Who can benefit from this tax credit?
The Investment and Innovation Tax Credit, commonly known as C3i, was introduced when the Quebec government tabled its budget in March 2020. The aim of this measure is to increase investment in regions with weaker economic vitality as well as to stimulate business productivity.
This credit applies to specified expenses incurred for the acquisition of new goods used solely in Quebec, namely :
- Manufacturing and processing equipment ;
- Universal electronic data processing hardware and related operating software;
- An eligible management software package ;
- Certain goods used in the processing of minerals extracted in a country other than Canada;
- Certain assets used primarily to process a mineral resource located in Canada.
Specified costs represent the costs incurred for the acquisition, which are included in the capital cost and paid no later than 18 months after the year in which the property was acquired. These costs are reduced by an excluded amount of either $5,000 or $12,500, depending on the nature of the property.
To be eligible for C3i, these assets must be acquired after March 10, 2020, but before January1, 2025.
Credit enhancement until December 31, 2023
Since March 2021, the Quebec government has temporarily doubled the rates applicable to C3i, and in the March 2022 budget, it was announced that this bonus would be extended to assets acquired before January1, 2024. Eligible companies therefore have until December 31, 2023 to take advantage of this important bonus.
In order to qualify for this bonus, the goods acquired must be individualized.
Details of investment and innovation tax credit rates according to territory and time of acquisition :
| Territory where the property is acquired to be used primarily | After March 10, 2020 and before March 26, 2021 | After March 25, 2021, but before January1, 2024 | After December 31, 2023, but before January1, 2025 |
| Low economic vitality | 20 % | 40 % | 20 % |
| Intermediate economic vitality | 15 % | 30 % | 15 % |
| High economic vitality | 10 % | 20 % | 10 % |
Well individualized
A property is individualized when :
- Its construction is complete, and
- The purchaser is informed.
As soon as the above two criteria are met, a good is individualized, even if the supplier still has to carry out quality tests. It is not necessary for the good to be delivered or commissioned, but it must begin to be used within a reasonable period of time. If, when the purchase contract is signed, the asset has been built and meets the specific needs of the acquiring company, it could qualify for C3i.
It’s important to understand that simply signing a purchase contract is not enough to benefit from the Investment and Innovation Tax Credit.
There are, of course, other criteria to consider. If you are in the process of acquiring a C3i property, we invite you to contact us as soon as possible.
An article from theTax team
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