Quebec innovation
SR&ED, CDAE,
and provincial funding
Quebec is home to some of Canada’s leading hubs of innovation, as well as some of the most generous non-dilutive funding programs in the country.
But accessing the provincial tax credits you deserve while still tapping into your fair share of federal funding can be a tricky balancing act.
Boast helps Quebec businesses access more innovation capital, faster and easier.
We combine our unparalleled expertise working directly alongside business leaders in Quebec with cutting-edge, AI–driven technology, resulting in:
3-4x
Higher growth rate of R&D-focused companies who claim with Boast
Featured in
CDAE + SR&ED expertise
Among the most popular provincial innovation funding programs in the entire country is Revenu Quebec’s Tax Credit for the Development of E-Business, commonly referred to as CDAE.
This program is only available to activities in Quebec. While the program isn’t mutually exclusive from the federal government’s SR&ED tax credit, there are qualifying criteria specific to CDAE that can make it a tricky application to navigate.
A mix of refundable and non-refundable credits for SaaS
While both SR&ED and CDAE are tax credits, SR&ED is typically dispersed as a refundable tax credit for CCPCs. CDAE, on the other hand, offers a mix of refundable and non-refundable tax credits for any Quebec-based companies, CCPC or otherwise.
CDAE tax credits are also geared toward businesses developing and selling software licenses or services (ie. SaaS).
Compared to SR&ED, CDAE qualification are also less rigid and can include routine development. This differs from the highly-vetted Why? and How? requirements put forth by SR&ED that prioritize net-new innovation.
CDAE does not, however, offer tax credits for any programs that involve hardware, including software that controls hardware or is built into hardware. Similarly, projects that rely on external data sets—namely, Artificial Intelligence (AI)—are ineligible for CDAE, as data used during R&D must be internally owned and generated by the company’s clients.
How to apply to CDAE
The application process for the CDAE takes place in two parts.
First, companies must apply to Invest Quebec within 15 months of the fiscal year-end where eligible expenses were accrued.
Next, Invest Quebec begins a systematic review process before granting qualified businesses an eligibility certificate. Once that certificate is delivered, qualifying organizations must submit an application to Revenue Quebec within 18 months of the same fiscal year to receive their credits.
SR&ED tax credits must also be claimed within 18 months of the relevant fiscal year.
When to use CDAE vs. SR&ED—or both?
CDAE primarily benefits SaaS companies that have made progress in their product development, but need additional, non-dilutive funding to bring software-based innovations to market.
A classic scenario for many startups is that they’ll receive more SR&ED tax credits as their R&D projects first ramp up, and then eventually increase their CDAE funding as fewer of their activities are covered by SR&ED.
In that same vein, because CDAE covers more routine development activities than SR&ED, businesses can reap CDAE tax credits when maintaining or improving existing technology.
Because CDAE tax credits are fixed regardless of size or ownership structure—unlike SR&ED which offers lower, non-refundable credits to non-CCPC and larger companies—it can be an attractive credit for large or foreign-owned businesses as well.
Stacking CDAE and SR&ED
There are options for businesses that want to use both CDAE and SR&ED as part of their capital strategy.
Doing this is tricky, however, and requires both deep knowledge of existing tax code, plus the ability to communicate the nature of your innovation both from the business-side and technical-side of R&D.
This is especially critical for businesses that may be applying for the first time—or who have maybe struggled with their application in the past.
To learn more about how to optimize your tax credit claims to help extend your R&D runway and drive greater innovation, book a call with a member of the Boast team today.
Find out how much money you can get in R&D tax claims
Talk to one of our experts to see how outsourcing your R&D tax claims to Boast can get you more money back from the government and help you regain the time you need to run your business.
First, estimate the value of your SR&ED, which could unlock 64% of your R&D spend as a cash refund from the Canadian government.
Use our calculator to learn more.
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