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 Quebec, allows companies devoted to the development or integration of e-business solutions (for example: management software or ERP, transactional websites or e-commerce websites) 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, the acronym from its original French name: Crédit au Développement des Affaires Électroniques. CDAE credits cover eligible salaries paid to eligible 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 of an eligible employee up to a maximum of $20,000 in refundable credits plus $5,000 in non-refundable credits.

The program aims to grow competitiveness especially with recent industry focus: AI solutions and cybersecurity, to achieve an overall stronger digital ecosystem.

Emergex possibly filed the most claims

Emergex SR&ED Consultants, the leading expert in government assistance for the software and information technology (IT) industry, helps IT companies that have operations in Quebec obtain the best return 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 Quebec since the creation of this funding program in 2008.

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

CDAE tax credit eligibility criteria

In order to qualify to the CDAE credit, a company must meet three criteria:

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

A corporation must keep an establishment located in Québec and meet ratio tests. Gross revenue must derive at least 75% from IT and at least 50% from covered activities. 

Specialized IT companies driving the creation of specialized tools for business processes must also meet these tests.

You are already claiming SR&ED tax credits? No problem! The tax credit for the development of e-business can be combined with R&D incentives and other tax credits in order to maximize your refunds. By combining the SR&ED and CDAE programs, you can get back up to 84% of eligible salaries in tax credits! This approach aims to encourage durable economic benefits for Quebec.

CDAE application process

To receive the CDAE tax credit, a company must first obtain an eligibility certificate from Investissement Quebec, as well as one for its employees, every year. Investissement Quebec will ask various financial documents (financial statements, trial balances, sales journal, etc.) to make sure that the program criteria are met, and then conduct a visit of the company, either in person or via videoconference. 

Once Investissement Quebec has determined that the company is eligible (and its fees have been paid), they will issue the certificates. With those, the company can then fill out the relevant schedules in its tax return to finally get the refund from Revenu Quebec.

Our E-business claim services

Claim preparation

Emergex helps technology companies claim the refundable and non-refundable tax credits for the development of E-Business (CDAE).

1. We analyse your specific situation and evaluate your eligibility to the E-Business program
2. If you meet the requirements of the E-Business program, we collect all the necessary information to obtain the annual eligibility certificates for both the company and the employees
3. We prepare and draw up a file that conforms to the requirements of Investissement Quebec
4. Once the eligibility certificates are received, we prepare the relevant tax schedules in your corporate income tax return

Advice

Several factors can compromise your eligibility to the tax credit for the development of E-Business (CDAE). We can advise you how to avoid the pitfalls and thus ensure that you obtain your certification.

We analyze your sources of revenues and make sure that you respect the required ratios. If you do not respect some required criteria, we can assist you in modifying your corporate structure in order to become compliant.

We examine your documentation (timesheets, project descriptions, contracts, etc.) to make sure that it meets the requirements of Investissement Quebec.

Optimization

In addition to the tax credit for the development of E-Business (CDAE), there are several government programs that help you grow your company. By entrusting Emergex with the responsibility for claiming these other credits, you are sure to maximize your global return on investment.

• We identify the other programs to which you qualify
• We calculate how much you can potentially claim from each program
• We identify the optimal combination of programs
• We optimize your return by also taking into account your ensuing tax liabilities

Financing

If you need cash to finance your software development, different options are available to you: banks, institutions specialized in financing tax credits, loan guarantees and direct financing by Investissement Quebec, etc. Contact us for more information on financing availability.

• We help you choose the best prefinancing solution for your particular needs
• Our reputation allows us to issue letters of comfort that are accepted by most financial institutions
• We prepare the technological descriptions required for prefinancing needs
• We can recommend you to our partners specialized in tax credits financing