CDAE-IA eligibility: 5 criteria for your IT company

Your technology company develops software solutions and integrates artificial intelligence. Yet CDAE-IA eligibility may still feel unclear, leaving you unsure whether the company qualifies. That uncertainty can delay an application for significant tax assistance.

Eligibility depends on precise criteria. It is better to validate them before preparing the certificates and tax return than to uncover a gap after the fact.

This guide reviews five criteria one by one. You will be able to assess your company’s position and identify the areas that deserve attention before filing.

Understanding CDAE-IA eligibility in 2026

Quebec’s tax credit for the development of e-business has been modernized and renamed CDAE-IA for taxation years beginning after December 31, 2025. In 2026, its general combined rate is 30%: a 22% refundable portion and an 8% non-refundable portion.

The former $83,333 annual salary cap per employee has been removed. However, the credit is not automatically calculated on the employee’s entire salary. An annual salary exclusion applies. The indicative threshold published for 2026 is $18,952 per eligible employee, indexed and adjusted for the number of eligible days.

Another central change is the meaningful integration of artificial intelligence into eligible activities. A superficial addition is not enough. Investissement Québec assesses the integration qualitatively based on the facts and documentation in the application.

The official detailed CDAE-IA program sheet sets out the applicable conditions, rates and certification rules.

The 5 CDAE-IA eligibility criteria

Five broad groups of conditions must be reviewed. The revenue and activity tests include several thresholds that must be met during the same taxation year.

1. The company’s status and Quebec establishment

The corporation must carry on a business in Quebec and have an establishment there to which its eligible employees report. It must conduct qualifying activities in the information technology sector and must not fall within a category of corporations excluded by law.

Incorporation and a Quebec presence are therefore not sufficient on their own. The nature of the activities, the company’s structure and its revenue must also meet the program’s tests.

2. IT-sector revenue and activities

At least 75% of the corporation’s gross revenue must come from qualifying IT-sector activities. In addition, at least 50% of gross revenue must be attributable to targeted activities, including software publishing, data processing and hosting, and certain computer systems design services.

Another test applies to services. At least 75% of the revenue from qualifying IT activities must generally be attributable to services supplied to arm’s-length ultimate beneficiaries, or to applications developed and used exclusively outside Quebec.

These calculations depend on actual revenue and eligible activity codes. A consistent accounting breakdown is therefore essential.

3. The minimum number of eligible employees

The business must normally maintain at least six eligible full-time employees throughout the taxation year. This threshold should be monitored carefully, particularly when an employee leaves, takes an extended absence or is affected by a reorganization.

The program nevertheless provides rules for exceptional circumstances, business start-ups and certain transfers of activities. A replacement made within a reasonable period may also be considered depending on the facts. A temporary drop below the threshold should therefore be reviewed in light of these rules.

4. The definition of an eligible employee

A full-time employee works at least 26 hours per week for a minimum expected period of 40 weeks. The employee must report to the employer’s establishment in Quebec.

At least 75% of the employee’s duties must consist of undertaking, supervising or directly supporting eligible activities. A job title is not enough: the work actually performed, time allocated to projects and supporting records must substantiate the employee certificate.

5. Meaningful integration of artificial intelligence

Eligible activities must integrate artificial intelligence in a meaningful way. This is a qualitative assessment: the architecture, models, data, functions performed and added value must show that AI plays a genuine role in the relevant activities.

A recommendation engine trained on product-specific data or a natural language processing module at the core of a solution may demonstrate meaningful integration. By contrast, an occasional call to an external service with no structural role may be insufficient.

Adjustments announced in the 2026–27 Quebec Budget also expand eligible functions to certain specialized AI consulting services and preparatory work completed within the 12 months before a project that will integrate AI, subject to all program conditions.

Summary of the CDAE-IA criteria

The following table summarizes the main thresholds for an initial assessment.

Criterion	Main condition
Establishment	Corporation carrying on business in Quebec with an eligible establishment
IT-sector revenue	At least 75% of gross revenue from qualifying IT activities
Targeted activities	At least 50% of gross revenue from targeted activities
Services test	At least 75% of qualifying IT revenue meeting the ultimate-beneficiary or outside-Quebec-use test
Eligible employees	Normally at least 6 full-time employees throughout the year
Full-time employee	At least 26 hours per week for a minimum expected period of 40 weeks
Eligible duties	At least 75% of the employee’s duties
Artificial intelligence	Meaningful integration demonstrated qualitatively

A quick CDAE-IA eligibility checklist

Before preparing an application, use this short self-assessment to identify potential gaps:

• Does your corporation carry on business in Quebec and have an establishment there?
• Does at least 75% of its gross revenue come from qualifying IT activities?
• Does at least 50% of its gross revenue come from the program’s targeted activities?
• Is the 75% test for services or applications used outside Quebec satisfied?
• Do you normally maintain at least six eligible full-time employees throughout the year?
• Does each claimed employee work at least 26 hours per week for the required period?
• Does each employee spend at least 75% of their duties on eligible activities?
• Can you demonstrate meaningful AI integration with technical records?

If you are unsure about any of these questions, discuss your situation with a specialist before building the claim.

Certificates required from Investissement Québec

Two types of certificates are required for each taxation year covered by the credit. The corporation certificate confirms that the business meets the applicable criteria. A separate certificate is also required for each employee whose salary is included in the credit calculation.

Investissement Québec reviews and issues these certificates. Revenu Québec remains responsible for determining the tax credit amount based on the return and tax rules. Certificate applications should therefore be supported by consistent financial data, duty descriptions and technical documentation.

Investissement Québec’s official page on the development of e-business integrating artificial intelligence centralizes the program’s criteria and documents.

How much is the CDAE-IA tax credit worth?

The published 2026 rates are:

Situation	Refundable portion	Non-refundable portion	Combined rate
General rate	22%	8%	30%
Reduced rate for certain related-party services	11%	4%	15%

The reduced rate may apply when the prescribed test is met for certain services supplied to a non-arm’s-length ultimate beneficiary located outside Quebec. The contractual structure and identity of the ultimate beneficiary should therefore be reviewed carefully.

The credit is calculated on eligible salary above the applicable salary exclusion, without the former $83,333 cap. The indicative exclusion threshold is $18,952 in 2026 and must be adjusted, among other factors, for the number of days the employee is eligible.

CDAE-IA may also interact with other measures. Our SR&ED versus CDAE-IA comparison and CDAE-IA guide for SaaS businesses explain the differences and key planning considerations.

Validate CDAE-IA eligibility without surprises

CDAE-IA eligibility depends on five dimensions: the company’s status, the revenue and activity tests, the number of employees, each employee’s duties and the meaningful integration of AI. Each one must be supported by verifiable facts.

Because the thresholds require a rigorous revenue breakdown and precise records of duties and projects, preparation makes all the difference. To assess your situation, book a consultation with a specialist and review our page about the CDAE-IA tax credit.

FAQ

What are the CDAE-IA eligibility requirements?

Among other conditions, the corporation must carry on business in Quebec, meet the 75% and 50% tests for IT revenue and activities, normally maintain at least six eligible full-time employees, assign each employee at least 75% eligible duties, and demonstrate meaningful integration of artificial intelligence. Additional rules and exclusions may apply based on the company’s structure and contracts.

How many employees are required for CDAE-IA eligibility?

The business must normally maintain at least six eligible full-time employees throughout the taxation year. A full-time employee works at least 26 hours per week for a minimum expected period of 40 weeks and spends at least 75% of their duties on eligible activities. Exceptions or transitional rules may apply in exceptional circumstances, during a business start-up or following a transfer of activities.

Does CDAE-IA replace the former CDAE tax credit?

CDAE has been modernized and renamed CDAE-IA for taxation years beginning after December 31, 2025. The program adds a meaningful AI integration requirement. In 2026, the general combined rate is 30%, consisting of a 22% refundable portion and an 8% non-refundable portion. The former salary cap has been removed, but an annual salary exclusion continues to reduce the salary used in the calculation.