CDAE Most Frequently Asked Questions
The Tax Credit for the Development of E-Business, known as "CDAE" in French. It offers an exceptional financial opportunity for IT specialized Quebec-based corporations to obtain a tax credit. This represents an annual maximum of $25,000 per eligible employee.
- Generate at least 75% of the gross revenue from information system design or software publishing.
- Maintain a minimum of six eligible employees dedicating 75% or more of their time to eligible activity.
Question: "Tell me more about the structure of the CDAE tax credit. How much financial assistance can I expect?"
Answer: The CDAE tax credit is equal to 30% (24% refundable tax credit, coupled with an additional 6% non-refundable tax credit) of each eligible employee's salary. The annual return can not exceed $25,000 per eligible employee. This can provide a significant boost to your corporation's finances.
Expanding on CDAE
Question: "What is the scope of the CDAE program, and what kind of e-business activities does it cover?"
Answer: The CDAE program is designed to support Quebec-based corporations developing or integrating e-business software solutions for their clients. The definition of “e-business” under the program means the digitization of internal and external business processes.
Eligible Employee Criteria
Question: "What criteria should employees meet to qualify for the CDAE tax credit?"
Answer: To be eligible, an employee must have a permanent contract and works at least 26 hours per week. Eligible employees need to dedicate over 75% of their time to eligible activities.
Defining Eligible Activities
Question: "Can you provide examples of 'eligible activities' that qualify for the CDAE tax credit?"
Answer: Technical activities encompass the design, development, integration, maintenance or evolution of information systems. Also, providing IT consulting services for e-business solutions are considered eligible activity.
Defining Excluded Activities
Question: "Can you provide examples of 'excluded activities' that qualify for the CDAE tax credit?"
- Operation of an e-business solution.
- Management or operation of information systems, applications or infrastructures.
- Operation of a customer relations centre.
- Hardware installation and training activities.
- Activities not related to e-business.
- Administrative tasks.
- Activities related to improve corporation’s visibility and promote its goods and services.
If an employee devotes over 25% of their time to excluded activities, they won't be eligible for the credit.
Maintaining Eligibility Throughout The Years
Question: "How can my corporation maintain eligibility for the CDAE tax credit, especially if an employee leaves?"
Answer: A corporation must maintain a minimum of six eligible positions throughout the year. If an employee leaves during his first 40 weeks, the corporation must take practical actions to replace him.
Hiring During the Fiscal Year
Question: "I'm planning to hire employees during the fiscal year. Will they still be eligible for the CDAE tax credit?"
Answer: Employees hired during the fiscal year qualify for the credit as long as they meet the 75% rule. Moreover, they should continue in the same position beyond the fiscal year end.
Calculating CDAE Tax Credits
Question: "How is the CDAE tax credit calculated, and what factors affect the amount I can receive?"
Answer: The CDAE tax credit is calculated based on the number of days an employee works in the fiscal year, prorated according to the program's salary cap ($83,333). The calculated eligible salary is then multiplied by the tax credit rate.
On the other hand, various factors can affect the CDAE returns, such as:
- Work realized for the Quebec Government.
- Other grants or tax credits received for the employee's salary.
Maximizing Annual CDAE Returns
Question: "How can Avinova help my corporation maximize its returns on the CDAE program?"
Answer: Your corporation could receive substantial annual financial returns by participating in the program. To learn more about whether your corporation is eligible for this tax credit, contact a qualified professional at Avinova and start the process today.