Corporate tax

Investments are essential to the success of your business. However, having the necessary cash flow to maintain organizational growth over time is a challenge, especially when you are in the start-up phase or when the company is in development. As a means of fostering the economic health of SMEs and large organizations in Quebec, they can claim tax deductions when they make investments. Today, we will tell you a little more about the investment tax credit.

The investment tax credit: a business-friendly tax deduction in Quebec

When incurring certain expenses and filing its income tax return, a corporation can claim the investment tax credit for the year in question or for a previous year for acquiring an eligible asset.

Without going into too much detail, an eligible corporation that acquires an equally eligible asset can benefit from an investment tax deduction for manufacturing and processing equipment it incurs to acquire an asset when it exceeds $12,500.

More about the corporate tax credit

The basic rate of the investment tax credit is 4%. However, if the capital paid by the corporation for the previous year, including that of associated corporations, is less than or equal to $250 million, the tax credit rate paid to the corporation increases. As a result, it can reach 8%, 16% and 24% in certain other cases, such as when the eligible asset is acquired for use in a remote area.

To be eligible, an asset must meet certain conditions. Class 50 of Schedule B of the Taxation Act stipulates, among other things, that the property must be used primarily for the manufacture or processing of items for sale or lease.

Expenses eligible for this tax deduction

Many expenses are also eligible for the investment tax credit. However, these must be part of the capital cost of the asset. They must also have been generated and paid in the relevant tax year or within 18 months of the end of the relevant year. However, an amount known as the "excluded expenses amount" must be subtracted from the eligible expenses incurred in respect of the asset acquired. The exclusion threshold is generally $12,500.

The investment tax credit is not the only way to support a company's financial health. Many business expenses are also tax deductible. For example, items that are indirectly used by a company to produce goods and services, business taxes, membership fees and permits are deductible. Office expenses such as pencils, pens and other equipment that is not considered capital property may be eligible. Management and administration costs are also included.

Promote your company's financial health with T2inc.

Running a business is no easy task. Fortunately, there are certain tax credits and expenses that allow a company to get tax deductions for investments. There is no better way to benefit from this than to work with a firm that specializes in tax and business accounting. To maximize your deductions and promote the financial health of your company, contact T2inc today.

Frédéric Roy-Gobeil


As President of T2inc.ca and an entrepreneur at heart, I have founded many start-ups such as delve Labs and T2inc.ca. A former tax specialist at Ernst & Young, I am also a member of the Ordre des comptables professionnels agréés CPA and have a master's degree in taxation from the Université de Sherbrooke. With a passion for the world of entrepreneurship and the growth mindset, I have authored numerous articles and videos on the industry and the business world, as well as on accounting, taxation, financial statements and financial independence.

LinkedIn profile