Bill 99 implements a broad set of fiscal changes announced in Québec’s 2024 update and the 2025 budget. It amends Québec’s Taxation Act, Tax Administration Act, Québec sales tax rules, the Act respecting the Régie de l’assurance maladie du Québec and related regulations to: add provincial versions of recent federal anti‑base‑erosion measures (limits on interest and financing expense, hybrid‑mismatch rules, reporting duties); change tax treatment for short‑term rental income and unregistered tourist accommodation; extend or phase out several sectoral tax credits and qualification windows; and adjust other revenue measures such as QST treatment of counselling/psychotherapy and the insurance‑premium tax rate.
For tax directors, corporate treasurers, family‑business owners and regulated service providers the bill is material because it shifts deductibility rules for cross‑border financing, creates new filing and disclosure obligations, restricts deductions for unregistered short‑term rentals, accelerates capital cost allowances for certain CCUS assets and changes consumption tax treatment of mental‑health services. Many provisions also harmonize Québec law with federal amendments, producing retroactive application windows and new compliance touchpoints for fiscal years beginning after 30 September 2023 and several specific effective dates.
At a Glance
What It Does
The bill inserts a Québec version of the federal interest and financing expense limitation (Division X.1.1), enacts hybrid‑mismatch denial rules and related reporting, requires electronic payment of large QST remittances, limits deductions for unregistered tourist accommodation via a pro‑rata formula, and adds new capital‑cost classes for CCUS projects (including one with 100% CCA). It also exempts counselling therapy and psychotherapy services from QST and raises exemption thresholds used to calculate RAMQ prescription‑drug plan premiums.
Who It Affects
Multinationals and any Québec taxpayer with significant interest or financing expenses; owners of tourist accommodation (short‑term rental hosts) and lodging operators; CCUS project developers and energy companies; mental‑health practitioners who bill individuals; insurers (through a higher premium tax rate); accountants and tax compliance teams (new returns and forms).
Why It Matters
The bill closes gaps that previously allowed tax base erosion while bringing Québec law closer to federal anti‑avoidance measures — that alters cross‑border financing economics and increases reporting. At the same time it targets specific sectors (tourism, mental health, CCUS) with rules that change effective tax costs and allowable deductions, so finance teams must reassess tax positions and filing processes.
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What This Bill Actually Does
Bill 99 is a package law: part alignment with federal 2023–24 anti‑avoidance reforms, part sectoral and administrative changes. The largest structural change is a provincial parallel to the federal limitation on interest and financing expenses.
Québec now denies a portion of interest and related financing deductions to non‑excluded taxpayers, defines “restricted interest and financing expense,” and requires taxpayers affected by the rule to attach a prescribed information form to their Québec fiscal return. The restriction uses the federal style of calculation and explicitly applies to taxation years beginning after 30 September 2023 (with bridging rules for certain short taxation years).
Closely related are new hybrid‑mismatch provisions: Québec denies deductions for payments that would be matched with non‑inclusion outcomes abroad, and it instructs ministers and taxpayers to exchange and file supporting documents where federal law requires disclosure. The bill creates assessment and reassessment rights tied to those elections and reporting duties — in short, expect both an extra compliance checklist and more reasons for Québec to re‑open past tax years where federal elections or assessments occurred.For the accommodation economy, the bill inserts a mechanical rule that limits deduction of expenses for a residential property used as a tourist accommodation unless the property is registered.
Deductions are limited to A × B/C (A = deductible amounts absent the rule; B = days the property was registered under the Tourist Accommodation Act; C = days the property was a tourist accommodation). The rule applies to outlays after 31 December 2023 but temporarily exempts eligible 2024 outlays where the property is registered by 31 December 2024.
That creates a clear compliance path for hosts who register but removes full deduction for unregistered short‑term rentals.Two sectoral moves are immediate and operational. Québec exempts counselling therapy and psychotherapy services from QST (effective 20 June 2024), changing the consumption‑tax burden on clients and the remittance treatment for clinicians.
Separately, the Regulation respecting the Taxation Act adds new capital‑cost classes (57–60) aimed at CCUS projects: these classes carve out capture, transport, storage, geological characterization and monitoring assets and assign accelerated CCA rates — notably Class 59 is set at 100% — for property acquired after 31 December 2021. That creates powerful upfront tax relief for CCUS capital investment.Finally, the bill tightens administrative rules: it requires electronic payment for remittances (QST payors with amounts ≥ $10,000 must pay electronically unless they can’t reasonably), raises certain RAMQ premium exemption thresholds (affecting the calculation of drug insurance premiums), and sets hard application cut‑offs (mostly 25–26 March 2025) for several sectoral qualification certificates and tax credits, effectively closing windows for some incentives.
Those cut‑offs will matter to any employer or issuer who has relied on those tax measures but has not yet applied.
The Five Things You Need to Know
The Tax Administration Act requires electronic payment for Québec sales tax remittances of $10,000 or more; that rule applies to amounts paid or remitted after 31 December 2023.
Division X.1.1 (new sections starting at 158.15.1) denies a portion of interest and financing expense deductions to non‑excluded taxpayers and requires affected taxpayers to file a prescribed information form with their fiscal return for years beginning after 30 September 2023.
Section 421.11 limits deductions for residential tourist accommodation to A × B/C (A = total deductible amounts, B = days the property is registered, C = days it was a tourist accommodation); outlays after 31 December 2023 are covered but an exception preserves 2024 outlays if the property is registered by 31 December 2024.
The Regulation adds CCA Classes 57–60 for CCUS projects; Class 59 is a 100% CCA class for certain incorporeal property tied to geological characterization and storage, applying to property acquired after 31 December 2021.
The bill exempts counselling therapy and psychotherapy services from QST (revising the definition of ‘practitioner’ and the exemption list); that exemption takes effect 20 June 2024.
Section-by-Section Breakdown
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Electronic payment requirement for larger QST remittances
The Act now requires persons who must remit amounts under the Québec sales tax (except Title IV) to make payments electronically when the amount is $10,000 or more, unless they cannot reasonably pay electronically. The provision is retroactive for remittances after 31 December 2023. Practically, this forces larger vendors and withholding agents to review their treasury systems, cut automated remittance rails for QST, and document any ‘reasonable inability’ to pay electronically to avoid procedural non‑compliance.
Québec version of the excessive interest and financing‑expense limit
This division imports the core mechanics of the federal interest‑limitation regime: it defines excluded entities, excluded interest, and sets out which interest and finance‑related amounts are restricted. The rule denies a proportion of otherwise deductible interest/financing expenses to taxpayers that are not excluded entities; the denial is calculated by reference to the federal proportional formula and taxpayers must disclose prescribed information (the new section 158.15.5). The division also contains carry‑forward, deemed‑deduction and assessment rules so that non‑deducted amounts can be treated for other Québec tax profiles. Tax departments must now trace financing expenses across partnerships and apply the formula to allocate denials — a non‑trivial bookkeeping and tax modelling task.
Hybrid‑mismatch denial and disclosure
Québec denies deductions for payments that create deduction/non‑inclusion mismatches — effectively mirroring subsection 18.4-type federal controls. The bill limits Québec deductions to the extent the payment would not be deductible under federal anti‑hybrid rules, instructs the tax administration to apply domestic tax consequences to eliminate mismatches, and requires taxpayers to file copies of documents they provided to the Canada Revenue Agency. This ties provincial compliance to federal reporting and increases the cross‑jurisdictional evidentiary record required with Québec returns.
Rules to relax intergenerational share transfers subject to conditions
The bill creates a detailed framework that allows certain transfers of qualified small business/family‑farm shares to children (expanded to include nieces and nephews and spouses of nieces/nephews) to be treated as arm’s‑length dispositions for Québec tax purposes provided strict conditions are met: control by children post‑transfer, active engagement tests, management transfer windows (36 or 60 months depending on the provision), and joint elections under federal s.84.1. The package also contains deemed‑arm’s‑length rules for specified dispositions and special look‑through rules for partnerships. Family businesses gain a clearer set of Québec rules that track federal elections, but compliance requires coordinated elections, timing and documentation.
Pro‑rata deduction for residential tourist accommodation
Québec inserts a bright‑line mechanical test that limits deductible outlays for a residential tourist accommodation to the ratio of days the property was properly registered to total days it functioned as a tourist accommodation. The consequence: hosts who operate without registration can deduct only the portion of their operating expenses attributable to registered days. The provision contains a transitional carve‑out for 2024 where registration is completed by 31 December 2024, but otherwise applies to outlays or expenses incurred after 31 December 2023. Compliance hinges on recordkeeping of registration dates and day counts.
Counselling and psychotherapy exempt; insurer premium tax rate adjusted
The definition of ‘practitioner’ and the exemption schedule were amended to add counselling therapy and psychotherapy to the list of exempt health services (effective 20 June 2024). Separately, Québec adjusts the tax base and the insurance‑premium tax rate formula: the Act increases the statutory rate reference from 9% to 9.975% for certain premium calculations, applying to premiums paid after 31 December 2026. These changes alter both consumer costs (lower QST on psychotherapy) and insurer tax liabilities (higher effective tax rate over time).
New CCA classes for CCUS projects, including a 100% CCA class
The regulation adds Classes 57–60 tailored to carbon capture, utilisation and storage projects. The classes separate capture/compression, transport, storage, and geological characterization/monitoring property; Class 59 gives 100% CCA for specified incorporeal property used to determine existence, location or quality of storage formations (subject to exclusions). The classes apply to property acquired after 31 December 2021 and create immediate tax depreciation incentives for CCUS capital, but applicants will need project documentation proving the property’s exclusive CCUS use.
Higher exemption amounts used to compute RAMQ prescription‑drug premiums
The RAMQ exemption thresholds used in calculating the public drug insurance premium are increased (for example, the single, no‑child threshold is set at $19,500 and other brackets are adjusted). The amended amounts apply from 2024 and directly affect the premiums payable by insured persons under the public prescription drug plan; analysts should re‑run premium calculations and review payroll withholding and benefit communications.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- CCUS project developers and energy companies — gain accelerated capital cost allowances (new Classes 57–60, including a 100% CCA class for certain incorporeal property), reducing up‑front after‑tax cost of qualifying carbon capture, transport and storage investments.
- Mental‑health practitioners and their clients — counselling therapy and psychotherapy services become exempt from QST, lowering the consumption tax on individual clients and simplifying billing for exempt services.
- Family businesses and potential successors — the new intergenerational transfer rules create a clearer Québec framework (broader definition of ‘child’, timing windows and deemed arm’s‑length rules) that can preserve tax attributes on qualifying transfers when federal elections are used correctly.
- Québec’s tax administration (Ministère des Finances / Ministère du Revenu) — benefits from strengthened anti‑avoidance tools, reporting hooks tied to federal elections, and clearer rules to assess large cross‑border interest flows and hybrid mismatches, improving the province’s capacity to protect the tax base.
Who Bears the Cost
- Multinational groups and Québec subsidiaries with cross‑border financing — face reduced deductibility of interest and financing expenses (Division X.1.1) and tighter reporting, increasing effective tax on debt and compliance costs.
- Unregistered short‑term rental hosts and some lodging operators — will lose full deduction of operating costs unless they register; deductions for a property are prorated to days registered, reducing after‑tax returns for unregistered hosts.
- Insurers and premium writers — the statutory reference rate change increases the prescribed premium tax base (the Act moves the insurance premium reference from 9% to 9.975%), raising costs for insurance companies and likely premiums for some policyholders over time.
- Tax preparers, corporate tax teams and accounting departments — incur new modelling, disclosure and filing burdens: prescribed forms, enclosures for interest limitation years, longer limitation periods for reassessments in specified circumstances, and reconciliations tied to federal elections.
- Taxpayers and employers who missed application windows — employers that fail to file researcher, specialist or synergy tax credit applications before the 25–26 March 2025 cut‑offs may lose access to incentives and will be unable to rely on discretionary ministerial certificates granted after those dates.
Key Issues
The Core Tension
The bill tries to balance tax‑base protection and fairness against investment friendliness and certainty: tightening interest deductibility and adding GAAR‑style enforcement protects revenue and counters aggressive cross‑border tax planning, but those same rules raise the after‑tax cost of debt and increase compliance burdens for multinational groups and capital‑intensive businesses — a genuine trade‑off between preventing avoidance and maintaining a predictable investment climate.
There are three implementation tensions worth flagging. First, many provisions are co‑timed with federal rules and apply (or are deemed to apply) to taxation years beginning after 30 September 2023, with bridging rules for short taxation years.
That retroactivity increases dispute risk: taxpayers and auditors must reconstruct positions and file supporting documents for years already closed under prior practice. Second, the interest/financing limitation and hybrid‑mismatch denial crate complicated interaction problems with partnership allocations, intercompany loans and flow‑through entities.
The Québec text largely mirrors federal formulas but introduces its own reporting deadlines, deemed‑deduction mechanics and carry‑forward rules; mapping federal elections to provincial consequences will require careful cross‑reference, coordinated elections and new accounting systems to isolate restricted amounts across entities. Third, sector‑targeted incentives (CCUS CCA classes, tourist‑accommodation pro‑rata, and QST exemptions for psychotherapy) use “solely” and “used for” language.
Enforcement disputes will likely arise over whether equipment or services are “solely” used by qualifying projects or whether mental‑health sessions meet the practitioner definition; that creates litigation and ruling demand for borderline cases.
Operationally, the March 2025 application cut‑offs for several qualification certificates and the phase‑outs of older tax holidays are blunt tools. They tidy program horizons but produce asymmetric impacts on businesses that planned investments around anticipated extensions.
Finally, the bill expands Québec’s reassessment windows tied to federal elections and prescribed filings, which heightens audit exposure for taxpayers who made joint federal elections or who failed to file the new provincial forms on time.
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