Quebec Innovation & R&D Tax Credits (2025 Guide)
Quebec is a Canadian leader in research, innovation, and technology development—supported by some of the most generous provincial business R&D tax credits available. Whether you’re a startup, SME, or large corporation, Quebec offers a suite of refundable and non-refundable credits for qualifying research and development activities, innovation projects, and the commercialization of intellectual property. This guide covers the main Quebec innovation and R&D tax credits, eligibility, stacking with the federal SR&ED credit, claim process, and expert tips for maximizing your refund.
1. Quebec R&D (SR&ED) Tax Credit
- What is it? A refundable tax credit for eligible R&D salaries, subcontracting costs, and university research performed in Quebec. Most corporations qualify for the refundable version.
- Who qualifies? Corporations with a permanent establishment in Quebec, conducting scientific research and experimental development (SR&ED) activities in the province.
- Eligible activities: Experimental development, applied research, basic research, and university/public research contracts performed in Quebec. Must meet the federal SR&ED definition.
- Rates:
- 14% (non-refundable) to 30% (refundable) for eligible salaries, depending on company size, sector, and whether the work is subcontracted or in-house.
- SMEs and certain public contracts qualify for the highest rates.
- Stacking: Can be claimed in addition to the federal SR&ED credit, but expenditures must be coordinated to avoid double claiming.
- Claim process: File Quebec form RD-1029.7 and supporting schedules with your CO-17 corporate tax return. Maintain detailed project documentation.
- Tip: Keep time logs, technical records, payroll, and supporting documents for all eligible employees and projects. Many SMEs can receive a cash refund even with tax losses.
- See: Official Quebec R&D Credit
2. Quebec Innovation Tax Credit (Commercialization)
- What is it? A refundable tax credit for eligible expenditures related to the commercialization of intellectual property developed in Quebec, including patents, new technology, and innovation adoption.
- Who qualifies? Corporations with eligible innovation projects, particularly in manufacturing, technology, and industrial sectors, and with qualifying patent/IP developed in Quebec.
- Eligible expenses: Technology commercialization costs, eligible property or equipment, and qualifying salaries.
- Rates: Typically 20%–30% of eligible expenditures, up to annual and project-specific caps.
- Stacking: Can be combined with federal SR&ED and other Quebec innovation credits, but review for overlap rules.
- Claim process: File the appropriate Quebec innovation credit schedules with your CO-17. Pre-approval or registration with Investissement Québec may be required for some programs.
- Tip: Review the latest eligibility guidelines—commercialization credits often target post-R&D activities such as patenting, process improvement, or product launch.
3. University, Public, and Contract Research Credits
- Enhanced rates: R&D performed through public or university research contracts is eligible for higher refundable credit rates in Quebec.
- Who qualifies? Corporations who commission eligible research work through Quebec universities or government-recognized research centers.
- Claim process: Additional supporting documents and contracts may be required. Ensure contracts meet Quebec's definitions and are properly executed.
4. Stacking Quebec & Federal Credits
- Quebec R&D and innovation credits are designed to stack with federal SR&ED incentives, often providing businesses with a combined tax credit/refund exceeding 60% of eligible salaries and costs.
- Ensure you coordinate your claims to avoid overlap or double-claiming the same expense on both returns.
- For complex projects, consider advice from a tax professional or R&D tax specialist familiar with both federal and Quebec rules.
5. How to Claim & Documentation Tips
- Prepare and file all required Quebec credit schedules (e.g., RD-1029.7, CO-1029.8.36.M for multimedia/IT, and innovation forms) with your CO-17 corporate tax return.
- Maintain robust supporting documentation: technical project descriptions, payroll records, time logs, contracts, invoices, and proof of Quebec-based activities.
- Obtain pre-approvals or certificates for certain innovation/technology programs where required.
- Unused non-refundable credits may be carried forward or back (subject to program rules).
Related Quebec & Business Innovation Guides
Frequently Asked Questions
Can I claim both Quebec and federal R&D credits?
Yes, you can. Most Quebec R&D tax credits stack on top of the federal SR&ED credit, maximizing your refund. Ensure you do not double-claim the same expenditure on both returns.
Are startups and tech companies eligible for Quebec innovation credits?
Absolutely. Quebec's refundable innovation credits are among the best in Canada for startups and SMEs, especially those with payroll and R&D occurring in Quebec. Review eligibility for each program.
What if my business has losses?
The Quebec R&D tax credit is refundable—meaning you can receive a cash refund even if your corporation has no taxable income.
How do I maximize my combined R&D and innovation claims?
Coordinate your Quebec and federal SR&ED claims, maintain excellent documentation, and review if your project qualifies for enhanced rates (e.g., university contracts, SME status, post-R&D innovation credits).