How to Apply for Québec’s Development of E‑Business Tax Credit (CDAE): Step‑by‑Step Guide
The Development of E‑Business Tax Credit (CDAE) is a Québec provincial corporate tax credit designed to support IT and e‑business activities by offsetting wages of eligible employees. To claim the Quebec e‑business tax credit, organizations must obtain an eligibility certificate from Investissement Québec and submit the credit through Revenu Québec with the proper forms. This guide explains the complete CDAE application process.
Administered through a two‑step model—certification by Investissement Québec followed by a tax claim to Revenu Québec—the CDAE requires careful coordination of eligibility, documentation, and filing deadlines. According to official program guidelines, you must demonstrate that your activities and employees meet the program’s definitions.
This application guide provides a clear, practical sequence to apply for the CDAE tax credit, including required documents, timelines, and common pitfalls. It also flags the planned modernization to “CDAE integrating AI (CDAEIA)” for corporate taxation years beginning after December 31, 2025. Last updated: 2025‑12‑01.
Overview of the Development of E‑Business Tax Credit (CDAE)
The CDAE is a wage‑based corporate tax credit that supports specialized IT and e‑business activities performed in Québec. It is commonly used by software publishers, SaaS companies, system integrators, fintechs, cybersecurity firms, and other information technology businesses that design, integrate, or maintain information systems and digital products.
Key features include:
Québec provincial corporate tax credit with both refundable and non‑refundable portions.
Requires an eligibility certificate from Investissement Québec for the tax year.
Claimed with Revenu Québec using corporate forms, including the CO‑1029.8.36.DA and entries on the CO‑17 return (code 86).
Focused on salaries of eligible employees engaged in qualifying e‑business activities.
Typical per‑employee calculations and caps apply; historical references to 30% up to $25,000 have evolved into a 23% refundable + 7% non‑refundable structure, with salary thresholds mechanics. Always verify the rates in effect for your tax year.
CDAE modernization: Québec’s 2025 budget announced that the program will be updated and renamed “CDAE integrating AI (CDAEIA)” for corporate taxation years beginning after December 31, 2025. While the core “certificate‑then‑claim” process is expected to remain, definitions and coverage may be adjusted. Applicants with fiscal years starting in 2026 should confirm current requirements before filing.
Eligibility Requirements
Before you apply, ensure that your organization, activities, and employees align with CDAE rules. The Investissement Québec certificate hinges on these elements.
Organization eligibility:
Incorporated business with an establishment in Québec.
Carries on business in Québec during the tax year.
In good standing for tax compliance (no outstanding compliance issues).
Maintains books and records that can substantiate wages, roles, and activities.
Activity eligibility:
Core operations in information technology and e‑business, such as:
Software publishing, SaaS platforms, and product development.
Computer system design, integration, and information system maintenance.
Data engineering, cloud computing, and cybersecurity operations.
E‑commerce platforms and digital transaction systems.
A meaningful proportion of revenue and activities relate to e‑business functions.
Work must be performed in Québec for eligible periods.
Employee eligibility:
Employees are on payroll (not independent contractors).
Employees perform eligible IT/e‑business tasks (e.g., development, architecture, DevOps, data engineering, QA, product security).
Employees are generally full‑time and assigned to eligible functions; part‑time rules vary and typically require prorating.
Employee eligibility attestations may be required or captured within the Investissement Québec certificate process for the year.
Other conditions:
Wages must be paid and supported by payroll records (e.g., RL‑1s, payroll registers).
Stacking with other incentives is subject to Québec’s coordination rules; ensure you do not double‑claim the same salary dollars for overlapping programs without respecting stacking limits.
Required Documents
Prepare a complete, consistent package before you start the CDAE application. Missing items cause delays.
Corporate and activity documentation:
Legal name, business number, incorporation documents, and Québec establishment details.
Overview of business activities, revenue mix, client base, and e‑business model.
NAICS/industry classification used on filings.
Employee‑level documentation:
Organization chart and team roster for the claim period.
Job descriptions for eligible roles (developers, architects, analysts, DevOps, data engineers, QA, cybersecurity).
Employment contracts or offer letters showing full‑time status and job titles.
Payroll registers by period, RL‑1 slips, and year‑to‑date summaries.
Timesheets or time allocation evidence if employees split between eligible and non‑eligible activities.
Certification and claim forms:
Investissement Québec eligibility certificate for the tax year (and, where applicable, employee eligibility attestations).
Revenu Québec form CO‑1029.8.36.DA (CDAE calculation schedule).
Corporate income tax return CO‑17 (including code 86 entries and related schedules).
Detailed annexes that reconcile per‑employee wages, eligible periods, and proration.
Record‑keeping:
Policies on remote work, work location, and supervision to confirm Québec performance of duties.
Evidence for bonuses, overtime, and allowances included or excluded as per CDAE rules.
Step‑by ‑Step Application Process
Follow these steps to apply for the CDAE tax credit from start to finish.
Step 1: Pre‑assess your eligibility and scope
Confirm your corporation has an establishment in Québec and carries on IT/e‑business activities.
Identify roles and employees likely to qualify.
Map the claim period to your fiscal year and ensure wages fall within the tax year.
Step 2: Compile corporate and employee documentation
Gather incorporation details, activity summaries, NAICS, and client mix.
Prepare job descriptions aligned to eligible e‑business functions.
Export payroll registers and RL‑1 data for the full fiscal year.
Organize timesheets or allocation memos for mixed‑duty employees.
Step 3: Request the Investissement Québec eligibility certificate
Complete the Investissement Québec application for the CDAE eligibility certificate for your tax year.
Provide narratives on your e‑business model, revenue sources, systems, and technologies used.
Attach the requested schedules: organization chart, job descriptions, employee lists, and payroll summaries.
Typical processing time can range from 4 to 12 weeks depending on completeness and volume. Apply early.
Step 4: Confirm eligible employees and roles
Validate which employees meet the program’s technical role definitions.
If employee attestations are part of your process, obtain or renew them for the tax year.
For mixed roles, document percentage allocations based on duties and timesheets.
Step 5: Calculate eligible wages
Determine gross wages paid in the year to each eligible employee.
Exclude non‑eligible remuneration items if required by the rules, and apply proration for partial eligibility.
Apply any salary caps or exclusion thresholds applicable to your tax year.
Keep a calculation worksheet per employee to simplify review.
Step 6: Complete the CO‑1029.8.36.DA
Enter corporate details, claim period, and per‑employee totals.
Calculate the refundable and non‑refundable portions based on the rates in effect for your fiscal year.
Reconcile the schedule with your payroll and annexes to avoid discrepancies.
Step 7: Prepare the CO‑17 corporate return entries (including code 86)
Integrate the CDAE figures into your CO‑17.
Use the appropriate lines and code 86 to report the credit.
Ensure the refundable portion and the non‑refundable portion are properly classified.
Step 8: Assemble supporting annexes and internal working papers
Create an employee‑by‑employee annex showing role, period, wages, and eligibility percentage.
Include a reconciliation to RL‑1 totals and your general ledger.
Keep signed certifications and timesheets on file.
Step 9: File by the deadlines
File your corporate tax return and CDAE schedule by the statutory filing due date.
The CDAE claim must be filed no later than 12 months after the corporation’s normal filing due date for the tax year. Late claims beyond this window are generally not accepted.
If your Investissement Québec certificate is pending near your filing deadline, file a protective claim and update once the certificate is issued.
Step 10: Respond to review or audit requests
Be prepared to provide additional information: job descriptions, code repositories or system architecture overviews, timesheets, payroll extracts.
Respond within the specified timelines to avoid delays in assessment.
Step 11: Receive assessment and refund/credit
Revenu Québec will issue a notice of assessment reflecting the CDAE.
The refundable component is paid out if you are in a loss or low‑tax position; the non‑refundable portion offsets tax otherwise payable.
Reconcile the credit in your financial statements.
Step 12: Maintain records for at least six years
Retain all working papers, calculations, certificates, forms, and supporting evidence.
Maintain consistent HR and payroll processes to simplify future year claims.
Application Timeline
Typical sequence and timing:
Eligibility certificate (Investissement Québec): 4–12 weeks from complete submission; complex files may take longer.
Corporate tax filing window: your CDAE must be included with your CO‑17 filing or within 12 months after your normal filing due date.
Assessment timelines: desk reviews can add several weeks or months, depending on volume and the completeness of your documentation.
Seasonal considerations:
Many organizations with December 31 year‑ends create filing congestion in spring; apply for the certificate early in the new year.
If your fiscal year starts on or after January 1, 2026, verify CDAEIA requirements before filing.
Tips for a Successful Application
Align titles and duties: Ensure job descriptions clearly reflect eligible e‑business roles (developer, data engineer, systems architect, DevOps, cybersecurity).
Document time allocation: For employees splitting work, maintain timesheets or signed allocation memos to support proration.
Reconcile to payroll: Match annex totals to RL‑1 summaries and general ledger accounts to prevent mismatches.
Apply early for the certificate: Start the Investissement Québec process as soon as year‑end payroll data is available.
Watch stacking: If combining with other programs (e.g., R&D incentives), ensure you respect stacking rules and do not double‑claim the same salary amounts.
Track salary caps and thresholds: Rates and thresholds can vary by year; apply the figures that correspond to your tax year.
Prepare for CDAEIA: For fiscal years beginning in 2026, confirm definitions and coverage for AI‑related roles and activities.
Common Mistakes to Avoid
Missing or late Investissement Québec certificate submission.
Claiming contractors or consultants as employees; CDAE generally requires employees on payroll.
Insufficient evidence of Québec‑performed work for remote employees.
Overclaiming by including non‑eligible functions (sales, general management, customer support not tied to eligible technical work).
Not applying proration for mixed‑duty positions.
Omitting code 86 entries or misclassifying refundable vs non‑refundable portions on the CO‑17.
Filing after the 12‑month post‑due‑date deadline.
What Happens After You Apply
Initial processing: Revenu Québec reviews your CO‑17 and CDAE schedule; they may request clarifications.
Information requests: Provide additional documents within the stated timelines; maintain a single point of contact to coordinate responses.
Assessment outcome: A notice of assessment details the allowed credit. If amounts are adjusted, review the rationale and supporting rules.
Payment and offsets: The refundable portion is paid if applicable; the non‑refundable portion reduces corporate income tax payable.
If denied or adjusted: You may file a notice of objection within the prescribed period. Consider refining documentation and roles for future years.
Amendments: If you discover an error, you can generally file an amended return within limitation periods; ensure your Investissement Québec documentation supports any changes.
Conclusion
Applying for Québec’s Development of E‑Business Tax Credit (CDAE) requires two coordinated steps: securing the Investissement Québec eligibility certificate and filing a complete, well‑documented claim with Revenu Québec using CO‑1029.8.36.DA and code 86 on your CO‑17. By aligning roles to eligible e‑business functions, documenting wage allocations, and filing before the deadlines, organizations can reliably access the CDAE tax credit. For fiscal years beginning in 2026, verify CDAEIA updates before submitting. Careful preparation and proactive record‑keeping will streamline your application and support a smooth assessment.
