Receive your tax credits for the Development of E-Business (CDAE)

The Development of E-Business Program

This Quebec government financial assistance, administered by Investissement Québec, allows companies devoted to the development or integration of e-business solutions (for example, management software or ERP, transactional websites, or e-commerce platforms) or technology infrastructure related to e-business systems to receive a refundable tax credit of 24% plus a non-refundable tax credit of 6% of the salaries paid to eligible employees.

Also named CDAE, from its original French name Crédit au Développement des Affaires Électroniques, CDAE credits cover eligible salaries paid to qualified staff in the information technology sector. Québec companies can include eligible expenses for maintenance and evolution, system development, and the development of e-commerce solutions.

This funding applies to the first $83,333 of salary per eligible employee, up to a maximum of $20,000 in refundable credits plus $5,000 in non-refundable credits.

The program aims to enhance competitiveness, especially in areas of recent industry focus such as AI solutions and cybersecurity, to build a stronger overall digital ecosystem.

Emergex Possibly Filed the Most Claims

Emergex SR&ED Consultants, the leading expert in government assistance for the software and IT industry, helps IT companies operating in Quebec maximize their returns from the CDAE program, a generous tax credit for the Development of E-Business.

Emergex is one of the business consulting firms that filed the greatest number of E-Business tax credit claims with Investissement Québec since the program’s creation in 2008.

Our specialists maximize CDAE outcomes for companies whose main activities include software publishing and advanced technological solutions.

CDAE Tax Credit Eligibility Criteria

To qualify for the CDAE credit, a company must meet three main criteria:

• At least 75% of its gross revenues must come from the IT sector, with at least 50% from activities covered by NAICS codes 541514, 541515, 511211, 511212, and under certain conditions, 561320 and 561330.
• At least 75% of gross revenues from activities covered by these NAICS codes must be for services ultimately provided to entities at arm’s length, or for services related to applications used exclusively outside Quebec.
• The company must maintain at least six eligible employees during the fiscal year. Each eligible employee must spend at least 75% of their time on eligible activities, work a minimum of 26 hours per week, and be hired for at least 40 weeks.

Additionally, the corporation must have an establishment in Québec and meet the required revenue ratios. Specialized IT companies creating tools for business processes must also comply with these criteria.

Already claiming SR&ED tax credits? No problem! The CDAE tax credit can be combined with R&D incentives and other tax credits to maximize your refunds. Combining SR&ED and CDAE programs can allow companies to recover up to 84% of eligible salaries in tax credits, fostering durable economic benefits for Quebec.

CDAE Application Process

To receive the CDAE tax credit, a company must first obtain an eligibility certificate from Investissement Québec, as well as one for its employees each year. Investissement Québec reviews financial documents (financial statements, trial balances, sales journals, etc.) to verify eligibility and may conduct a company visit, either in person or via videoconference.

Once the company and its employees are deemed eligible and fees are paid, Investissement Québec issues the certificates. The company can then complete the relevant schedules in its tax return to obtain the refund from Revenu Québec.

Our E-Business Claim Services

Claim Preparation

Emergex assists technology companies in claiming both refundable and non-refundable CDAE tax credits.

1. Analyze your situation and assess eligibility for the E-Business program.
2. Collect all necessary information to obtain annual eligibility certificates for the company and its employees.
3. Prepare a file that meets Investissement Québec’s requirements.
4. Once certificates are received, prepare the relevant tax schedules in your corporate income tax return.

Advice

Several factors can compromise CDAE eligibility. Emergex provides guidance to avoid pitfalls and ensure certification:

• Analyze revenue sources and verify compliance with required ratios.
• Assist in modifying corporate structure if needed to meet eligibility criteria.
• Review documentation (timesheets, project descriptions, contracts, etc.) to ensure compliance with Investissement Québec requirements.

Optimization

Beyond the CDAE tax credit, other government programs can help grow your company. Entrusting Emergex with these claims ensures maximum global ROI:

• Identify additional programs you qualify for.
• Calculate potential claims for each program.
• Determine the optimal combination of programs.
• Optimize your return considering ensuing tax liabilities.

Financing

If you need cash to finance software development, different options are available: banks, institutions specialized in financing tax credits, loan guarantees, and direct financing by Investissement Québec. Emergex can help:

• Choose the best prefinancing solution for your needs.
• Provide letters of comfort accepted by most financial institutions.
• Prepare technological descriptions required for prefinancing.
• Recommend partners specialized in tax credit financing.