Published | Category: Income tax - businesses

Broadening of the Refundable Tax Credit for the Production of Ethanol in Québec

The refundable tax credit for the production of ethanol in Québec is modified so that the associated eligibility period no longer refers to a maximum period of 10 years and production of biodiesel fuel by a qualified corporation can now qualify for the credit.

Eligibility period

The condition respecting the maximum period of 10 years is eliminated from the definition of eligibility period. Thus a qualified corporation that began carrying on an ethanol production business in Québec on April 1, 2006, can claim the refundable tax credit for a maximum period of 12 years ending on March 31, 2018.

This change applies to a qualified corporation whose taxation year ends after March 28, 2017.

Eligibility of biodiesel fuel for the tax credit

The tax credit is broadened to apply to qualified corporations carrying on a biodiesel fuel production business

Broadly, the term "qualified corporation" refers to any corporation other than an excluded corporation (according to the usual definition) that, during a taxation year, has an establishment in Québec where it carries on a biodiesel fuel production business. 

The term "eligible production of biodiesel fuel" refers to, in respect of a qualified corporation, for a particular month, the number of litres of biodiesel fuel that the qualified corporation produces in Québec and sells in Québec, during its eligibility period, to the holder of a collection officer's permit issued under the Fuel Tax Act, where the permit holder takes possession of the biodiesel fuel during the particular month, and that fuel is intended for Québec. The term "biodiesel fuel" has the same meaning as it has in the Fuel Tax Act.

It should be noted that most of the terms and conditions that apply to the refundable tax credit for the production of ethanol in Québec apply, with the necessary adaptations, to eligible biodiesel fuel production. This is true as regards the requirement to file a prescribed form, the calculation of the maximum amount of the tax credit for a particular month, the calculation and allocation of the monthly ceiling and the exclusion of property used in the course of operating a biodiesel fuel production plant in order to calculate the tax credit for investments relating to manufacturing and processing equipment.

The changes apply to biodiesel fuel produced by a qualified corporation after March 31, 2017, but before April 1, 2018, provided the acquirer takes possession of the fuel before April 1, 2018.

For more information, see pages A.51 to A.55 of the document entitled Additional Information 2017-2018 (PDF – 2.71 MB), published by the Ministère des Finances.

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