Who Can Apply to the Development of E‑Business Tax Credit (CDAE) in Québec
Last updated: December 2, 2025
The Development of E‑Business Tax Credit (CDAE) is a Québec provincial corporate tax credit that supports organizations carrying out specialized IT and e‑business activities. It is wage‑based, requires an eligibility certificate from Investissement Québec, and is ultimately claimed on the corporate return with Revenu Québec. This guide explains exactly who can apply, so you can confidently self‑assess before preparing an application.
If you are a software publisher, IT services provider, SaaS company, systems integrator, fintech, e‑commerce platform, or AI/digital engineering team with employees in Québec, the CDAE may help offset eligible salaries. Read on for applicant eligibility, activity and employee criteria, geographic rules, and important 2026 updates as the program evolves toward “CDAE integrating AI (CDAEIA).”
Program Overview
The CDAE is a Québec e‑business wage‑based corporate tax credit designed to strengthen digital capabilities and export‑oriented IT services. Two public bodies are involved:
Investissement Québec (IQ) assesses eligibility and issues required certificates (business and employees).
Revenu Québec administers the tax credit claim through the corporate tax filing, including form CO‑1029.8.36.DA and code 86 on the CO‑17 return.
Funding is tied to eligible employees’ salaries dedicated to qualifying e‑business/IT functions. Historically, practitioners often referenced a two‑part structure (a refundable and a non‑refundable portion) with a per‑employee cap. Rates and thresholds have been adjusted over time, and the Government of Québec announced a modernization to “CDAE integrating AI (CDAEIA)” for corporate taxation years beginning after December 31, 2025. Always verify current percentages, caps, and thresholds when planning.
This article focuses on eligibility: which corporations, activities, and employees qualify—and which do not.
Applicant Type Requirements
To be eligible to apply for the CDAE, organizations typically must meet the following conditions:
Be a corporation subject to Québec corporate income tax.
Have a permanent establishment in Québec with employees on Québec payroll.
Operate in information technology or e‑business fields such as:
Software publishing and product development (including SaaS).
Computer systems design, integration, and application development.
Data engineering, cloud computing, cybersecurity, DevOps, and related services.
E‑commerce platforms and digital transaction systems supporting external markets.
Obtain an Investissement Québec eligibility certificate for the corporation.
Employ individuals who perform eligible functions and for whom IQ issues employee eligibility certificates.
Keep adequate books and records to support the salary amounts, time allocation, and roles claimed.
Entities that are not corporations (for example, individuals, partnerships without corporate status) generally do not qualify. Non‑profit organizations and public bodies are generally excluded. If your structure is complex (e.g., multiple subsidiaries, joint ventures), ensure the claiming entity is a qualifying corporation with the Québec permanent establishment and the employees on its payroll.
Size & Scale Criteria
The CDAE is built to support organizations with a substantive and ongoing e‑business operation. While the program does not publicly emphasize a single universal minimum headcount for every scenario, in practice:
A minimum number of eligible employees is typically required to demonstrate a true, continuous e‑business activity. The threshold and role mix can vary; confirm with Investissement Québec before you plan your claim.
Employees must be assigned primarily to eligible IT/e‑business functions (see “Employee eligibility” below), often on a full‑time basis. Part‑time or mixed roles may be proportionally eligible if the program allows and if time tracking is robust.
The program expects operational continuity, not one‑off or incidental technical tasks.
If you are a very small team or an early‑stage startup, you may still qualify if you meet the permanent establishment, role, and documentation criteria. However, expect closer scrutiny on employee roles, time allocation, and external market orientation.
Geographic Eligibility
The CDAE is a provincial incentive. Key geographic rules typically include:
The claimant must have a permanent establishment in Québec.
Employees for whom salaries are claimed must be on Québec payroll and usually must perform their work in Québec. Remote work arrangements are common; however, if employees are physically located and working outside Québec for extended periods, their wages are generally not eligible.
Sales or clients can be anywhere, but the program is oriented toward serving external markets rather than internal corporate IT. Activities aimed at clients outside the organization (and often outside Québec) strengthen the e‑business profile.
If you operate across Canada or internationally, ensure that payroll, supervision, and day‑to‑day eligible activities for claimed employees are anchored in Québec.
Project & Activity Requirements
The CDAE targets specialized IT and e‑business activities that create, operate, or commercialize digital solutions. Typical eligible activity families include:
Software engineering and product development: application design, development, testing, deployment, maintenance, and product lifecycle operations for commercialized software or platforms.
Systems design and integration: architecture, data pipelines, APIs, middleware, and integration of business systems for external clients.
Cloud and data engineering: infrastructure as code, data warehousing, analytics pipelines, MLOps, AI/ML model engineering when embedded in a product or service offering.
Cybersecurity and DevOps: secure software development, CI/CD, monitoring, reliability engineering linked to external client deliverables or commercial products.
E‑commerce and digital transaction systems: platforms enabling online sales, digital payments, order management, and customer portals intended for external users.
Activities primarily serving internal corporate IT (back‑office tools for your own use) are typically not eligible. The credit is market‑facing: external commercialization and client delivery are central to the intent.
Financial & Operational Criteria
Beyond the corporation, activity, and employee requirements, applicants should demonstrate:
Good standing for tax compliance in Québec (e.g., filed returns and remittances).
Adequate payroll records and timekeeping to support claimed salaries and allocations.
Ability to segregate eligible vs. ineligible costs and avoid double‑counting with other credits (such as SR&ED). Stacking is sometimes allowed under limits; ensure you do not claim the same dollar twice.
Capacity to obtain and retain Investissement Québec certificates (corporate and employees) and to file the Revenu Québec forms (including CO‑1029.8.36.DA) with the corporate return (CO‑17), using code 86 where required.
The CDAE often includes refundable and non‑refundable components. Many corporations can receive a refund even if they have little or no tax payable, subject to program rules. As rates, caps, and salary exclusion thresholds have evolved, review current parameters before budgeting.
Ineligible Applicants
Applicants are typically ineligible if they:
Are not corporations subject to Québec corporate income tax.
Do not have a permanent establishment in Québec.
Cannot obtain an Investissement Québec corporate eligibility certificate.
Do not employ individuals in qualifying e‑business/IT roles in Québec (e.g., only contractors).
Are primarily internal IT service groups with no external commercialization.
Are public bodies, Crown corporations, or similar excluded entities.
Fail compliance or documentation standards (e.g., insufficient payroll records or time tracking).
If your model relies mainly on subcontractors or independent consultants, note that contractor payments are generally not eligible because the CDAE is wage‑based and tied to T4 payroll employees.
Special Cases & Exceptions
Startups and SMEs: Early‑stage companies can qualify if they have Québec employees in eligible roles and credible commercial activity. Maintain strong documentation.
Subsidiaries and corporate groups: A Québec subsidiary with its own eligible employees can claim. Intercompany arrangements must be transparent, with the claiming entity paying the wages.
Remote and hybrid work: Employees working from home within Québec are generally fine if payroll and supervision are in Québec, and work meets eligibility definitions. Long‑term work physically performed outside Québec is typically excluded.
Non‑profits and charities: Generally ineligible, as the CDAE is a corporate tax credit intended for for‑profit corporations.
Contractors and secondees: Fees to contractors are typically ineligible; secondees must be on your payroll and otherwise meet employee criteria.
CDAEIA (2026 changes): For corporate taxation years beginning after December 31, 2025, Québec announced a modernization to “CDAE integrating AI (CDAEIA).” Expect refinements to eligible activities and roles—especially for AI engineering—plus potential rate and threshold adjustments. Confirm the applicable regime for your fiscal year.
Self‑Assessment Checklist
Use this quick yes/no checklist to pre‑screen eligibility:
Are you a for‑profit corporation subject to Québec corporate income tax?
Do you have a permanent establishment in Québec with Québec payroll?
Can you obtain an Investissement Québec eligibility certificate for your corporation?
Do you deliver e‑business/IT products or services to external clients or markets?
Do you employ Québec‑based staff in eligible roles (e.g., developers, architects, data engineers, cybersecurity, QA, DevOps)?
Are those employees primarily dedicated to eligible activities on a continuous basis?
Can you obtain employee eligibility certificates from Investissement Québec?
Do you maintain detailed payroll and, where relevant, time allocation records?
Can you avoid double‑counting costs with other incentives (e.g., SR&ED)?
Will you be able to file form CO‑1029.8.36.DA with your CO‑17 and use code 86 as required?
If you answered “yes” to most questions, you likely meet the baseline profile. If multiple answers were “no,” consult the program administrators or seek expert guidance before proceeding.
Conclusion
Eligibility for Québec’s Development of E‑Business Tax Credit (CDAE) hinges on being a Québec‑taxable corporation with a permanent establishment, delivering market‑facing e‑business/IT activities, and employing Québec‑based staff in eligible roles. Investissement Québec certificates (corporate and employee) are mandatory, and the claim is filed with Revenu Québec using form CO‑1029.8.36.DA and code 86. With modernization to CDAEIA starting for fiscal years that begin in 2026, verify the applicable rules for your year. Once you are confident you qualify, proceed to prepare certificates, documentation, and your claim.
