The Regroupement des cabinets de courtage d’assurance du Québec (RCCAQ) says it welcomes the measures announced Thursday by Nicolas Marceau, Quebec’s Minister of Finance and the Economy, aimed at mitigating the negative impacts of QST/GST harmonization, which went into effect on January 1.
These measures include abolishing the compensation tax and introducing a temporary refundable tax credit for property and casualty insurance (P&C) brokerages.
Insurance brokers will no longer be required to pay the temporary contribution tax by financial institutions, retroactive to January 1.
The tax burden of all financial services providers was increased when the QST was harmonized with the GST/HST regime, although property and casualty insurance brokerages were especially hard hit due to the particularities of their industry. The new refundable tax credit, which will be in effect for a three-year period, will ensure that the transition is smoother than it currently is for these brokerages.
“Quebec-based brokerages, most of which are small businesses, have been hard hit by QST harmonization, which represents an additional operating cost of nearly 10% of their taxable expenditures. We are relieved that Mr. Marceau realized the full implications of this situation and took concrete measures to rectify it,” said RCCAQ chairman Michel Duciaume, in a release.
“Since this temporary measure only runs until 2015, we would like to pursue the dialogue we entered into with the Ministry of Finance and the Economy in order to identify potential solutions that may be brought in after that deadline. In that regard, the measures taken by the Minister today bode well for the future, and we are confident that we will find a basis of agreement for a long-term solution to this situation,” said Duciaume.
The RCCAQ represents 4,500 insurance brokers based in 615 brokerages and branch offices across Quebec.