The new Quebec Economic Plan was published by the Ministry of Finance on March 22, 2022, following the speech by Finance Minister Eric Girard.
In order to rubber-stamp the economic revival following the Covid-19 pandemic and to support the good results presented during the two previous years, the Quebec government wants to promote business investment, encourage innovation, pursue the numeric transition and the commercialisation by accelerating growth and exportations through the modification or the implementation of new fiscal measures. The presented measures this year hinge on four major points which are the growth of productivity of Quebec economy, the reinforcement of the integration of immigrant people, the support to the economical development of regions and to the economic recovery plan and the valorisation of the culture of Quebec and its environment. Theses new initiatives will totalise around 4.2 billion dollars from now to 2026-2027.
FI Group offers you an overview of the main changes related to R&D and innovation proposed with this new economic plan.
1. No modifications on the attribution methods on CDAE and SR&DE programs
The new economic plan did not lead to major changes in the methods for allocating tax credits for SR&ED and CDAE tax credits. The rules during the previous year therefore remain in force regarding the obtaining, and monitoring of these tax credits.
The SR&ED tax measures therefore still represent 30% of eligible R&D expenditures for SMEs and 14% for large corporations. R&D tax credits will provide support of over $2.7 billion to Québec businesses during 2022-2027, benefiting approximately 4 000 businesses annually.
2. Tax holiday for foreign researchers and experts (reminder)
A foreign researcher doing R&D work or a foreign expert carrying out activities to promote R&D results as the employee of a company in Québec may benefit from a five-year income tax holiday. The tax holiday for foreign researchers and experts consists of a degressive deduction in the calculation of the individual’s taxable income, the rate applicable to the individual’s salary being 100% for the first two years, 75% for the third year, 50% for the fourth year and 25% for the fifth year.
These tax holidays, representing $56 million in support for the 2022-2027 period, attract and retain approximately 500 world-class researchers or experts for the Québec innovation ecosystem annually.
3. Incentive deduction for the commercialization of innovations (IDCI) (reminder)
The IDCI allows a corporation to benefit from an effective tax rate of 2% on taxable income attributable to the commercialization of intellectual property in Québec.
This deduction, which encourages corporations to commercialize their innovations in Québec, will represent a $176-million reduction in the tax burden during the 2022-2027 period, eventually benefiting over 300 businesses annually.
4. Deploying the Quebec Research and Innovation Strategy 2022-2027
An additional budget of 1.3 billion of dollars is implemented to:
5. Supporting innovation in strategic sectors
To support innovation in key sectors, the government especially intends to:
6. Temporary increase in the tax credit relating to investment and innovation C3i
Introduced in March 2020, the investment and innovation tax credit (C3i) has been encouraging businesses in all sectors to acquire new technologies to digitalize their processes and upgrade their equipment.
To continue its efforts to boost productivity, the government is announcing that the temporary enhancement of C3i rates will be extended for one year, that is, for goods acquired before January 1, 2024.:
7. Stimulating investment in entrepreneurship and exports
In support of entrepreneurship, the government is providing an additional 57.5 million of dollars over three years to implement the future entrepreneurship plan for developing entrepreneurial skills and setting up a business environment conducive to the start-up, growth, and long-term survival of businesses. Furthermore, A 20 million of dollars envelope has been set aside to recapitalize the Fonds de transfert d’entreprise du Québec, which provides funding adapted to business transfer situations.
The Budget also plans to continue supporting businesses impacted during the pandemic through the Concerted Temporary Action Program for Business (PACTE), the Emergency Assistance Program for Small and Medium-Sized Businesses (PAUPME), and the implementation of the Assistance for Businesses in Regions on Maximum Alert (AERAM) component and the PACTE tourism component in order to provide help for certain more strongly affected businesses.
8. Contributing to prosperity in the regions
To contribute to prosperity in the regions, the government is providing 434.9 million of dollars over six years for:
The FI Group team is available for any further information you may have.
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