In his March 25, 2025, budget speech, Québec's Minister of Finance announced the introduction of a new refundable tax credit for R&D, innovation and pre-commercialization (“the CRIC”) to improve the competitiveness and productivity of Québec businesses, increase the economic benefits of scientific research and experimental development (R&D) in Québec and provide a simpler, more effective tax assistance system for innovation.

The new tax credit is available to qualified corporations (or corporations that are members of a qualified partnership) and is aimed at:

• consolidating the R&D tax measures currently available into a new refundable tax credit
• providing a higher basic tax credit rate and a more accessible increased rate
• making certain expenditures relating to pre-commercialization activities eligible for the tax credit
• maximizing business R&D investment by making certain capital expenditures eligible for the tax credit
• refocusing the tax assistance provided on higher-value-added jobs by introducing a modified exclusion threshold

In addition to supporting R&D activities, like the previous R&D tax credits, the CRIC supports the pre-commercialization activities of corporations and partnerships carrying out innovation projects in Québec.

In general, pre-commercialization activities include tests, technological validations and studies carried out to meet regulatory requirements, as well as product design, provided that such activities constitute a continuation of R&D activities undertaken in Québec by or on behalf of a qualified corporation or partnership in respect of a business of the corporation or partnership.

The basic rate of the CRIC is 20%. The rate may be increased to 30% for a maximum of $1 million in expenditures relating to R&D activities or pre-commercialization activities of a qualified corporation that exceed the applicable exclusion threshold, regardless of the corporation's assets.

Expenditures relating to R&D or pre-commercialization activities include salaries and wages, considerations paid to subcontractors, payments made to certain research organizations as well as capital expenditures relating to the acquisition of property incurred by a qualified corporation or partnership for R&D or pre-commercialization activities carried out in Québec.

Briefly, the amount of the exclusion threshold applicable to a qualified corporation or a qualified partnership, for a taxation year or fiscal period, corresponds to the greater of the following two amounts:

• $50,000
• the sum of the R&D employees threshold and the pre-commercialization employees threshold

A qualified corporation or a corporation that is a member of a qualified partnership can claim the CRIC for a taxation year or fiscal period, as applicable, that begins after March 25, 2025.

Elimination of certain tax measures

With a view to streamlining the tax assistance system for innovation and considering that many of the current tax measures are ineffective, the following tax measures have been eliminated:

• the tax credit for salaries and wages of researchers
• the tax credit for university research or research carried out by a public research centre or a research consortium
• the tax credit for fees and dues paid to a research consortium
• the tax credit for private partnership pre-competitive research
• the tax credit for technological adaptation services
• the industrial design component of the design tax credits
• the tax holiday for foreign researchers and experts

Corporations and individuals can claim any of the R&D tax credits provided their taxation year begins before March 26, 2025. Likewise for corporations that want to claim the tax credit for technological adaptation services. If the corporation or individual claims one of these tax credits as a member of a partnership, the partnership's fiscal period must begin before March 26, 2025.

No expenditure related to the industrial design component of the design tax credit is eligible for the tax credit if it is incurred by a corporation or partnership for a taxation year or fiscal period that begins after March 25, 2025. Expenditures for the fashion design component continue to be eligible for the tax credit.

For more information on the abolition of the tax holiday for foreign researchers and experts, see the Tax News article Abolition of the tax holiday for seamen engaged in international transportation of freight.

Changes to the deduction for the commercialization of innovations (DCI) in Québec

Corporations can claim the DCI in calculating their taxable income. Briefly, the deduction is calculated by multiplying the qualified profits from the commercialization of a qualified intellectual property asset by the Québec nexus ratio.

The Québec nexus ratio is calculated taking into account certain expenditures that are eligible for the R&D tax credits. For a taxation year that begins after March 25, 2025, the ratio will no longer be calculated taking into account eligible expenditures for the R&D tax credits, but rather R&D expenditures giving entitlement to the CRIC.

For greater clarity, expenditures relating to pre-commercialization activities will not be taken into account in the calculation of the Québec nexus ratio for the purposes of the CRIC. In addition, expenditures relating to R&D activities taken into account in the calculation of the Québec nexus ratio will not be reduced by the CRIC exclusion threshold.

For the tax credit eligibility requirements and terms, see Crédit d'impôt pour la R-D et la précommercialisation (CRIC) – Codes 112 et 113 (in French only).

For more information on the CRIC and the changes to the DCI, see Budget 2025-2026 – Additional Information (PDF - 5 MB) on the Ministère des Finances du Québec website.

You can also watch the webinar De l'idée au marché : le CRIC, une clé de l'innovation au Québec (in French only) prepared by the Conseil de l'innovation du Québec and the Ministère des Finances.