Published | Category : Income tax - businesses

Introduction of a Refundable Tax Credit to Support the Digital Transformation of Print Media Companies

A temporary refundable tax credit has been introduced to support the start or continuation of the digital transformation of print media companies.

This refundable tax credit will provide qualified corporations (other than excluded corporations) and qualified partnerships with tax assistance of up to $7 million annually for expenditures they incur after March 27, 2018, and before January 1, 2023, for the purpose of the digital transformation of their print media activities.

Qualified corporation

For a taxation year, a qualified corporation is a corporation, other than an excluded corporation, that has an establishment in Québec, carries on a business in Québec and holds a qualification certificate issued by Investissement Québec for the year.

Qualified partnership

For a fiscal period, a qualified partnership is a partnership that has an establishment in Québec, carries on a business in Québec and holds a qualification certificate issued by Investissement Québec for the period.

Eligible digital conversion costs

The eligible digital conversion costs for a taxation year of a qualified corporation or a fiscal period of a qualified partnership are the costs incurred by the corporation or partnership for the year or period that:

  • are reasonable in the circumstances;
  • correspond to the total of amounts paid by the corporation or partnership for the year or period in respect of qualified wages or salaries of its employees, and expenditures related to an eligible digital conversion contract.

Qualified wages or salaries

For a taxation year or a fiscal period, qualified wages or salaries refers to the portion of wages or salaries calculated in accordance with the Taxation Act that a qualified corporation or qualified partnership incurs, for that year or period, in respect of a qualified employee (for whom Investissement Québec has issued a qualification certificate). The wages or salaries must have been incurred after March 27, 2018, and before January 1, 2023, and be reasonably attributable to eligible digital conversion activities of an eligible medium that is specified on a qualification certificate issued to the corporation or partnership by Investissement Québec for that year or period.

Expenditure related to an eligible digital conversion contract

For a taxation year or a fiscal period, an expenditure related to an eligible digital conversion contract means 80% of the portion of a qualified corporation's or a qualified partnership's expenditure for costs provided for in an eligible digital conversion contract (for which Investissement Québec has issued a qualification certificate). The costs must relate to the acquisition or lease of qualified property, the supply of eligible services, a right of use or an eligible licence and must have been incurred by the corporation after March 27, 2018, and before January 1, 2023, and be reasonably attributable to eligible digital conversion activities of an eligible medium specified on a qualification certificate issued to the corporation or partnership by Investissement Québec for that year or period.

However, qualified property acquired under an eligible digital conversion contract must be acquired before January 1, 2022.

Calculating the refundable tax credit

The refundable tax credit can be granted to:

  • a qualified corporation for a taxation year;
  • a corporation, other than an excluded corporation, that is a member of a qualified partnership for a taxation year in which the partnership's fiscal period ends, in proportion to its share of the qualified partnership's income or loss for the fiscal period.

It is equal to 35% of the lesser of:

  • the eligible digital conversion costs incurred by the corporation or the partnership for the taxation year or fiscal period; or
  • the annual limit on eligible digital conversion costs applicable to a taxation year or fiscal period.

The annual limit on eligible digital conversion costs applicable to a taxation year or fiscal period corresponds to $20 million if the qualified corporation or qualified partnership is not associated with any other qualified corporation or qualified partnership in the taxation year or fiscal period.

Where the qualified corporation or qualified partnership is associated with another qualified corporation or qualified partnership in the taxation year or fiscal period, the $20 million must be shared between the qualified corporations and qualified partnerships, in accordance with the usual rules.

Thus, in general, the maximum amount of the refundable tax credit for a taxation year or fiscal period is $7 million.

For more information, see pages A.77 to A.85 of Additional Information 2018-2019 (PDF – 3.73 MB) published by the Ministère des Finances.

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