Taxation Bulletin

April 2009 Martineau DuMoulin LLP

The Québec Stock Savings Plan, Version II By Jean-Pierre Chamberland et Thomas W. Copeland, Montréal

The Québec Budget, tabled on into account the assets of associated March 19, 2009, amends the SME corporations); Growth Stock Plan by making it more d) reduce by one year the minimal accessible, improving its tax benefits and holding period for qualifying shares renaming it the “stock savings plan II.” (or valid replacement shares) acquired The SME Growth Stock Plan was by an investor, decreasing the holding launched in 2005 to replace the Québec period to two taxation years following stock savings plan (widely known under the year of acquisition. the acronym QSSP), which had been The other main plan eligibility introduced in 1979 and was used by criteria applicable to corporations many corporations in Québec to finance remain unchanged and can be their growth and, in some cases, to summarized as follows: undertake their initial public offering. e) The central management of the The stock savings plan II gives qualified corporation is in Québec, and more corporations better access to capital than one half of the wages paid to its markets by letting individuals who reside employees during the last taxation in Québec deduct the adjusted cost of a year were paid to employees of an qualifying share. establishment located in Québec; In general terms, the main amendments f) Throughout the preceding twelve brought by the 2009 Budget: months, it carried on a business and a) extend the plan to December 31, 2014; had at least five full-time employees b) raise the tax benefit for individuals who are neither insiders nor persons who reside in Québec from 100% of related to such insiders; Ottawa the cost of acquiring shares to 150% g) A maximum of 50% of the value of its for shares acquired before January 1, assets consists of investments, other Montréal 2011; therefore, an investor taxed at than qualified investments. the highest marginal rate buying Furthermore, the 2009 Budget simplifies Québec City $1,000 worth of qualifying shares will the procedure for registering a “valid benefit from a provincial tax saving of share” on the list of the Autorité des London $360; marchés financiers after June 30, 2010 Johannesburg c) increase the upper asset limit of a by eliminating the obligation to obtain qualified issuing corporation from an advance ruling from Revenu Québec. www.fasken.com $100 million to $200 million (taking Fasken Martineau DuMoulin LLP Taxation Bulletin 2

This could lead to an increase of the pool of “valid For more information on the subject of this bulletin, shares” and therefore contribute to the popularity of please contact the authors: the stock savings plan II with investors. Jean-Pierre Chamberland The SME Growth Stock Plan introduced in 2005 514 865 5186 was not as successful as the QSSP. Hopefully, the [email protected] stock savings plan II will revive the interest of Thomas W. Copeland investors and facilitate the growth of future leaders 514 397 7633 in our economy. [email protected]

The texts included in this collection are intended to provide general comments on taxation. They reflect the point of view of their respective author and are not opinions expressed on behalf of Fasken Martineau DuMoulin LLP or other member corporations. These texts are not intended to provide legal advice. Therefore, readers should seek out advice on issues specific to them before acting on any information set out in these texts. We would be pleased to provide additional information on request.

© 2009 Fasken Martineau DuMoulin LLP

Vancouver Calgary Toronto Ottawa 604 631 3131 403 261 5350 416 366 8381 613 236 3882 [email protected] [email protected] [email protected] [email protected] Montréal Québec City London Johannesburg 514 397 7400 418 640 2000 44 20 7382 6020 27 11 685 0800 @fasken.com [email protected] [email protected] [email protected]