Your Questions About CDAE

The tax credit for the development of e-business, also known as “CDAE” in French, is a valuable opportunity for Quebec-based companies to receive financial support to develop software solutions that improve electronic business processes.

To be eligible, companies must have at least six employees dedicated to technical activities for 75% or more of their time, and at least 75% of the company’s gross revenue must come from IT sector activities. The tax credit provided is in the form of a 24% refundable tax credit and 6% non-refundable for each eligible employee’s salary, offering a significant boost to company profitability.

However, it is important to note that this overview does not cover all the details of the CDAE tax credit. For more detailed information, please consult our dedicated blog article. In addition, we understand that there may be many questions regarding the CDAE tax credit, which is why our team of experts has compiled a list of the most frequently asked questions for your reference.

What is the CDAE Program?

The CDAE (Tax Credit for the Development of E-Business) program is designed to support Quebec-based companies in developing electronic business software solutions. The definition of “electronic business” within the program is quite broad, encompassing not only e-commerce but also the digitization of various business operations, such as HR, purchasing and accounting. This means that companies that develop software for other companies to help them evolve in this direction are also eligible for the credit.

What is an Eligible Employee for the CDAE Tax Credit?

To be considered an eligible employee for the CDAE tax credit, a person must be a full-time employee for an indefinite period working in Quebec, for a minimum of 26 hours per week and spending more than 75% of their time on technical activities. Temporary absences for reasonable reasons (e.g., illness, parental leave) do not affect an employee’s eligibility as long as they meet the other criteria.

What Are Eligible Technical Activities?

The program guidelines define “technical activities” as those that consist of:

• Designing and developing electronic business solutions
• Performing quality controls
• Maintaining and evolving e-business solutions
• Providing IT consulting services for electronic business solutions
• Providing technical supervision and oversight

If an employee spends more than 25% of their time on non-eligible activities, they will not be eligible for the tax credit.

How to Maintain Eligibility for the CDAE Tax Credit?

To remain eligible for the CDAE tax credit, a company must maintain at least six eligible positions throughout the year. If an employee leaves the company, it must intend to replace them with another employee in the same position within six months to remain eligible.

Are Employees Hired During the Year Eligible?

Employees hired during the fiscal year may also be eligible for the tax credit if they meet the 75% rule and hold the same position in the company after the end of the fiscal year. If an employee worked less than 40 weeks and left the company during the fiscal year, they will only be eligible if the company has found a replacement or is actively continuing to seek one.

How is the CDAE Tax Credit Calculated?

The CDAE tax credit is calculated based on the number of days worked by an employee during the fiscal year, and this is prorated based on the salary cap offered by the program.

Need Help?

If you have questions about CDAE that have not been answered in this blog post, or if you are considering submitting an application, do not hesitate to contact the Avinova team.

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