Refundable Tax Credit for the Hiring of Employees by New Financial Services Corporations
A qualified corporation may claim, for a taxation year, a refundable tax credit equal to 30% of the qualified wages it pays during the period of validity of its qualification certificate included in the taxation year.
A qualified corporation is a corporation that holds a qualification certificate issued by the Minister of Finance and, for a taxation year, an annual qualification certificate also issued by the Minister of Finance. The corporation must have an establishment in Québec and carry on a business there. Furthermore, it must not carry on a personal services business nor be exempt from income tax.
To obtain a qualification certificate, a corporation must show, by means of its financial statements, that its net shareholders' equity, calculated on a consolidated basis, was less than $15 million for the fiscal period preceding the period in which it filed its application for a certificate. However, no applications for a certificate can be filed with the Minister of Finance after December 31, 2017.
The corporation must also show that its activities consist of, or will consist of, one or more of the following activities:
- an analysis, research, management, advisory and trading service related to securities or a securities distribution rendered or carried out by a securities dealer who is
- an investment dealer,
- a derivatives dealer,
- a mutual fund dealer,
- an exempt market dealer, or
- a restricted dealer;
- a securities advisory service or a portfolio management service rendered by a securities adviser who is
- a portfolio manager,
- a restricted portfolio manager,
- a derivatives portfolio manager, or
- an investment fund manager.
The period of validity of a qualified corporation's qualification certificate is five years from the certificate's effective date. However, a single five-year period applies where a number of corporations are associated at any time in the first or second fiscal period of any of them.
An eligible employee for a taxation year is an employee of a qualified corporation in respect of whom the Minister of Finance has issued an annual qualification certificate, for the year, certifying that the following conditions have been met:
- the employee held full-time employment during the period of validity of the qualified corporation's qualification certificate included in the taxation year. Such employment included a minimum of 26 hours of work per week, for the prescribed minimum of 40 weeks;
- 75% or more of the employee's duties during the period of validity of the qualified corporation's qualification certificate included in the taxation year were performed in Québec at an establishment of the qualified corporation and are directly attributable to the transactional process that is specific to the carrying out of the activities contemplated in the qualified corporation's qualification certificate.
An eligible employee's duties that relate to corporate management, finance, accounting, taxation, legal affairs, marketing, communications, reception work, secretarial work, messenger services, office computing, or human and physical resource management do not constitute duties directly attributable to the transactional process that is specific to the carrying out of the activities contemplated in the qualified corporation's qualification certificate.
The total wages paid to an eligible employee may, subject to the rules referred to below, constitute qualified wages for purposes of the refundable tax credit.
The qualified wages paid in a taxation year by a qualified corporation to an eligible employee are limited to $100,000, calculated on an annual basis according to the number of days in the year that the employee qualifies as an eligible employee. Furthermore, the wages must be reduced by the amount of any government assistance, any non-government assistance and any benefit or advantage attributable to such wages, in accordance with the normal rules.
Therefore, for a taxation year, this refundable tax credit will be limited to $30,000 per eligible employee, on an annual basis.
A qualified corporation that obtains a qualification certificate after March 20, 2012, may claim this refundable tax credit in respect of the qualified wages it pays to an eligible employee after that date.
For further information, see page 42 in Additional Information on the Fiscal Measures of the Budget, published by the Ministère des Finances.