Tax credit for design in Quebec
QC, Canada
Tax credit for a desing activity carried out by an outside consultant
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|projectCostPercent
grant_single|deadlines
- grant_single|openingDateNovember 14, 2019
- grant_single|grantStatusClosed
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- Manufacturing
grant_single|grantors
- Revenu Québec
- Gouvernement du Québec
grant_single|status
grant_card_status|open
grant_single_labels|preview
Tax credit of 12% to 24% on the cost of external design activities (salary costs up to $60,000 for a designer and $40,000 for a pattern maker) or 65% of contract fees admissible on the cost of external design activities by a consultant.
grant_single_labels|projects
This grant is specifically available to companies that have a permanent establishment in Quebec, Canada. The eligible geographical area is within the province of Quebec as determined by the funding framework.
- Companies operating with a physical establishment in Quebec.
grant_single|admissibleProjectsExample
$65,000
Creation of an eco-friendly furniture line with external design consultancy
$32,500
Designing a new corporate identity with external consultancy
$45,500
New tech startup designs mobile app interface with external consultant
$20,400
Development of a new fashion line with external design consultant
$14,900
Redesign of restaurant interiors with the help of an external design consultant
$52,000
Revamping company’s website with the help of an external design consultant
grant_single_labels|admissibility
Eligibility for this grant is determined by specific criteria related to the company's profile and activities.
- The company must have an establishment in Quebec and operate a business with a gross income of at least $150,000 annually.
- The company must obtain a certificate of eligibility for an external design activity issued by the Minister of Economy, Innovation and Energy.
- The company should not be a tax-exempt corporation.
- The company should not be a Crown corporation or a wholly controlled subsidiary of such a corporation.
- If the company is a member of a partnership, it can claim the tax credit for its share of the expenses incurred by the partnership.
grant_eligibility_criteria|who_can_apply
Yes, there are eligible types of companies for this grant. The company must operate an establishment in Quebec and generate a minimum annual gross revenue of $150,000.
- Company must have an establishment in Quebec.
- Annual gross revenue requirement of at least $150,000.
- Not exempt from taxes, nor a Crown corporation or its wholly controlled subsidiary.
- Holds a certificate of eligibility from the Minister of Economy, Innovation, and Energy for external design activities.
grant_eligibility_criteria|who_cannot_apply
This grant is not available to certain companies based on their tax status and ownership structure. The restrictions focus on directing funds only to taxable and non-governmental entities.
- Companies that are exempt from tax.
- Crown corporations or subsidiaries wholly controlled by such corporations.
grant_eligibility_criteria|eligible_expenses
This grant is designed to support companies engaging in external design activities that involve a qualified external consultant. Eligible projects or activities are those that a company undertakes via a contract with an external consultant for design work in Quebec.
- Design activities conducted under a contract with an eligible external consultant.
- Pattern drawing activities conducted under a contract with an eligible external consultant.
grant_eligibility_criteria|zone
Eligible expenses for the credit are specified based on whether the eligible corporation has a relationship of dependence with the eligible external consultant or not.
- If the eligible corporation has a relationship of dependence with the eligible external consultant: The eligible expenses are the portion of the contract cost attributable to the salary paid by the external consultant to an eligible designer or an eligible pattern designer who holds the necessary qualification certificate and works at one of their establishments located in Quebec. The eligible annual salary is capped at $60,000 for a designer and $40,000 for a pattern designer.
- If the eligible corporation does not have a relationship of dependence with the eligible external consultant: The eligible expenses are 65% of the portion or total cost of the contract attributable to a design or pattern drawing activity provided for in the contract and performed by the eligible external consultant themselves in Quebec, on behalf of the corporation.
grant_single_labels|register
Here are the steps to submit an application for this grant:
- Step 1: Gather Necessary Documentation
- Complete the form "Crédit d'impôt pour la réalisation d'une activité de design à l'externe" (CO-1029.8.36.5).
- Obtain a copy of the eligibility certificate issued by the Minister of Economy, Innovation, and Energy for the design activity.
- Secure a copy of the qualification certificate for each eligible external consultant from the Minister of Economy, Innovation, and Energy.
- Step 2: Additional Required Documents
- Prepare an organizational chart of associated companies and related persons or partnerships.
- Collect copies of invoices from eligible external consultants and proof of payments showing their Quebec Enterprise Number (NEQ) or Social Insurance Number (SIN).
- List names of eligible external consultants and their employees who performed the work.
- Attach a copy of the contract or agreement with each eligible external consultant.
- Provide proof that the company’s income calculation for the year includes the credit amount for any previous years, if applicable.
- Step 3: Complete Income Tax Return Entries
- Enter the name of the tax credit on one of the lines 440p to 440y of the income tax return.
- Include its code (10) and amount in the designated spaces.
- Step 4: Submission of Application
- Attach all copies of the form CO-1029.8.36.5 to the company’s income tax return for the fiscal year.
- Include copies of all relevant certificates issued by the Minister of Economy, Innovation, and Energy.
- If unable to attach documents to the income tax return, submit them by mail before the latest of: 12 months after the tax return deadline or 3 months after issuance of the necessary certificates.
- Step 5: Final Covering Considerations
- Ensure all documents required are provided to facilitate processing.
- Submit all documents in one package for faster processing.
- Optionally, transmit documents via the Internet using authorized software, eliminating the need for paper copies.
- Include the company's name, identification numbers, and fiscal year-end date on postal submissions.
grant_single_labels|otherInfo
Here are additional relevant details for this grant:
- The maximum annual salary considered for eligible designers is $60,000, and for patternmakers, it is $40,000.
- Documents can be submitted via authorized internet software, which negates the need for paper submissions.
- On mailed documents, include the company name, identification numbers, and fiscal year-end date.
- All documents should ideally be submitted in one package to expedite processing.
- If necessary attestation documents are delayed, applications will be processed only upon receipt of these attestations, even if they arrive past the deadline.
Apply to this program
Unlocking Tax Incentives for External Design Activities
The Crédit d'impôt pour la réalisation d'une activité de design à l'externe provides tax credits to eligible companies that engage in qualified design activities through external consultants in Quebec. This initiative supports enterprises by offering substantial tax relief based on the size of their total assets, promoting external collaboration within the design sector.
Detailed Insights into the Design Activity Tax Credit
The "Crédit d'impôt pour la réalisation d'une activité de design à l'externe" is a valuable fiscal benefit designed to encourage Quebec businesses to engage in external design projects. This tax credit aims to enhance the innovative capabilities of companies by financially supporting their collaboration with external design consultants. To qualify, a company must hold an eligibility certificate from the Minister of Economy, Innovation, and Energy regarding a design activity conducted under a contract with an eligible external consultant. The tax credit rates vary, influenced by the total assets of the company: 24% for assets amounting to $50 million or less, reducing proportionally for companies with assets up to $75 million, and settling at 12% for those with $75 million or more.
This financial incentive is tailored for businesses actively operating in Quebec with an establishment earning a gross income of at least $150,000 annually. However, it excludes tax-exempt corporations, crown corporations, or subsidiaries wholly owned by a crown corporation. This ensures that the credit targets private-sector businesses that can benefit significantly from increased cash flow for further innovation investments. Companies involved in partnerships must manage their share of expenses incurred collaboratively to avail themselves of this credit.
Eligible expenses primarily involve costs associated with salaries paid to qualified designers or patternmakers who hold a certification and work at the consultant's Quebec establishment. When a dependency exists between the company and the consultant, the eligible expenses reflect the portion of the contract cost related to these certified workers' wages. Conversely, when no dependency exists, businesses can claim 65% of the contract expenses tied to design or pattern drawing activities personally executed by the consultant in Quebec.
To apply for this tax credit, companies must meticulously assemble a range of documents alongside their tax return. This includes the designated tax credit form (CO-1029.8.36.5), eligibility certificates for both the business and the consultant, detailed organizational charts, invoices with Quebec business numbers or social insurance numbers, and a comprehensive list of involved consultants and employees. Additionally, copies of contracts and proof of their financial contribution are required for thorough verification.
Timely submission of documentation is critical, with deadlines extending to 12 months post the tax year's deadline or three months following issuance of the required certification, whichever occurs later. While digital submissions via authorized software simplify the process and negate the need for physical copies, postal submissions must be accompanied by all relevant identification details to expedite handling.
The "Crédit d'impôt pour la réalisation d'une activité de design à l'externe" thereby ensures that companies investing in external design collaborations are rewarded with reduced tax liabilities. This leverages the collaborative potential of external experts to enhance design quality and outputs, contributing to the competitive advantage of Quebec's enterprises within a global marketplace.
