated age range.
Comprehensive Guide to the Crédit d'impôt favorisant le maintien en emploi des travailleurs d'expérience
The Crédit d'impôt favorisant le maintien en emploi des travailleurs d'expérience is an incentive introduced by the Quebec government to address workforce challenges and encourage the retention of experienced employees. This guide provides a detailed explanation of the credit, eligibility criteria, application process, and examples of its financial benefits. By fully understanding this credit, companies can optimize their tax planning and contribute to their long-term talent retention strategies.
Eligibility Criteria
To benefit from this tax credit, companies must meet specific eligibility requirements:
- Establishment in Quebec: The company must have an operational establishment in Quebec and conduct business activities there.
- Age of Employees: The credit targets employees who are aged 60 and over as of January 1 of the relevant calendar year. These employees are classified as either "admissible" (65 years or older) or "determined" (between 60 and 64 years).
- Non-exclusion of Employees: The employees must not be classified as "excluded" under specific conditions outlined by the tax code.
- Payroll Threshold: The company's total payroll must be less than the annual threshold set by the Quebec government’s Fonds des services de santé (FSS). For example, in 2023, the threshold was set at 7.2 million CAD.
- Employer Contributions: The company must have paid employer contributions for the salaries or other remunerations of the eligible employees during the specified calendar year.
- Non-exemption from Tax: The company must not be exempt from tax for the fiscal year and should not be a Crown corporation or a wholly-owned subsidiary of such a corporation.
Calculating the Credit
The calculation of the tax credit involves several steps:
Rate of Credit
The tax credit rate depends on whether the employee falls under the "admissible" or "determined" category:
- Admissible Employees (65 years and older): The base rate for these employees is 75%. The rate is adjusted based on the company's payroll using the formula:
Taux admissible = 75% - [75% x (A - 1,000,000) / (B - 1,000,000)]
Where A is the lower of the company's total payroll and the threshold, and B is the payroll threshold.
- Determined Employees (60-64 years): The base rate for these employees is 50%. The rate is adjusted using the formula:
Taux déterminé = 50% - [50% x (A - 1,000,000) / (B - 1,000,000)]
Where A and B follow the same definitions as above.
Dépense Admissible and Dépense Déterminée
Once the rates are established, the company needs to calculate the admissible and determined expenses:
- Dépense Admissible: For employees aged 65 and over, the eligible expense is the lesser of the employer’s contributions paid for the salary during the calendar year, or 1,875 CAD divided by the admissible rate.
- Dépense Déterminée: For employees aged between 60 and 64, the eligible expense is the lesser of the employer’s contributions paid for the salary during the calendar year, or 1,250 CAD divided by the determined rate.
Calculation Example
Consider the following example to illustrate the calculation:
Let’s assume ABC Inc. is a qualifying company with a payroll of 6 million CAD in 2023. ABC Inc. employs Denis, aged 66, and Luce, aged 62.
Scenario A (1 million CAD payroll):
Denis (65+): Admissible Rate: 75%
Employer Contributions: 3,500 CAD
Eligible Expense: Lesser of 3,500 CAD or (1,875 CAD / 75%) = 2,500 CAD
Tax Credit: 2,500 CAD * 75% = 1,875 CAD
Luce (60-64): Determined Rate: 50%
Employer Contributions: 3,000 CAD
Eligible Expense: Lesser of 3,000 CAD or (1,250 CAD / 50%) = 2,500 CAD
Tax Credit: 2,500 CAD * 50% = 1,250 CAD
Total Tax Credit: 1,875 CAD (Denis) + 1,250 CAD (Luce) = 3,125 CAD
Scenario B (6 million CAD payroll):
Denis (65+): Admissible Rate: 12.5%
Employer Contributions: 3,500 CAD
Eligible Expense: Lesser of 3,500 CAD or (1,875 CAD / 12.5%) = 3,500 CAD
Tax Credit: 3,500 CAD * 12.5% = 437.50 CAD
Luce (60-64): Determined Rate: 8.33%
Employer Contributions: 3,000 CAD
Eligible Expense: Lesser of 3,000 CAD or (1,250 CAD / 8.33%) = 3,000 CAD
Tax Credit: 3,000 CAD * 8.33% = 249.90 CAD
Total Tax Credit: 437.50 CAD (Denis) + 249.90 CAD (Luce) = 687.40 CAD
Application Process
The process for claiming this tax credit involves several steps:
- The company must ensure it meets all eligibility criteria and accurately calculate its relevant payroll.
- Prepare detailed records of employer contributions paid for eligible employees.
- Complete the CO-1029.8.33.TE form to claim the tax credit. If the company was part of a partnership, fill in the relevant section of this form regarding the partnership’s eligible expenses.
- If the company is associated with other eligible companies, ensure a mutual agreement on the division of the expenses and fill out the CO-1029.8.33.TF form.
- Submit the completed forms and any required documentation to Revenu Québec by the deadline.
It is crucial to keep rigorous records as documentation may be required for audits or verifications by Revenu Québec. Leveraging the expertise of tax advisors or professionals specializing in Quebec’s tax credits can also be beneficial in ensuring the correct application and maximizing the benefits.
Benefits of the Credit
The main advantages of the Crédit d'impôt favorisant le maintien en emploi des travailleurs d'expérience include:
- Financial Savings: The tax credit can significantly reduce a company’s tax liability, effectively lowering operating costs.
- Retention of Experienced Talent: By providing financial incentives, companies are encouraged to retain employees who bring valuable experience and knowledge to the workforce.
- Social Responsibility: Supporting the employment of older workers contributes positively to societal stability and the well-being of a demographic group that might otherwise face employment challenges.
- Enhanced Productivity: Retaining skilled and experienced workers can lead to higher productivity levels and better overall performance for the company.
Conclusion
The Crédit d'impôt favorisant le maintien en emploi des travailleurs d'expérience is a valuable tool for Quebec-based companies aiming to retain experienced employees aged 60 and above. By understanding the eligibility criteria, calculation methods, and application process, companies can effectively leverage this tax credit to reduce their costs and retain critical talent. Consistent record-keeping and expert advice can further ensure that companies maximize the benefits of this tax credit, contributing to their long-term success and stability in the competitive business environment.