Research and Development

Financing of Refundable Tax Credits

Investissement Québec

Businesses that qualify for one of the following tax credits:

• Scientific research and experimental development: Federal and provincial sections;

• Payroll increase: Aluminum Valley (VA); Gaspésie and Certain Maritime Regions of Québec (GM); Processing Operations in Resource Regions (AT);

• Knowledge-based economy: Development of E-Business (CDAE); Biotechnology Development Centres (CDB); Major Employment-generating Projects (GPCE); Production of Multimedia Titles (PTM).

• Loan guarantee or loan.
• Minimum amount of loan guarantee: $50,000 for the SRED tax credits and $20,000 for the other tax credits.
• The loan guarantee can cover up to 80% of the net loss.
• The maximum duration for financial assistance is 18 months.
• For loans, the amount granted by Investissement Québec may cover up to 75% of refundable tax credits for a given fiscal year.

Eco-Financing

Investissement Québec

Québec businesses in all economic sectors are eligible, except the following:

• Agriculture;
• Finance and insurance;
• Real estate;
• Services to individuals;
• Retail sales and related or comparable activities;
• Other sectors in which the client base is made up mainly of individuals, except for the tourism sector.

Eligible Projects

• Acquisition of capital assets for greenhouse gas (GHG) reduction
• Working capital expenditures, including R&D for GHG reduction
• Expenditures for the qualification, quantification and certification of offset credits (carbon credits)
• Acquisition of offset credits to comply with your business sector standards

• Loan, loan guarantee or quasi-equity financing.
• The minimum amount of financing from Investissement Québec is $50,000.
• The financing may cover up to 100% of the project costs.
• The loan guarantee may cover up to 85% of the net loss.
• The maximum duration of the financial assistance is 20 years, depending on the nature of your project.
• Repayment of the capital amount may be deferred.
• Securities may be required.

Legally incorporated companies active in Québec, particularly companies with a maximum of 200 employees. Companies in all economic sectors are eligible, except for the following:

• Primary sector;
• Wholesalers (with the exception of value-added distribution centres);
• Retailers;
• Personal services;
• Food and lodging businesses.

• Financial assistance takes the form of a non-refundable contribution covering up to 40% of eligible expenses.
• Total financial assistance for a given project is limited to a maximum of $400,000, including a $100,000 ceiling for carrying out studies required for project planning or developing a marketing plan.
• However, financial assistance for a project involving a demonstration of green technology in real operating conditions may be as high as $1,000,000.

The SD Tech Fund ^TM is aimed at supporting the late-stage development and pre-commercial demonstration of clean technology solutions.

Businesses that have expertise in sustainable development technology and are part of a consortium bound by contract.

Foreign interest proposals are also accepted for technologies to be tested in Canada.

Non repayable contribution representing, on average, 33% of project costs.

Two funding rounds a year: August and January.

Two steps: statement of interest and interest proposal.

Note: The application assessment process spans one year.

Businesses in Canada (without restriction as to the number of employees).

Subsidiaries of international corporations that have been in Canada for at least one year and have an independent administrative centre (intellectual property must remain in Canada).

Repayable contribution that can represent 30% of eligible costs.

Businesses in Canada with less than 500 employees.

Subsidiaries of international corporations that have been in Canada for at least one year and have an independent administrative centre (intellectual property must remain in Canada).

Non repayable financial contribution that can cover up to 50% of R&D expenditures and vary from $5,000 to $350,000.

Tax Credit for R&D Salary for Biopharmaceutical Activities

Investissement Québec

Your corporation must carry on one or more of the following activities related to human health:

• integrated innovative pharmaceutics;
• pharmaceutical manufacturing of generics;
• pharmaceutical manufacturing under contract;
• biotechnology (therapeutic or diagnostic products, biological processes and pharmaceutical research).

A refundable tax credit equal to 27.5% to 37.5% of eligible R&D expenditures for a given taxation year.

Your corporation may be eligible for the increased rate of this tax credit for expenditures incurred and work carried out after November 20, 2012 and prior to January 1, 2018.

Eligible expenditures

• The wages of employees working directly on an eligible project;
• 50% of the fees paid to a subcontractor conducting R&D for a Québec business;
• 80% of all eligible R&D expenditures incurred under a research contract signed with a university or eligible research centre;
• The fees paid to a research consortium;
• The expenditures made under a precompetitive research project in private partnership.

For R&D

• Fully refundable basic tax credit covering 17.5% of R&D wages paid in Québec.

For university R&D and consortium R&D

• Fully refundable tax credit covering 35% of eligible expenditures.

The following researchers and experts not residing in Canada immediately prior to signing their employment contract may qualify for this tax holiday: 

• A researcher specializing in pure or applied sciences hired by an employer carrying on a business in Canada that conducts R&D in Québec;
• An expert specializing in management or financing of innovation activities or in foreign marketing or advanced technology transfer, and hired by an employer carrying on a business in Canada that conducts R&D in Québec.

Tax holiday for foreign researchers and experts who have expertise in certain specialized sectors and move to Québec to work.

This tax holiday covers a period of no more than five consecutive years and applies to a portion of an individual's wages, i.e., 100% of the individual's taxable income in the first two years, 75% in the third year, 50% in the fourth year and 25% in the fifth year.

Eligible expenditures:

• The wages of employees working directly on an eligible project;
• The fees paid to a subcontractor conducting R&D for the business;
• The payment made to an accredited association, a university, college, research institute or other accredited organization;
• The cost of materials used for the project;
• The cost of leasing the equipment used for project implementation;
• The overhead directly related to the research;
• The cost of capital assets, such as equipment, where 90% of such assets are used for R&D projects.

Non refundable basic tax credit covering 20% of R&D expenditures.

Partially refundable tax credit covering 35% of the first $3,000,000 segment of annual R&D expenditures by a Canadian-controlled SMB.