Tax Insights: Extension of and improvement to the TCEB until 2025

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Issue 2013-07

Background

The TCEB refundable tax credit, introduced on March 13, 2008, is paid to eligible corporations that have an establishment in Quebec where they carry out business in the field of information technology.

Eligibility certificates must be obtained from Investissement Québec (IQ) for each taxation year for which the corporation intends to claim the TCEB refundable tax credit. To obtain these certificates, the corporation must satisfy criteria regarding the activities and services provided and the maintenance of a minimum of six eligible jobs. Information must be provided to show that the corporation meets these criteria. IQ will analyze contracts entered into, invoices, the duties and responsibilities of employees and the time spent on eligible activities.

The TCEB refundable tax credit is equivalent to 30% of the eligible wages paid to eligible employees performing eligible activities. The amount of the tax credit may not exceed $20,000 per employee, per year. There are rules to prevent multiple applications for Quebec tax assistance relating to an expense that qualifies for more than one Quebec tax credit.

The TCEB refundable tax credit is calculated and applied for at the end of the taxation year, when the corporation files its income tax return with Revenu Québec. The prescribed forms and certificates obtained must be filed no later than 18 months after the end of the corporation’s fiscal year. Some exceptions apply if the corporation has not received its certificates within the 18-month time limit.

Investissement Québec can provide a loan guarantee to cover the interim financing of the tax credit. Investissement Québec charges a fee for the analysis of an eligibility application. The eligibility period of this refundable tax credit started on March 14, 2008 and should end on December 31, 2015.

Extension of the eligibility period and increase to the amount of the tax credit

The eligibility period for the TCEB will be extended by 10 years, to December 31, 2025. The maximum amount of the credit per eligible employee is raised to $22,500 on an annual basis. For a corporate taxation year that includes January 1, 2016, this amount of $22,500 will be calculated on a prorated basis. This new cap of $22,500 represents 30% of annual wages of $75,000.