Interest deductibility in Quebec

The 2004 Quebec budget presented on March 30, 2004 made some significant changes to the Quebec tax rules around interest deductibility. This bulletin provides some examples of how these new rules in Quebec work.

As a result of the rules, some investors may be thinking of moving away from owning mutual funds with a buy-and-hold approach since these funds do not pay out distributions as often as other funds might.

This concern is not a valid one. In fact, mutual funds that make taxable distributions will often leave the investor worse off, even after the tax rule changes. We have prepared examples to show why.