Published | Category : Income tax - businesses

Extension of and Changes to the Refundable Tax Credit for Cellulosic Ethanol Production in Québec

The refundable tax credit for cellulosic ethanol production in Québec has been extended for five years. The tax credit is now calculated using a fixed rate, and the monthly ceiling on cellulosic ethanol production has been increased.

Extension of the eligibility period

Tax legislation will be amended so that the eligibility period for the refundable tax credit for cellulosic ethanol production in Québec ends on March 31, 2023.

To be included in the eligible production of cellulosic ethanol of a qualified corporation for a particular month, eligible cellulosic ethanol must be produced after March 17, 2011, and before April 1, 2023, and the purchaser must take possession of it in the particular month, before April 1, 2023.

Change to the calculation of the refundable tax credit

Tax legislation will also be amended to provide that the refundable tax credit for cellulosic ethanol production in Québec will be calculated at a fixed rate of $0.16 per litre as of April 1, 2018.

If a qualified corporation's taxation year includes March 31, 2018, the tax credit is calculated in two ways:

  • For each of the months in the part of the taxation year that precedes April 1, 2018, the credit must be calculated using the variable rate, taking into account the average monthly market price of ethanol.
  • For each of the months in the part of the taxation year that follows March 31, 2018, the credit must be calculated using a fixed rate of $0.16 per litre.

Change to the monthly ceiling on the production of cellulosic ethanol

The monthly ceiling on the production of cellulosic ethanol for a qualified corporation increased on April 1, 2018. For a particular month beginning after March 31, 2018, it is calculated by multiplying 821,917 litres by the number of days in the particular month.

If a qualified corporation's taxation year includes March 31, 2018, the corporation's monthly ceiling on the production of cellulosic ethanol for each of the months in the part of the taxation year that precedes April 1, 2018, is calculated by multiplying 109,589 litres by the number of days in the month. Its monthly ceiling on the production of cellulosic ethanol for each of the months in the part of the taxation year that follows March 31, 2018, is calculated by multiplying 821,917 litres by the number of days in the month.

For more information, see pages A.95 to A.98 of Additional Information 2018-2019 (PDF – 3.73 MB) published by the Ministère des Finances.

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