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E-business certificates

Other Credits12Sep2021

E-business tax credits certificates

Applications for e-business tax credit certificates must be submitted to  Investissement Québec (IQ)  no later than 15 months after the end of your fiscal year.

Before claiming a tax credit, IQ must verify your application and provide the necessary certifications.

After analyzing the file for the CDAE, Investissement Québec issues two certificates: one for the company, valid for two years and one for the employees, renewable each year.

Investissement Québec issues two e-business certificates: one for the company and one for the employees
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The following explanations are taken from the IQ web site.

1- Company e-business (CDAE) certificate

An e-business (CDAE) company certificate means that the activities and revenues of the targeted company are in the IT domains recognized by the CDAE program.

To obtain an e-business certificate for a company, it must be shown that it maintained, at any time during the tax year, a minimum of six eligible full-time employees (40 consecutive 26-hour weeks). In exceptional cases, IQ will issue a company certificate and another one of employees when the company shows that the non-respect of the number of employees is related to a situation beyond its control (eg if an employee leaves office and he it is difficult to replace).

In addition, in order to obtain an e-business company certificate, it must be shown that it has met two revenue or activity requirements:

  1. 75% of gross revenue must come from the IT sector
  2. 50% of gross revenue must be tied to four (4) specific NAICS codes

A- 75% of gross revenue must come from the IT sector

75% of the gross revenues of the corporation must have been generated through activities related to the ten (10) NAICS codes described below.

NAICS Code Description

334110 Computer and Peripheral Equipment Manufacturing;

334220 Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing;

334410 Semiconductor and Other Electronic Component Manufacturing;

417310 Computer, Computer Peripheral and Pre-Packaged Software Wholesaler-Distributors;

443144 Computer and software stores;

511211 Software publishers (except video game publishers);

511212 Video game publishers;

51821 Data processing, hosting, and related services;

541514 Computer Systems Design and Related Services;

541515 Video game design and development services;

561320 Substitute personnel hired (under certain conditions);

561330 Permanent staff hired (under certain conditions).

B- 50% of gross revenue must be tied to four (4) specific NAICS codes

50% of the gross revenues of the corporation must have been generated through activities related to the six (6) NAICS codes described below.

NAICS Code Description

511211 Software Publishers;

511212 Video game publishers;

541514 Computer Systems Design and Related Services;

541515 Video game design and development services;

561320 Hire of substitute personnel (under certain conditions);

561330 Hire of permanent staff (under certain conditions).

In addition, in order for a company’s operations grouped under NAICS 511211, 511212 or 541514 and 541515 to be considered eligible, at least 75% of these activities must be:

  • Services provided to a person with whom it deals at arm’s length;
  • Services relating to applications developed by the company that are used exclusively outside Québec,
  • A combination of these two elements.

2- E-business certificate for employees

A certificate for e-business confirms that the individual referred to in it is recognized as an eligible employee of the corporation for the taxation year for which the application is being made or for a part of a year indicated therein.

Eligible employees

An employee is eligible when both of the following conditions are met:

  1. He holds a full-time job with a minimum of 26 hours of work per week, for a minimum of 40 consecutive weeks;
  2. He devotes at least 75% of his time to undertaking, supervising or directly supporting work related to the performance of an eligible activity, including:

Eligible activities

  1. Information Technology (IT) consulting services related to technology, systems development or e-business processes and solutions. Example: the development, integration, maintenance or evolution of information systems or technological infrastructures, or the design or development of e-commerce solutions or the development of security and identification services that can be done for that person;
  2. Development, integration, maintenance or evolution of:
  • Information systems, such as software packages, software and computer programs;
  • Technological infrastructures, such as upgrading the technological architecture and integrating hardware components and software;

It should be noted that the maintenance and development activities must be ancillary to the development and integration activities carried out by the eligible corporation. These activities include any activity (other than a hardware installation activity) required to ensure the proper functioning of systems and infrastructure or to resolve or prevent problems or incidents, provided that it is:

  • A technical intervention, whether corrective or preventive, which modifies one or more technical aspects of the components, including the computerized processes;
  • A diagnostic activity, with remote intrusion or takeover of technological systems and infrastructures, leading, directly or indirectly, to such a technical intervention;
  1. The design or development of e-commerce solutions, if such an activity consists of an e-commerce solution allowing a monetary transaction between those on whose behalf this design or development was carried out and its clientele;

For greater clarity, any activity for the design or development of a solution to which no monetary transaction is associated may nonetheless qualify as an eligible activity as long as it is linked to the development, integration, the maintenance or evolution of an eligible information system;

  1. The development of security and identification services.

Important note

The information contained in this blog is for information only. You must consult an accounting or tax specialist such as R&D Action before submitting a claim. You must also review the relevant policies available on the Investissement Québec (IQ), Revenu Québec in French only(ARQ) websites.

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President, R&D Action. ------ Notre équipe est formée de spécialistes fiscaux, scientifiques et techniques qui comprennent les nuances du programme et de votre R & D. Nous travaillons avec votre équipe pour identifier et définir les projets éligibles de RS & DE, pour préparer un dossier clair et précis et pour le défendre, le cas échéant. ------------------------------------------------------ Our team is made up of tax, scientific and technical specialists who understand the nuances of the program and your R & D.. We work with your team to identify and define eligible SR & ED projects, to prepare a clear and accurate record and to defend it, when necessary.