The CRIC, Quebec’s Research and Development (R&D) Tax Credit

Important: This article reflects the rules applicable to taxation years beginning after March 25, 2025.

Following Quebec's 2025–2026 fiscal reform, the government restructured its tax incentives related to research and development. Several former programs were consolidated into a single measure: the tax credit for R&D and pre-commercialization.

For incorporated businesses investing in innovation, this change is significant. It modifies how provincial R&D tax support in Quebec is calculated and applied.

What Is the Quebec CRIC Tax Credit?

CRIC stands for the Tax Credit for Research, Innovation and Commercialization. It is a Quebec provincial tax credit available to corporations that carry out eligible research and development activities in Quebec.

It applies to taxation years beginning after March 25, 2025.

The base credit rate is 20%. It may increase to 30% on up to $1,000,000 of eligible expenditures exceeding the applicable exclusion threshold.

The R&D and pre-commercialization tax credit replaces several former Quebec R&D tax credits. The government's objective was to simplify the regime and consolidate the measures into a single structure.

Specifically, the CRIC covers:

• research and development work carried out in Quebec
• certain pre-commercialization activities (work performed as a continuation of R&D activities, such as testing, prototyping and technological validation)
• certain eligible capital expenditures, subject to specific conditions

This credit is refundable in Quebec. When claimed on the corporate income tax return (T2 and CO-17) in Quebec, any amount exceeding the tax payable may be paid to the corporation as a refund.

The CRIC is a provincial measure. It does not replace the federal SR&ED tax credit. We will discuss the interaction between the CRIC and the federal SR&ED credit further below.

Former Quebec R&D Tax Credits Replaced by the CRIC

Depending on the type of expense and corporate structure, several distinct credits previously applied. Before the CRIC came into force, Quebec's R&D tax support included:

• the tax credit for scientific research and experimental development (R&D) – wages
• the tax credit for university research or research carried out by a public research centre
• the tax credit for pre-competitive private partnership research
• the tax credit for membership fees and dues paid to a research consortium

The objective was to unify the rules and simplify the framework applicable to corporations investing in R&D in Quebec. The additional fiscal information released with Quebec's 2025–2026 reform also confirms that certain less effective measures were abolished as part of this simplification.

Which Businesses Are Eligible for the CRIC?

The CRIC is available to corporations that carry on a business in Quebec and incur eligible expenditures related to research and development or pre-commercialization activities.

It primarily applies to corporations, regardless of industry. Sole proprietorships cannot claim the credit in the same manner as incorporated businesses.

To qualify, the corporation must:

• carry on a business in Quebec
• perform eligible activities in Quebec, or have them performed on its behalf in Quebec under a contract
• not be an excluded corporation under Quebec tax legislation

Certain corporations are not eligible, including specific tax-exempt entities or corporations controlled by designated entities. A preliminary review is recommended when the corporate structure is complex.

A corporation may also claim the credit as a member of a partnership, based on its share of eligible expenditures, provided statutory conditions are met. Specific rules apply in that context.

What Expenses Are Eligible Under the CRIC?

The CRIC applies to specific expenditures related to eligible R&D work carried out in Quebec. Generally, eligible categories include:

• wages paid to employees engaged in eligible activities, including certain support roles directly related to the work
• a portion of amounts paid to subcontractors for work performed in Quebec
• certain payments made to eligible research organizations
• certain capital expenditures for property used in eligible activities

Wages

The corporation must be able to demonstrate the actual time devoted to eligible activities. Calculations must take into account any assistance, benefits or advantages received in respect of those amounts.

Subcontracting

Eligibility depends on whether the parties are related and on the nature of the work performed. In certain cases, only 50% of the adjusted contract amount may be included.

Where a contract is entered into with an arm's length subcontractor, only half of the portion reasonably attributable to work performed in Quebec may be included in the credit base.

Detailed information about such contracts must be retained and, in some cases, filed with the return, including the subcontractor's identity, Quebec sales tax number or social insurance number, and amounts paid during the year.

Capital Expenditures

Strict conditions apply. The property must be used in Quebec, almost exclusively in eligible activities, and must not have been previously used.

The acquisition of land, buildings or rights in a building is not eligible.

A capital expenditure is considered incurred when the property becomes available for use.

Eligible amounts may need to be reduced by any government assistance or contractual payments received.

How Is the CRIC Calculated?

The calculation is based on net eligible expenditures and the application of an exclusion threshold.

The threshold is the greater of:

• $50,000, adjusted for the number of days in the taxation year
• an amount calculated using the basic personal amount applicable to the employees involved

Eligible expenditures must exceed this threshold before the credit applies.

Once the threshold is exceeded:

• a 30% rate applies on the first $1,000,000 of eligible expenditures
• a 20% rate applies on the excess

The $1,000,000 enhanced limit may need to be shared among associated corporations.

If the taxation year is shorter than a full year, the enhanced expenditure limit must be prorated based on the number of days in the year.

If the corporation claims the credit as a partnership member, the 30% enhanced rate does not apply.

For SMEs investing in research and development, the cash flow impact can be significant, provided expenditures are properly documented and calculated.

How to Claim the CRIC

The credit is claimed using Form RD-1029.8.CR (2025-09).

This form allows the corporation to:

• separately detail R&D and pre-commercialization expenditures
• calculate eligible wages and determined amounts
• apply the exclusion threshold
• determine expenditures eligible for the enhanced rate
• establish the final credit amount

Assistance, benefits and contractual payments must be considered in the calculations.

Filing with the CO-17 Corporate Return

Form RD-1029.8.CR must be filed with the Quebec corporate income tax return (CO-17).

If it cannot be filed with the return, it must be submitted no later than 12 months after the filing deadline.

On the CO-17:

• the R&D portion is reported using code 112
• the pre-commercialization portion is reported using code 113

R&D Expenditures: Form RD-222

When scientific research and experimental development expenditures are claimed, Form RD-222 must also be completed and filed.

This form relates to the deduction of expenditures, which is separate from the credit itself.

Partnership Members

If a corporation claims the credit as a partnership member:

• its percentage interest must be applied to the eligible expenditures
• the 30% enhanced rate does not apply
• a separate form is required if the corporation also claims the credit directly

Associated Corporations

Where corporations are associated, the $1,000,000 enhanced limit must be allocated using Form RD-1029.8.EN.

Required Documentation

Maintaining rigorous accounting records greatly facilitates defending the credit in the event of a tax audit.

The corporation must be able to substantiate:

• time devoted to eligible activities
• the nature of the work performed
• subcontracting agreements
• use of capital property
• assistance received

Proper record retention is essential to support your claim.

An overclaimed credit may result in repayment through a special tax in a subsequent year.

CRIC and the Federal SR&ED Tax Credit

The CRIC and the federal SR&ED tax credit are cumulative.

An eligible corporation may claim both for the same R&D work performed in Quebec, provided each regime's specific criteria are met.

However, an interaction must be considered.

The provincial credit received under the CRIC generally constitutes government assistance for federal purposes. As a result, it may reduce the eligible expenditure base for the federal SR&ED credit.

There is no automatic "loss," but the federal calculation may be adjusted to reflect the provincial support received.

In most cases, the combined claim remains advantageous.

Getting the Calculation Right and Securing Your CRIC Claim

The CRIC can represent a significant financial lever for an SME investing in research and development. However, eligible expenditures must be properly identified, the exclusion threshold correctly calculated, and all forms completed accurately.

At T2inc.ca, our tax accountants and CPAs assist incorporated businesses with the compliant preparation of their CO-17 corporate return and their online corporate tax filings, including:

• identifying eligible expenditures
• coordinating the CRIC with the federal SR&ED tax credit
• preparing the required forms
• ensuring compliance with Revenu Québec requirements

The goal is not simply to claim a credit, but to do so correctly, with a structured and defensible approach.