Investment and innovation tax credit (CIII)
QC, Canada
Incentives for businesses operating in Québec, with rates up to 40%, to promote economic growth and technological advancement
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|projectCostPercent
grant_single|deadlines
- grant_single|timelineUnspecified
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- Manufacturing
grant_single|grantors
- Revenu Québec
grant_single|status
grant_card_status|open
grant_single_labels|preview
The Credit for Investment and Innovation aims to support eligible corporations in Quebec by providing a tax credit for expenses incurred on the acquisition of specific property. Eligible activities include the purchase of manufacturing and processing equipment, electronic data processing equipment, eligible management software, and certain other specified categories of property, used primarily at a designated location within Quebec.
grant_single_labels|projects
Projects or activities eligible for this grant include acquiring new machinery and equipment for manufacturing, as well as investing in advanced technological systems. Additionally, software for enterprise resource planning and customer relationship management is considered eligible.
- Acquisition of new machinery and equipment for manufacturing.
- Investment in advanced technological systems.
- Procurement of enterprise resource planning software.
- Procurement of customer relationship management software.
grant_single|admissibleProjectsExample
$75,000
Montreal
Acquiring new CNC machines for precision manufacturing with advanced features
$100,000
Saguenay
Upgrading mineral processing equipment at the mining facility
$40,000
Laval
Procurement of customer relationship management software for enhanced client handling
$125,000
Longueuil
Introduction of advanced automation technology for manufacturing
$90,000
Sherbrooke
Acquisition of data processing equipment to upgrade IT infrastructure
$60,000
Quebec City
Investing in an ERP software system to streamline operations
grant_single_labels|admissibility
A corporation with an establishment in Quebec that operates a business can be eligible for this grant under certain conditions. However, specific entities such as tax-exempt corporations or Crown corporations are not eligible.
- Must have an establishment in Quebec and operate a business there.
- A corporation cannot be tax-exempt.
- A corporation cannot be a Crown corporation or a fully controlled subsidiary of such.
- A corporation cannot be involved in aluminum production or petroleum refining.
- If part of a partnership, the partnership itself must meet eligibility criteria, but the credit will be granted to the corporation members of the partnership.
- The acquired asset must meet specific newness, timing, and utilization requirements.
grant_eligibility_criteria|who_can_apply
To be eligible for the Investment and Innovation Tax Credit, a company must have an establishment in Québec and carry on a business there. However, companies such as tax-exempt corporations, Crown corporations, aluminum production corporations, and petroleum refining corporations are excluded from eligibility.
- Must have an establishment in Québec
- Must carry on a business in Québec
- Exclusively for non-tax-exempt corporations
- Excludes Crown corporations and their fully controlled subsidiaries
- Excludes aluminum production corporations
- Excludes petroleum refining corporations
grant_eligibility_criteria|who_cannot_apply
The Credit for Investment and Innovation has specific exclusions for certain types of companies. The following types of companies are not eligible for this grant:
- Companies exempt from tax.
- Crown corporations or subsidiaries wholly controlled by such corporations.
- Aluminum production companies.
- Oil refining companies.
grant_eligibility_criteria|eligible_expenses
Eligible expenses for this grant include costs associated with acquiring a determined property after March 10, 2020, but before January 1, 2030, which must meet specific criteria.
- Material for manufacturing and processing categorized under Category 53.
- Universal electronic processing equipment falling under Category 50, including operating software.
- Equipment used primarily in the treatment of minerals in Category 43.
- Management software package categorized under Category 12.
- Equipment used mainly in the smelting, refining, or hydrometallurgy of minerals from within Canada, excluding gold or silver.
grant_eligibility_criteria|zone
The eligible geographic zones for the credit vary based on the economic vitality of the area where the purchased asset is primarily used.
- Zones with low economic vitality
- Zones with intermediate economic vitality
- Zones with high economic vitality
grant_single_labels|register
- Step 1: Verify Eligibility
- Ensure the company has an establishment in Québec and operates a business there
- Confirm that the company is not exempt from tax, a Crown corporation, a subsidiary fully controlled by a Crown corporation, a production company of aluminum, or a petroleum refining company
- Step 2: Identify Eligible Expenses
- Determine if the expenses incurred qualify as "determined expenses" for acquiring an eligible asset
- Ensure the asset was acquired within the specified date range and meets the definition of a determined asset
- Calculate the determined expenses minus the amount of excluded expenses
- Step 3: Complete Form CO-1029.8.36.II
- Fill out the Crédit d'impôt pour investissement et innovation (CO-1029.8.36.II) form with all prescribed information
- Step 4: Submit Application
- If the year in which expenses were incurred ends before January 8, 2023, submit the form by the latest of:
- The 183rd day after receiving a notice of assessment or reassessment indicating ineligibility because the credit was not claimed in the year expenses were incurred
- Step 5: Compliance and Reporting
- Ensure that the acquired asset is used primarily in Québec, for a minimum period of 730 consecutive days following the start of its use by the eligible company, except in cases of loss, major damage, or involuntary destruction
- Maintain necessary records to demonstrate compliance with the requirements
grant_single_labels|otherInfo
The grant includes specific requirements and details for determining the eligibility and calculation of the credit.
- The credit's percentages vary based on the time when expenses were incurred and the territory's economic vitality where the property is primarily used.
- There are different financial periods and percentages applicable, notably for expenses incurred from March 26, 2021, to December 31, 2023.
- The conditions for a "determined property" include being new, used primarily in Quebec, and not for use by specific excluded enterprises.
- Prolongation of the deadline for filing the tax credit application form CO-1029.8.36.II is now possible under specified conditions.
- A new calculation method for exclusive expenses and a cumulative annual ceiling have been introduced as part of the credit's determination process.
Apply to this program
Credit for Investment and Innovation
The Credit for Investment and Innovation is designed to support eligible corporations in Québec investing in specific assets by providing a tax credit based on the acquisition costs and the region where the asset is utilized. The credit percentages vary based on economic vitality zones, offering more significant incentives for regions with lower vitality.
Detailed Explanation of the Credit for Investment and Innovation
The Credit for Investment and Innovation is a Québec tax credit aimed at stimulating investments in certain types of assets by corporations. This credit, available to eligible corporations, provides a financial incentive to acquire and utilize specific assets within the Québec region.
Eligibility Criteria for Corporations
To qualify for the Credit for Investment and Innovation, a corporation must meet certain eligibility criteria:
- The corporation must have an establishment in Québec and conduct business there during the taxation year.
- Corporations exempt from tax, Crown corporations or their wholly controlled subsidiaries, aluminum production corporations, and petroleum refining corporations are not eligible for this credit.
- For assets acquired by a partnership, the partnership must meet the eligibility requirements, and the credit is granted to the individual corporate members of the partnership.
Definition of Determined Assets
A "determined asset" refers to specific types of properties acquired within outlined timeframes and categories:
- The asset must be acquired after March 10, 2020, and before January 1, 2030.
- Types of determined assets include manufacturing and processing equipment (category 53), universal electronic data processing equipment (category 50), certain mining-related assets (category 43), management software packages (category 12), and smelting or refining equipment for mineral processing (except for gold and silver mines) located in Canada.
The asset must also meet additional criteria such as being new, not related to certain excluded activities or special investment projects, and primarily used in Québec for at least 730 consecutive days following its acquisition.
Credit Rates Based on Economic Vitality
The rate of the credit varies depending on the economic vitality of the region where the asset is primarily used:
- For expenses incurred before March 26, 2021:
- 20% for assets used in a low economic vitality region.
- 15% for assets in an intermediate vitality region.
- 10% for assets in a high vitality region.
- For expenses incurred between March 26, 2021, and December 31, 2023:
- 40% for assets used in a low economic vitality region.
- 30% for assets in an intermediate vitality region.
- 20% for assets in a high vitality region.
- For expenses incurred after December 31, 2023:
- 25% for assets used in a low economic vitality region.
- 20% for assets in an intermediate vitality region.
- 15% for assets in a high vitality region.
note that the asset might be acquired between January 1, 2024, and March 31, 2024, provided it meets specific pre-existing contractual obligations or construction commencement criteria.
Eligible Determined Expenses
"Determined expenses" are defined as the excess of the total capital cost of a determined asset over the excluded expenses related to that asset. These expenses must be either incurred and paid within the taxation year or incurred within the taxation year and paid within an 18-month period following the end of that year.
Exclusions from Eligible Expenses
Not all expenses related to acquiring a determined asset are eligible as determined expenses. Exclusions apply to expenses incurred with related persons or entities to avoid conflict of interest and ensure transparency.
- For corporations:
- Expenses incurred with persons or entities with whom the corporation has a dependency relationship.
- Expenses with entities where a designated shareholder has a dependency relationship.
- For cooperatives, with persons with whom a designated member has a dependency relationship.
- For partnerships:
- Expenses incurred with corporate members of the partnership.
- Expenses with persons related to such corporate members.
- Expenses where a designated shareholder of such a corporate member has a dependency relationship.
- For cooperative members, with entities where a designated cooperative member has a dependency relationship.
Filing and Deadlines
A corporation must claim the credit by filing the form Credit for Investment and Innovation (CO-1029.8.36.II) within specified deadlines. Amendments to the legislation have extended the period for submitting the form for expenses incurred in taxation years ending before January 8, 2023.
The documentation for claiming the credit must be submitted by the later of the following dates:
- The 183rd day following the issue date of the notice of assessment denying the credit, fully or partially.
- June 30, 2024.
Implications of Excluded Expenses
The calculation of determined expenses takes into account a "threshold of exclusion," which varies by asset type:
- The exclusion amount is $5,000 for assets in category 50 or for management software packages.
- The exclusion amount is $12,500 for other asset types.
This threshold is adjusted for assets acquired in joint ventures based on the corporation’s ownership share at the acquisition time.
Prolonged Use Requirements
The assets must remain in use in Québec for a minimum of 730 consecutive days to remain eligible for the credit, with certain exceptions for loss, major damage, or obsolescence.
Overall, the Credit for Investment and Innovation provides a robust mechanism to encourage corporations to invest in vital assets, enhancing their operational efficiencies and technological advancements, particularly in regions that may require more economic stimulation. Proper understanding and timely filing of the necessary documentation are crucial to optimize the benefits from this tax credit.
