Development of E-Business Tax Credit
QC, Canada
Tax credit for development of a Quebec e-business
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|maxCount
grant_single|deadlines
- grant_single|openingDateNovember 14, 2019
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- Information and cultural industries
- Finance and insurance
- Professional, scientific and technical services
grant_single|grantors
- Gouvernement du Québec
- Investissement Québec (IQ)
grant_single|status
grant_card_status|open
grant_single_labels|preview
Tax credit of 30% (24% refundable and 6% non-refundable) for information technology (IT) sector salaries up to a maximum of $25,000 per employee working on e-business activities.
grant_single_labels|projects
This grant supports activities primarily in the fields of information system design or software publishing that are carried out in an establishment in Québec, focusing on IT consulting services, development, and maintenance of technology-related infrastructures.
- IT consulting services related to technology, systems development, or e-business processes
- Development and integration of information systems
- Maintenance and evolution of technology infrastructure
- Design and development of e-commerce solutions
- Development of security and identification services for e-commerce activities
grant_single|admissibleProjectsExample
$25,000
Montreal, QC
Implement a new e-commerce platform for small and medium-sized businesses in Montreal.
$25,000
Quebec City, QC
Enhance IT infrastructure for a network of cooperative businesses in Quebec City.
$25,000
Laval, QC
Develop cybersecurity solutions for enhancing e-commerce activities in Laval.
grant_single_labels|admissibility
This tax measure supports the development of IT in Quebec by providing a tax credit for specialized corporations engaging in high-value-added IT activities.
Below are the eligibility criteria:
- At least 75% of the corporation's activities must be in the IT sector, with at least 50% of these under specific NAICS codes (541514, 541515, 513211, 513212, 561320, 561330).
- At least 75% of the IT activities must be services provided to arm's length persons or services related to applications used exclusively outside Quebec.
- The corporation must maintain a minimum of six eligible full-time employees at all times during the taxation year.
- Eligible employees must work full-time and dedicate at least 75% of their time to eligible IT activities.
- Eligible salaries are those paid to eligible employees, capped at $83,333 annually.
- The corporation must obtain a certificate from Investissement Québec each year.
grant_eligibility_criteria|who_can_apply
This grant targets companies operating primarily in the information technology sector within Quebec. Eligible organizations focus on fields like information system design or software publishing.
- Corporations operating in the information technology sector.
- Firms primarily involved in information system design and software publishing.
grant_eligibility_criteria|who_cannot_apply
Certain types of companies are explicitly excluded from being eligible for this grant:
- Companies involved in the operation of an e-business solution, such as processing electronic transactions over a transactional website
- Companies that manage or operate information systems, applications, or infrastructures arising from e-commerce activities
- Companies that operate a customer relations center
- Companies focused on hardware installation and training activities
- Companies engaged in activities not related to e-business
- Companies involved in administrative tasks
- Companies engaged in activities related to a marketing information system designed to increase their visibility and promote their goods and services to current or potential customers
grant_eligibility_criteria|eligible_expenses
The tax credit allows corporations to offset eligible salaries paid to eligible employees engaged in qualified activities. The maximum eligible salary per employee is $83,333 annually.
- Employment income generally calculated pursuant to the Québec Taxation Act
- Salaries paid to eligible employees up to $83,333
grant_eligibility_criteria|zone
Companies eligible for this grant must be carrying out their activities in an establishment located in Québec, Canada. The funding is primarily aimed at consolidating the development of information technologies within the Québec region.
- Québec, Canada
grant_single_labels|criteria
The evaluation and selection criteria for this grant are as follows:
- Innovation and added value of activities in the information technology (IT) sector
- Impact on Quebec's technological and economic development
- Capacity and skills of the project team
- Potential for job creation in Quebec
- Financial viability and project implementation plan
grant_single_labels|register
Step 1: Contact Investissement Québec advisor
- Reach out to an advisor from Investissement Québec.
- Get answers to your questions about the tax credit.
- Learn where to access the application for an eligibility certificate on the Investissement Québec website.
Step 2: Complete application forms
- Fill out the application for a corporation certificate.
- Fill out the application for an employee certificate.
- Ensure the forms are completed for the relevant taxation year.
Step 3: Submit application forms
- Send the completed application forms to Investissement Québec for review.
- Wait for Investissement Québec to confirm your company's eligibility.
grant_single_labels|otherInfo
This tax measure helps companies in Québec's IT sector by providing a tax credit for eligible e-business activities. Companies must apply annually and fees are charged for processing.
- The cutoff date for using the prior version of forms is December 31, 2023.
- Companies may apply for financing for refundable tax credits to receive funds sooner.
- New changes in 2025 will introduce an exclusion threshold for calculating the tax credit and remove the $83,333 limit on eligible salaries.
Apply to this program
Tax Credit for E-Business Development in Quebec
The Tax Credit for the Development of E-Business is aimed at incentivizing IT-centric corporations in Quebec by providing a tax credit of up to $25,000 per eligible employee, fostering technological innovation and growth in the region. This grant covers various IT activities such as systems development, e-commerce solutions, and security services while excluding operational activities and administrative tasks.
Understanding the Tax Credit for E-Business Development in Quebec
The Quebec government's Tax Credit for the Development of E-Business is a significant initiative aimed at bolstering technological advancement within the province. Structured to support specialized corporations undertaking innovative activities in the IT sector, this tax measure not only promotes regional development but also ensures high-value-added activities remain competitive on a global scale. Here’s a detailed breakdown of the various aspects of this tax credit:
Credit Rate and Financial Benefits
The tax credit is framed to cater to salaries paid to eligible employees within qualifying corporations. It’s structured as follows:
- The tax credit encompasses 30% of eligible salaries, divided into two portions: a 24% refundable credit and a 6% non-refundable credit.
- An annual maximum credit of $25,000 can be availed per eligible employee.
This effective split ensures corporations can benefit both by reducing immediate taxable income and securing refunds, thereby improving cash flows.
Eligibility Criteria
The tax credit isn’t open to all businesses indiscriminately; rather, it involves a stringent set of eligibility criteria that corporations need to meet:
Eligible Corporations
To benefit, a corporation must:
- Engage primarily (at least 75%) in the IT sector, particularly in fields of information system design or software publishing, within Quebec.
- Have at least 50% of its IT activities covered by the North American Industry Classification System (NAICS) codes 541514, 541515, 511211, 511212, 561320, and 561330.
- Ensure that at least 75% of its applicable activities include services provided to arm’s length persons or involve applications developed for exclusive use outside Quebec.
- Maintain a minimum of six full-time eligible employees throughout the taxation year.
Eligible Employees
To qualify, an employee should:
- Hold a full-time position.
- Devote at least 75% of their time to activities directly supporting IT services, systems development, or e-business processes.
Eligible Activities
A broad spectrum of IT activities falls under the auspices of this tax credit, but it remains essential to recognize the specific focus areas and exclusions:
Permitted Activities
Corporations can claim the tax credit for:
- IT consulting services, including technology integration, systems development, and e-business solution design.
- Development, integration, maintenance, and evolution of information systems (software, computer programs), and technology infrastructure (hardware, architecture upgrades).
- Design and development of e-commerce solutions facilitating monetary transactions.
- Security and identification services targeted at e-commerce activities (like electronic imaging, AI interfaces).
Excluded Activities
Certain activities, however, are excluded:
- Operation of e-business solutions, such as processing electronic transactions over a transactional website.
- Management or operation of information systems, applications, or infrastructures arising from e-commerce.
- Operation of customer relations centers, hardware installation, and training.
- Activities unrelated to e-business, administrative tasks, and marketing activities designed to increase corporate visibility.
Eligible Salaries
The salaries deemed eligible for this tax credit are selective:
- They refer to employment income as defined by the Quebec Taxation Act.
- The maximum annual salary for which the tax credit can be claimed is $83,333 per employee.
Application and Compliance
Compliance is crucial for corporations to successfully obtain the tax credit:
- Corporations must procure both a corporation certificate and an employee certificate from Investissement Québec annually.
- Fees are associated with the application and processing of these certificates.
Failure to comply with these specific requirements could result in delays or denial of the tax credit.
Application Process
The procedure for applying is straightforward:
- First, contact an Investissement Québec advisor to obtain detailed application forms for the corporation and employee certificates.
- Complete and submit these applications post-tax year-end for review.
- Investissement Québec will then confirm the eligibility status.
It's advisable to maintain transparent records and precise documentation to facilitate a smooth application review.
Recent and Upcoming Changes
Modifications have been announced to keep the tax credit aligned with current economic needs:
- Starting in 2025, the $83,333 salary limit will be removed, but an exclusion threshold per eligible employee will be introduced.
- This threshold is based on the basic personal tax credit ($18,056 for 2024), adjusted for the eligible employee’s qualification period.
- Furthermore, the non-refundable tax credit rate will increment by 1% annually, reaching 10% by 2028, whereas the refundable rate will reduce correspondingly to 20% by 2028.
These changes aim to balance between encouraging higher salaries while maintaining manageable tax credit limits.
Financial Assistance
Companies eligible for this tax credit might also seek immediate financial benefits:
- They can apply for financing for refundable tax credits, thus ensuring they leverage their cash flow more effectively.
Conclusion
The Tax Credit for the Development of E-Business is a cornerstone initiative by the Quebec government to propel the IT sector forward. By providing substantial financial incentives, it supports corporations in undertaking high-value IT activities while promoting employment and growth within the region. Compliance with eligibility criteria and understanding the scope of covered activities are imperative for businesses to maximize benefits from this tax credit. For further details, companies are encouraged to consult with Investissement Québec advisors to ensure that they are well-informed and adequately prepared to take advantage of this lucrative financial incentive.