Revenu Québec’s investment and innovation tax credit (“C3i”) is granted to a eligible company that acquires manufacturing and processing equipment, general-purpose electronic data processing equipment or management software packages, provided these purchases take place after March 10, 2020 and before January 1, 2025. There is also a temporary credit rate subsidy for purchases made on or after March 26, 2021, but before January 1, 2023.
Investment tax credit
To take advantage of the C3i offered by the Quebec government, the eligible company must have acquired more than $12,500 worth of processing or manufacturing equipment. However, there is a minimum threshold for certain expenses. A minimum threshold of $5,000 applies to purchases of computer hardware and management software packages. This means that the first $5,000 of expenses is not eligible for the credit. The tax credit rate will also be set according to the economic vitality of the region where the business is located and where the asset is acquired for use.
| Investment and innovation tax credit rates (C3i) | After March 10, 2020, but before March 26, 2021 | Temporary bonus after March 25, 2021, but before January1, 2024 | After December 31, 2023, but before January1, 2025 |
| Areas with low economic vitality | 20% | 40 % | 20% |
| Intermediate zone | 15% | 30% | 15% |
| High economic vitality zone | 10% | 20% | 10% |
The C3i is a refundable tax credit for companies whose total assets or gross income (whichever is greater), including the gross income of associated companies, is less than $50 million. For other companies, the repayable portion of the credit is gradually transformed into a non-repayable credit.
Eligibility requirements – summary
Company eligible for C3i from Revenu Québec
An incorporated company or partnership that is not tax-exempt must, in its taxation year, have a permanent establishment in Quebec and carry on business there.
Eligible property: The specific property
The specified property must have been acquired after March 10, 2020 and before January 1, 2025.
However, the property must not be :
- Property acquired pursuant to a written obligation entered into on or before March 10, 2020;
- A property for which construction by or on behalf of the company had begun on March 10, 2020.
The specified property corresponds to :
- Manufacturing and processing equipment (depreciation class 53); OR
- Universal electronic data processing equipment and related operating software (depreciation class 50); OR
- A management software package eligible under certain conditions (depreciation class 12); OR
- It is used primarily in the processing of ores extracted from a mineral resource located in a country other than Canada (depreciation class 43); OR
- It is used primarily in the smelting, refining or hydrometallurgy of ores, other than gold- or silver-mined ores, extracted from a mineral resource located in Canada.
It should start being used within a reasonable time of purchase.
The property must be
new
. It is possible for a property leased by a corporation to be eligible for C3i despite the fact that the eligible corporation did not actually acquire the property if certain conditions are met.
Certain additional criteria must also be met in order for the property to qualify, particularly with regard to its use.
Specified costs
These are expenses incurred by the company, after March 10, 2020 and before January 1, 2025, to acquire the specified property.
specified property
and are included in the capital cost of the property. The amount of specified expenses may not exceed a cumulative limit of $100 million for the 48 months preceding the given taxation year, for an entire group of associated companies.
The specified expenses must have been paid at the time the tax credit is claimed. If the specified expenses are paid more than 18 months after the end of the fiscal year, they will be considered as specified expenses for the fiscal year in which they were incurred.
The amount of costs determined must be reduced :
- The portion of expenses that are also eligible expenses for the refundable tax credit for the integration of information technologies;
- Any government or non-government assistance attributable to specific expenses;
- Any profit or benefit attributable to specific expenses.
Exclusion threshold
The exclusion threshold for a given
specific good
will be equal to the following amount :
- 5,000 for a specified
specified property
that is Class 50 property or an eligible business software package; - 12,500 for another specified
property.
An executive summary prepared by Demers Beaulne, highlighting the most important tax measures for corporations and individuals, will be released shortly. Find out more in our News section.
We have specialists in corporate tax credit research. They can help you with your requests.
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For an interpretation of the date of obligation, Lettres d’interprétation 09-006081.
A company’s eligible management software package means a property included in Class 12, pursuant to paragraph o of the first paragraph, that is a software package primarily used to manage one or more of the following:
- All of the company’s business processes, as appropriate, integrating all of the company’s functions;
- The company’s interactions with its customers using multiple, interconnected communication channels;
- A network of companies involved in the production of a product or service required by the end customer, covering all movements of materials and information, from point of origin to point of consumption.
