February 7, 2017

Bill 112 – Act to give effect mainly to fiscal measures announced in the Budget Speech delivered on 17 March 2016


Bill 112 amends the Taxation Act, more particularly, the small business deduction and its qualification criteria. The Bill replaces the qualification criterion as to the number of full-time employees, as introduced in the March 26, 2015 budget, by a criterion as to the number of hours worked by employees. The Québec Ombudsman understands the reasons cited in support of this amendment, but foresees adverse effects that could be caused by the following two elements introduced by the Bill:

Notion of hours worked

Small businesses would have to create and update a new record for entering the number of hours worked. This would make management of these businesses (which sometimes have limited means) more cumbersome.

Maximum threshold of 40 hours per week

The 40-hour-per-week limit per employee, calculated for the purposes of the deduction, imposes an undue constraint on businesses. This limit compromises management adapted to employees’ respective situations (work and family balance, supplementary time bank for rush periods, etc.).

Proposed amendments

First, the Québec Ombudsman proposes that the presumption that an hour paid is an hour worked be introduced in the Act. This way, small businesses could continue to use the same records, without having to create a new record.

Secondly, the Québec Ombudsman suggests an annual rather than a weekly limit on the number of hours. The fact of allowing a maximum of 2,000 hours per year rather than 40 hours per week would enable businesses to continue to have management that is adapted to the specific features of their sectors of activity.