The March 27, 2018 Québec budget announced that the 3.7% Small Business Deduction (SBD) rate would be raised to 4.7% as of March 28, 2018. Unfortunately, the calculation on line 98i in Part 9.2 of the CO-771 (rate of Small Business Deduction) is incorrect when the tax year ends after March 27, 2018.
We suggest that you review and override the rate calculation. To figure out the correct rate, follow these steps. For example, the corporation tax year is from April 1, 2017 to March 31, 2018:
- TaxCycle incorrectly calculates the SBD rate to be 3.7109589041%. The correct rate is 3.7863013699.
- Open the TaxConstants form (press F4 and type TaxConstants).
- Scroll down to the section called "Québec - CO-771 Tax Rates".
- In the bottom table (Small Business Deduction Rate), find the table that contains the proration days and tax rates for each period.
- Calculate the rate by taking into account the number of days in the taxation year included in each period and applying the appropriate rate.
- ((275 days / 365 days) x 3.8%) + ((86 days / 365 days) x 3.7%) + ((4 days / 365 days) x 4.7%) = 3.7863013699%.
This issue as resolved in version 7.2.33535.0.