Capital tax credit

A corporation other than a financial institution (This link will open a new window) that makes an eligible investment during a taxation year, may claim a non-refundable capital tax credit equal to

• 15% of the amount of the eligible investment incurred after November 23,  2007, but before January 1, 2011
• 10% of the amount of the eligible investment incurred after February 20,  2007, but before November 24, 2007, for property acquired under a contract entered into no later than November 23,  2007, or for property of which the installation had begun before November 23, 2007
• 5% of the amount of the eligible investment incurred before February 21,  2007, for property acquired under a contract entered into no later than February 20, 2007, or for property of which installation had begun before February 20, 2007.

If the corporation carries on its activities in the forestry sector, the credit is 15% of the amount of the eligible investment incurred after March 23, 2006, but before January 1, 2011, under certain conditions.

Corporations may claim a capital tax credit, for a taxation year, not exceeding the amount of tax on capital payable by the corporation for the taxation year. The non-refundable portion of the capital tax credit that exceeds the tax on capital payable for the taxation year may be carried to subsequent taxation years and applied against the tax on capital payable for those years.

The tax on capital will be eliminated on January 1, 2011. The capital tax credit, which is conditional on the existence of the tax on capital, will also be eliminated on that date. Corporations will therefore no longer be entitled to the capital tax credit for taxation years beginning after December 31, 2010.

Eligible investments

The term "eligible investments" designates property that has the following characteristics:

• It is class 43 property (manufacturing or processing equipment).
• It is new and is used only in Québec and primarily in carrying on a business.
• It is acquired before January 1, 2011.
• The corporation starts using it within a reasonable time period after its acquisition.
• The corporation uses it for a period of at least 730 days.

The amount of a corporation's eligible investment, for a taxation year, is the portion of the capital cost of the eligible investment that is incurred in the year by the corporation.

To claim the tax credit, complete form CO-1139, Crédit de taxe sur le capital pour investissement.