Workers nearing retirement in Quebec will face financial difficulties as the government raises the minimum age for the career extension tax credit to 65, resulting in an annual loss of around $1,000 for many. The tax credit, which previously offered up to $1,540 in deductions for those aged 60 to 64, has been eliminated, while benefits for those 65 and older will see a slight increase. These changes are part of efforts to address an $11 billion budget deficit and reflect a trend toward later retirement in the province.
Workers approaching retirement age in Quebec are set to face significant financial challenges as the government shifts its focus towards achieving budgetary balance. The province has increased the minimum age for the career extension tax credit to 65, which translates into an annual loss of approximately $1,000 for many individuals.
During the economic update on Thursday, Finance Minister Éric Girard announced the discontinuation of this incentive designed to encourage employment among those aged 60 to 65.
Introduced in 2012, the tax credit allowed eligible workers to claim up to $1,540 in deductions, with an average benefit of $973 for nearly 195,000 taxpayers. However, those aged 65 and older will now see a modest increase in their benefits by $210.
Justification for Changes
The Legault government defends these revisions by citing a trend towards later retirement among Quebecers. The average retirement age has risen from 61.3 years in 2011 to 64.7 years today.
However, there are new penalties for higher-income employees due to changes in the calculation method. From now on, all sources of income, not just salaries, will be factored into this assessment.
Despite these changes, Minister Girard remains optimistic that the removal of this tax incentive will not exacerbate the current labor shortage. He argues that the credit was not a critical factor for many individuals when deciding to remain in the workforce.
Budget Revisions and Future Planning
The elimination of the tax credit is part of a broader strategy that involves a thorough review of 277 tax expenditures aimed at addressing the provincial budget’s $11 billion deficit.
Minister Girard claims that the public expects a re-evaluation of financial measures to eliminate those that are no longer warranted. Last spring, the government also cut tax credits for sectors like video games, information technology, and special effects, originally established during a time of high unemployment.
As for the budget deficit, it remains significant, but new revenue streams are anticipated, particularly from the recent alignment with Ottawa on capital gains tax for individuals exceeding $250,000, which is projected to yield an additional $972 million this year.
Nonetheless, caution is advised, as forecasts from the C.D. Howe Institute suggest that the actual revenue may fall short of the government’s projections.
The Finance Minister is preparing for more challenging decisions in the upcoming spring budget presentation, assuring that the government is not resorting to austerity measures and acknowledging the need for ministries to adhere to their budget limits after previous prosperous years.
- Listen to Benoit Dutrizac discuss this issue in podcast format on the QUB platform, also aired on 99.5 FM:
Potential Loss of Tax Credits
If you are between the ages of 60 and 64 and still active in the workforce, you will no longer qualify for a tax credit of up to $1,400 annually.
Additionally, workers aged 65 and over with higher retirement income will also be ineligible. Previously, the tax credit began to decrease for those earning above $42,090; now it will reduce when total income—comprising salary, retirement pensions, investments, and more—exceeds $56,500.
This measure is expected to reduce tax assistance by an average of $973 for nearly 195,000 individuals in Quebec. Conversely, the maximum assistance for those who still qualify will increase by $210, from $1,540 to $1,750.
- Listen to Benoit Dutrizac discuss this issue in podcast format on the QUB platform, also aired on 99.5 FM:
Additional Measures Announced
The government has also allocated $879 million over the next four years to support public transportation systems.
An additional $251 million will be provided this year to aid disaster victims and assist in rebuilding efforts following Hurricane Debby.
Furthermore, $182 million over four years, including $92 million from the federal government, will be directed towards accelerating housing construction.