Investment and innovation tax credit (IITC)

• The tax credit rate for eligible expenses varies according to the acquisition date and the economic vitality of the territory where the asset is primarily used: up to 40% for territories with low economic vitality, 30% for intermediate, and 20% for high, for acquisitions between March 26, 2021, and December 31, 2023.
• For acquisitions after December 31, 2023, the maximum tax credit amounts are 25% (low vitality), 20% (intermediate), and 15% (high) economic vitality territories.
• An exclusion threshold applies to eligible assets per year: $5,000 for category 50 assets or eligible management software, and $12,500 for other cases.

• The applicant must be a corporation with an establishment in Quebec and must be carrying on business there during its taxation year.
• The applicant cannot be a tax-exempt corporation.
• Excluded entities: Crown corporations or their wholly controlled subsidiaries, aluminum production companies, and oil refining companies.
• If the asset is acquired by a partnership, the partnership must meet eligibility conditions and the credit will be granted to its corporate members.

Who is eligible?

• Corporations with an establishment in Quebec operating a business during the tax year
• Partnerships acquiring eligible property, with members who are eligible corporations

Who is not eligible

• Companies that are exempt from tax.
• Crown corporations or subsidiaries wholly controlled by such corporations.
• Aluminum production companies.
• Petroleum refining companies.

Eligible expenses

• Capital costs for the acquisition of a "specified property" (bien déterminé), including:
• Manufacturing and processing equipment (category 53 of Schedule B of the Taxation Act Regulations).
• General-purpose electronic data processing equipment and related operating software (category 50 of Schedule B).
• Eligible management software package (category 12 of Schedule B).
• Equipment used primarily for the processing of ore extracted from mineral resources located outside Canada (category 43 of Schedule B).
• Equipment used primarily for smelting, refining, or hydrometallurgical activities involving ores (excluding gold or silver) extracted from mineral resources located in Canada.

Eligible geographic areas

• Companies with an establishment and business operations in Quebec.
• Specific credit rates apply depending on whether the asset is primarily used in areas of low, intermediate, or high economic vitality within Quebec.

• An extension of the deadline for submitting the application form is planned, allowing the submission of form CO-1029.8.36.II until June 30, 2024, or within 183 days following a notice of assessment that refused the credit for a prior year.
• The eligible property must be used in Quebec for a minimum period of 730 consecutive days, except in cases of force majeure (loss, theft, major breakage, accidental destruction, or obsolescence).
• Expenses related to a specific property incurred with persons having a dependency relationship with the corporation or the corporation being a member of a partnership are not eligible in the calculation of the credit.
• The acquisition as part of a joint venture leads to a calculation of the exclusion threshold proportional to the share of the business in the specific property.