How much e-commerce (CDAE) tax credits?

A corporation eligible for the e-business tax credits program (CDAE) gives access to refundable (checks) and non-refundable credits (as a deduction from Québec taxes):

• A refundable tax credit of 24% is granted for eligible salaries for a maximum tax credit of $ 20,000 per employee (maximum of $ 83,333 in salaries);
• And a non-refundable tax credit of 6% for eligible salaries for a maximum tax credit of $ 5,000 per employee(maximum of $ 83,333 in salaries).

This annual repayment may become recurring in subsequent years if the corporation continues to meet the eligibility criteria requested by Investissement Québec (IQ).

The qualifying salary is the gross amount paid to an eligible employee who meets the eligibility requirements.

Who are the eligible employees?

To be eligible for this measure, the employee must meet the following conditions:

• Not hold more than 10% of the shares of the company;
• Have a full-time job (minimum of 26 hours per week) for a minimum of 40 consecutive weeks;
• For at least 75% of his working time, undertake, supervise or directly support work related to the performance of an eligible activity, except administrative tasks.

Optimization of credits

Québec’s tax legislation includes several measures to prevent the accumulation of tax credits from the same expense.

For example, some employees are eligible for the e-business tax credit and the tax credit for scientific research and experimental development (SR & ED). But an information technology company can not claim the SR & ED (Quebec) and the e-business credit for the same salary expense. However, this legislation leaves the taxpayer with the option of determining which of the tax credits to apply to an expense. It is therefore important to make the right choices.

First, it is important to mention the minimum annual R&D  expenses threshold of $ 50,000 introduced in Quebec. If the expenses are below the minimum threshold and they were made by an employee eligible for the CDAE, your choice is simple: CDAE.

If the expenditure exceeds this threshold, an optimization of your requests for tax credits is necessary. This optimization must be done individually for each employee. It must take into account credit rates, the effect between the federal and provincial credits, and the refundable or non-refundable amounts of these credits.

Finally, the excess of $ 83,333 in salary of an employee can be claimed as SR&ED if he qualifies.

Important note:

The information contained in this blog is for information only. Consult an accounting or tax specialist such as R&D Action before submitting a claim. Review the relevant policies available on the Investissement Québec (IQ) and Revenu Québec (ARQ)  websites.

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