Published | Category : Income tax - businesses
Introduction of a Temporary Tax Credit for Pyrolysis Oil Production in Québec
A refundable tax credit for pyrolysis oil production in Québec has been introduced. This refundable tax credit, at a rate of $0.08 per litre, will be granted to a qualified corporation in respect of eligible pyrolysis oil it produces in Québec from residual forest biomass, which is sold in and intended for Québec, up to 100 million litres per year. A qualified corporation will be able to claim this tax credit for a period of five years beginning on April 1, 2018.
A qualified corporation is, for a taxation year, a corporation, other than an excluded corporation, that, in the taxation year, has an establishment in Québec where it carries on an eligible pyrolysis oil production business.
Calculating the refundable tax credit
A qualified corporation's refundable tax credit for pyrolysis oil production in Québec, for a taxation year, is equal to the aggregate of the amounts, each of which is determined for a particular month of the taxation year, and will correspond to the product obtained by multiplying, by a rate of $0.08 per litre, the lesser of the number of litres in the qualified corporation's eligible production of pyrolysis oil for the particular month and the number of litres in its monthly ceiling on the production of pyrolysis oil for that month.
Eligible production of pyrolysis oil
A qualified corporation's eligible production of pyrolysis oil, for a particular month in a taxation year, is the number of litres of eligible pyrolysis oil produced in Québec by the corporation after March 31, 2018, but before April 1, 2023, that is sold by the corporation in Québec to a person that takes possession of it in the particular month, but before April 1, 2023, and that is intended for Québec.
Eligible pyrolysis oil
For the purposes of the refundable tax credit, eligible pyrolysis oil is the liquid mixture of oxygenated organic matter obtained from the condensation of vapours resulting from the thermal decomposition of residual forest biomass.
Residual forest biomass is forest biomass resulting from harvesting activities—residual trees (branches and tops), non-commercial tree parts, and twigs and leaves—as well as that resulting from primary or secondary processing, namely, bark, shavings, sawdust and woodchips. It includes non-contaminated, additive-free deconstructed wood, if it is not part of a hierarchical use approach along the lines of 3R-RD (source reduction, reuse, recycling, reclamation and disposal). However, standing trees are excluded.
Pyrolysis oil intended for Québec
Eligible pyrolysis oil is considered to be intended for Québec if it is sold by the qualified corporation to a person and it is reasonable to expect that the person acquired it for personal use or consumption in Québec or for use or consumption in Québec by another person with which the person does not deal at arm's length.
In addition, the eligible pyrolysis oil must be delivered by the qualified corporation or on its behalf, and possession must be taken of the oil in Québec.
Monthly ceiling on the production of pyrolysis oil
A qualified corporation's monthly ceiling on the production of pyrolysis oil, for a particular month of a taxation year, is equal to the number of litres obtained by multiplying 273,972 litres by the number of days in the particular month.
Document to attach to the tax credit application
To claim the refundable tax credit for a taxation year, a qualified corporation must attach the form prescribed by Revenu Québec to its income tax return for that year.
In addition, the qualified corporation must provide to Revenu Québec, on request, in respect of its eligible production of pyrolysis oil for each month of a taxation year, a report indicating the name of the person having acquired the eligible pyrolysis oil, the number of litres acquired, the date of the sale, the date on which possession was taken and the address of the place where possession was taken.
Qualified corporations may claim the refundable tax credit for pyrolysis oil production in Québec for a taxation year that ends after March 31, 2018.
For more information, see pages A.100 to A.104 of Additional Information 2018‑2019 (PDF – 3.73 MB) published by the Ministère des Finances.