Incentive deduction for the commercialization of innovations (IDCI)

• The IDCI provides a reduced effective tax rate of 2% on the qualifying portion of income derived from the commercialization of a qualifying intellectual property asset, representing a reduction of 9.5 percentage points from the general corporate tax rate of 11.5%.
• The qualified profit eligible for the deduction must be attributable to the establishment in Québec and stem from eligible income such as sales, leases, services intrinsically related to the asset, royalties, or judicial remedies associated with the asset.
• The amount of the deduction is calculated using a formula that allocates income based on the proportion of R&D expenditures linked to Québec, and applies the tax rate reduction accordingly.

• The company must have an establishment in Québec and operate a business there.
• The company must generate income from the commercialization of a qualifying intellectual property (IP) asset.
• The qualifying IP asset must result from research and development (R&D) activities carried out in whole or in part in Québec that significantly contributed to its creation, development, or improvement.

Who is eligible?

• Corporations with an establishment in Québec carrying on a business in Québec
• Corporations earning income from the commercialization of a qualifying intellectual property asset (such as protected inventions, software, or plant varieties)

Who is not eligible

• Companies that do not have an establishment in Québec or do not carry on business in Québec.
• Corporations that do not earn income from the commercialization of a qualifying intellectual property asset.

Eligible expenses

• Research and development (R&D) expenditures directly contributing to the creation, development, or improvement of a qualifying intellectual property asset carried out in whole or in part in Quebec.
• Expenses attributable to R&D activities that are reasonably allocable to Quebec establishments.

Eligible geographic areas

• Quebec

• The IDCI applies a reduced effective tax rate of 2% on the qualifying portion of corporate income derived from the commercialization of eligible intellectual property assets.
• To benefit from the IDCI, corporations must complete and attach form CO 737.18.CI to their corporate income tax return.
• The calculation of the deduction involves specific formulas and ratios that factor in R&D expenditures in Quebec, with requirements for detailed documentation.
• The measure is accompanied by ongoing changes and updates, so applicants should consult the latest official documents and bulletins to ensure compliance with current legislation.