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Does your business perform manufacturing and processing activities? Are you considering acquiring production equipment or computer systems for your processes, particularly as part of your 4.0 manufacturing strategy? You should do it in 2019.
The Quebec investment tax credit (QITC) for manufacturing and processing equipment has been enhanced and is now available for ALL Quebec regions with some very attractive benefits.
The temporary increase in the QITC announced by the Quebec government on August 15, 2018 (increase applicable to property acquired after August 15, 2018 and before January 1, 2020) is designed to support the expansion and productivity improvements of businesses investing in manufacturing and processing equipment.
QITC tax rate
The QITC tax rate is at least 10% (20% for the metal processing sector) and can be as much as 45% for some Quebec regions (provided the corporation is entitled to the increased rates, otherwise it would be 5%) (see the table below).
The applicable credit rate depends on the location and timing of the investment as well as other factors:
- The size of the business (global paid-up capital);
- Whether the corporation qualifies as a metal processing corporation (based on the overall payroll);
- Eligible property (is new and used exclusively in Quebec):
- Internally designed and manufactured equipment for the business’s own use may qualify;
- Eligible related expenditures;
- Optimizing eligible expenditures ($12,500 exclusion threshold per property).
While it may be advantageous, the QITC is a complex tax measure that is closely scrutinized by Revenu Québec.
Our canadian tax experts can support your processes in order to maximize the QITC during the preliminary analysis, optimization, documentation and filing of the application, assisting during the audit and much more…
Not only can they help you achieve savings by ensuring you have everything you need to claim the credit, they would be more than pleased to advise you on the additional capital cost allowance, accelerated capital cost allowance and any other matter to help reduce your tax burden. Contact us.
The following table presents the QITC for businesses with a paid-up capital under $250 million.
- The remote zones consist of the following administrative regions: Abitibi-Témiscamingue, Côte-Nord, Nord-du-Québec and Gaspésie–Îles-de-la-Madeleine.
- The eastern portion of the Bas-Saint-administrative regions includes the following Regional County Municipalities (RCM): La Matapédia, La Mitis and La Matanie.
- The intermediate zones include the following administrative regions and RCMs: Saguenay–Lac-Saint-Jean administrative region, Mauricie administrative region, Antoine-Labelle RCM, Kamouraska RCM, La Vallée-de-la-Gatineau RCM, Les Basques RCM, Pontiac RCM, Rimouski-Neigette RCM, Rivière-du-Loup RCM and Témiscouata RCM.
This article was written in collaboration with Kim Joyal Lamarche.