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• TRLs help organizations assess the maturity of a technology, from concept to deployment, offering a structured way to track progress and communicate clearly with stakeholders.
• By categorizing project stages, TRL enables better milestone tracking, resource allocation, and risk management throughout the innovation lifecycle.
• Projects may advance through or bypass certain TRL stages depending on their nature, making the framework flexible and adaptable.
• Many Canadian government programs use TRL as a criterion to determine which R&D projects qualify for financial support.

Innovation and RD&I projects pass through various phases, from the inception of an idea to the consolidation of the technology: therefore, a tool is necessary to assess a project’s stage quickly and universally. Among all the processes involved in the innovation cycle, the Technical Readiness Level (TRL) often serves as a crucial tool for Canadian companies, allowing organizations to systematically track the various stages of their projects and effectively communicate progress to internal teams and external stakeholders. 

By categorizing project stages, TRL helps identify the specific scope of each phase, assess progress against predefined milestones, establish realistic timelines, and outline the necessary resources required for successful completion. This structured approach not only fosters alignment and transparency among project participants but also facilitates informed decision-making and risk management throughout the innovation journey. 

But how does the TRL work? 

The TRL system assesses the maturity of a technology, ranging from Level 1 (Concept Evaluation) to Level 9 (Successful Deployment). Each of the nine levels marks a specific milestone in the progression of the project, where important activities take place. Although some stages may not apply to certain projects, most of the research and development initiatives will advance through all nine levels until they are effectively integrated into the market.  

It’s important to notice that the Technology Readiness Level (TRL) framework delineates various stages of technological maturity. In crafting its scale, it acknowledges the inherently non-linear nature of technological development, proposing that projects may advance through, or even bypass, certain levels depending on their specific requirements and objectives.  

Typically, these maturity levels are characterized by: 

1. Concept Evaluation
   the translation of scientific research into applied research. This is mostly exploration of a technology’s basic properties. 
2. Technology Evaluation
   the study of how technologies could be applied in the market. This is the point where the project’s direction takes form. 
3. Proof-of-Concept Research
   at this phase, active projects begin, and a technological solution is developed. This stage looks at the critical function of the technology and asks, “what is required for this technology to meet the application requirements?”. 
4. Early-Stage Prototype Development
   the integration and testing of basic components in a laboratory environment. This can be done multiple times during technological development to ensure that the technology is progressing toward its desired purpose. 
5. Late-Stage Prototype Development
   the integration and testing of basic components in a simulated environment. This is done following lab testing and usually involves accessing better testing equipment to identify potential issues. 
6. Simulated Environment Pilot
   upon completion of the technology design, final testing can commence. This will provide data critical to the commercialization phase where the technology is applied. 
7. Operational Environment Demonstration
   using the prototype in an operational environment to understand how it performs in non-simulated testing. Further development may be required to address performance issues. 
8. Final Testing and Evaluation
   upon further testing, the technology has proven itself to be successful under normal operating conditions. 
9. Successful Deployment
   the application of a technology, in its final form, in real-life conditions. 

Understanding TRLs is crucial as they can assist businesses in identifying and applying government funding programs relevant to various research phases. Numerous Canadian grant and loan programs for research and development initiatives utilize TRL as a criterion for eligibility, aimed at identifying technologies at specific stages of development. Government funding can support projects in advancing the innovation of a technological product to a more advanced development stage. 

Government Funding for Canadian Research and Development 

The Canadian government offers a variety of funding programs designed to support RD&I initiatives across all stages of technology readiness. These programs are crucial for advancing innovations from conception to commercialization. While most of the available funding is aimed at accelerating the development of established technologies, there are also specific grants and initiatives that focus on providing early-stage support for novel and groundbreaking concepts that have yet to be proven. 

TRLs serve as a critical framework in determining eligibility for these government funding programs. Each funding initiative typically emphasizes sectors or stages of development, which helps define the characteristics and requirements of the ideal applicant. By understanding your organization’s TRL, you can effectively navigate the landscape of available government incentives. This insight not only aids in identifying suitable funding opportunities but also empowers your business to craft a robust application, enhancing your chances of securing financial support for your innovative projects. 

FI Group can help you! 

If your company engages in R&D activities, you can count on us: we specialize in helping companies recognize innovation and secure funding for their Research and Development (R&D) activities through the comprehensive management of R&D Tax Credits. With over 1,400 qualified employees, including specialists from different fields, we are dedicated to supporting companies of all sizes and sectors. With our expertise, FI Group specialists can help your company identify the qualifying activities conducted and access the available benefits, optimizing your research and giving it even more space and investment. 

Despite common misconceptions in the sector, the program can and should be applied to technology projects. 

Key Takeaways 

• R&D is crucial to success in the IT industry, enabling companies to improve the quality and functionality of their products and services, and stand out in the marketplace. 
• Building diverse and multidisciplinary teams is essential to enrich creativity and problem-solving capabilities, resulting in innovative solutions that meet changing customer needs. 
• The SR&ED Tax Credit Program encourages companies to engage in R&D activities by offering tax credits and reimbursements. 
• Many companies have misconceptions about what qualifies R&D claims. Projects such as database development and website creation often do not meet the criteria for technological advancement. 
• For a project to be eligible for SR&ED, it must have detailed documentation, involve systematic research and experimentation, and seek to resolve technological uncertainties while achieving technological advancements. 

Research and Development (R&D) serves as a pivotal facet for achieving success in the rapidly evolving Information Technology (IT) industry. By strategically investing in innovative practices and technologies, companies can enhance the quality and functionality of their products and services, positioning themselves as frontrunners in a highly competitive marketplace. This commitment to innovation not only fosters improved user experiences but also facilitates the development of cutting-edge solutions that can disrupt traditional industry norms.  

Moreover, cultivating a diverse and multidisciplinary team is crucial; it brings together various perspectives, skills, and expertise, which enhances creativity and problem-solving capabilities. A collaborative approach to R&D encourages brainstorming and experimentation, resulting in groundbreaking solutions that effectively address the dynamic and diverse needs of customers. By staying ahead of industry trends and proactively responding to market demands, organizations can ensure sustained growth and relevance in an ever-changing technological landscape. 

SR&ED 

Aiming to encourage companies of all sectors and sizes to engage in research and development, the Scientific Research and Experimental Development (SR&ED) Tax Credit Program is Canada’s leading research-focused tax incentive program, offering tax incentives (such as refunds and credits) to companies engaged in qualifying activities in the country. 

SR&ED Claim for the IT Industry 

Within the IT area, numerous misconceptions exist regarding what can be considered – or not – eligible for R&D claims. Although it may involve innovative and ingenious projects, database development, business solutions, website creation, and application of standard software, they do not usually represent advances or overcome technological obstacles. Therefore, it is essential to remain aware of the type of projects developed by the company and how it can be presented to the Canada Revenue Agency (CRA). 

Examples of qualified IT projects may involve problems with encryption, compression, algorithms, logic, performance and quality issues, incompatibility issues, state-of-the-art IT, and combinations of media types. 

Regarding the Eligibility criteria, we can mention: 

• Documentation: detailed documentation is essential for your project to be properly registered and have the necessary support to prove its advances. It should include design documents, code changes, records of steps, tests, and results, forming a clear portfolio of your entire process. 
• Research and experimentation: Your project must conduct systematic research and/or experiments, aiming to create and test specific hypotheses to address and overcome technological uncertainties and obstacles, which may include: 
• Testing various algorithms to determine which one offers the best performance under specific conditions. 
• Experimenting with different software structures to evaluate compatibility with existing systems. 
• Iterative development cycles where tests and modifications are made to evaluate different approaches to solving a technological problem. 
• Technological Advancements and Technological Uncertainties: To be eligible, a project must aim to resolve a technological uncertainty that cannot be addressed using existing technologies. In doing so, it should also pursue a technological advancement, which doesn’t necessarily mean inventing something entirely new but can include improving existing technologies in terms of performance, scalability, efficiency, or other key metrics. Technological advancements should be described as the new conceptual knowledge gained through experimentation, which goes beyond the current state of the art in the industry. This knowledge should reflect insights that were not previously available or accessible through standard practices or publicly known solutions. 

Overall, the SR&ED program presents a significant opportunity for IT companies in Canada to fund their R&D initiatives, thereby contributing to innovation and technological advancement in several ways. 

FI Group can help you!  

If your company engages in research and development (R&D) activities and needs assistance identifying innovative projects or securing funding for your research, we are here to help. With over 1,400 qualified employees, including experts from various fields, FI Group is dedicated to supporting companies of all sizes and sectors. We help identify eligible activities and access the available R&D tax credits, ensuring that you optimize your research efforts while increasing scope and investment. 

Key Takeaways  

• The healthcare industry relies heavily on innovation, with professionals involved in developing innovative treatments, diagnostics, and technology that can improve patient care. 
• The SR&ED program offers tax credits and reimbursements for eligible research and development expenses, allowing healthcare professionals to offset costs and reinvest in further innovation. 
• To be considered eligible for the program, activities must meet the two requirements defined by the CRA: the WHY and the HOW, demonstrating the technological advancement (due to scientific or technological uncertainty, and a systematic investigation, along with a detailed documentation 
• Tax incentives help ease the financial burden of R&D activities, allowing companies to recoup part of their investment through credits. 
• Taking advantage of SR&ED benefits can provide a significant competitive advantage, and it is crucial to have expert advice to ensure compliance and maximize eligible claims. 

In the rapidly evolving healthcare sector, innovation is a critical component for advancing and improving patient care. Whether you’re a physician leading the way in novel treatment methodologies, a researcher delving into groundbreaking diagnostics that can revolutionize early detection, or a pharmacist at the forefront of designing sophisticated drug delivery systems that enhance therapeutic effectiveness, your work is often deeply rooted in extensive research and development (R&D).  

What many healthcare professionals may not fully appreciate is that these innovative endeavors could be eligible for considerable financial incentives through Canada’s Scientific Research and Experimental Development (SR&ED) program. This program is specifically designed to encourage innovation by providing tax credits and refunds for eligible R&D expenditures, including labor costs, materials, and some overhead expenses. By leveraging the SR&ED program, professionals in the healthcare industry can not only offset their R&D costs but also reinvest those savings into further innovation, leading to improved outcomes for patients and the healthcare system. 

Eligibility 

As with all other industries, eligibility in the healthcare industry is contingent upon meeting certain criteria. These are: 

1. Technological Advancement 
2. Systematic Investigation 
3. Detailed Documentation 

Intrinsic to each of these criteria are examples of activities that are eligible once completed, such as: 

• Innovative treatments, the development of new therapies and procedures that improve outcomes, increase efficacy, and reduce patient side effects. 
• Creation of new diagnostic tools, methods, and technologies, or innovative medical tools and devices. 
• Formulation, testing, and documentation of hypotheses, discoveries, and investigations that aim to overcome technological barriers and limitations. 
• Description of methods, procedures, results, progress, challenges throughout the R&D process, etc.  

The SR&ED program serves as a significant incentive for Canadian companies that are focused on advancing research and development initiatives. Whether involved in the creation of innovative medical devices, the exploration of advancements in pharmaceuticals, or other research activities, SR&ED provides a valuable opportunity to both support and recognize these innovative efforts. 

Benefits of Participating in the SR&ED Program 

Among the key benefits of R&D tax incentives in the healthcare sector, several important aspects can be highlighted. 

• Financial support: R&D tax incentives help organizations offset the substantial costs associated with research and development activities and can significantly alleviate the financial burden associated with innovative projects, fostering a culture of continued advancement and exploration in the healthcare field. 

• Tax credits: Companies engaged in eligible R&D activities can claim specific expenses as tax credits, which are designed to reduce their overall tax liability. This process allows organizations to recover a portion of their R&D investments through direct credits on their income tax returns. In many cases, if the total credits exceed the tax due, eligible companies can receive a cash refund, thus providing immediate financial relief and further incentivizing innovative pursuits. 

• Competitive advantage: Leveraging R&D tax benefits can improve an organization’s market position. By investing in research and developing innovative technologies or treatment methodologies, companies can differentiate themselves from their competitors. This strategic advantage not only drives innovation within the organization but can also lead to significant long-term profitability and growth. 

• Compliance expertise: Navigating the complexities of the R&D tax incentive program can seem overwhelming, given the detailed requirements and regulations involved. Partnering with and assisting consulting firms specializing in R&D can provide essential expertise, particularly in helping organizations understand and meet program specifications, maximize eligible claims, and mitigate audit risk through meticulous documentation and adherence to compliance standards. 

Medical innovation: a lever for the future 

Healthcare continues to evolve in line with other industries and technologies, creating and incorporating new ways to advance personal and general care, diagnostics, and personalized technology that could change the way medicine is viewed and practiced.

Taking advantage of tax incentives like SR&ED – and having access to the benefits provided by other industries – could be the key to greater investment and continuous improvement not only for companies and professionals but also for the daily lives of patients in Canada and around the world. 

FI Group can help you! 

Is your company active in research and development (R&D) and would you like to identify innovative projects or obtain financing for your work? FI Group is here to help you. 

With more than 1,400 qualified employees, including experts from various fields, FI Group supports companies of all sizes and sectors. We help you: 

• Identify eligible activities; 
• Access available tax credits; 
• Optimize your research efforts; 
• And increase your investment capacity. 

The new fund aims to empower Canadian SMEs to scale AI innovation 

Key takeaways 

• The AI ​​Compute Access Fund provides up to $5 million to support Canadian SMEs in accessing essential computing infrastructure to develop and commercialize AI solutions. 
• It covers up to 66% of costs with Canadian cloud-based AI compute providers and up to 50% with foreign providers (until March 2027). 
• Companies must be registered in Canada, have fewer than 500 employees, develop AI products or services, have R&D staff in the country, and demonstrate financial viability. 
• Applications are open until July 31, 2025. Selection considers market potential, management capacity, technological maturity, and public and economic benefits to Canada. 

On December 5, 2024, the Government of Canada officially launched the AI Compute Access Fund, a pivotal initiative within the framework of the Canadian Sovereign AI Compute Strategy. This ambitious program is backed by an investment of up to $300 million, aimed specifically at bolstering the capacity of Canadian small and medium-sized enterprises (SMEs).  

The fund is designed to facilitate access to high-performance computing infrastructure, which is essential for the development, testing, and commercialization of innovative artificial intelligence solutions. By providing these resources, the government seeks to empower SMEs to leverage cutting-edge technology, enhance their competitive edge in the global market, and foster a thriving ecosystem of AI research and application within Canada. 

Why this fund matters 

AI development is compute-intensive, and compute is often the most expensive part of the innovation pipeline. The AI Compute Access Fund aims to: 

• Accelerate the innovation and the commercialization of AI technologies by Canadian firms. 
• Provide targeted support to AI-focused SMEs with clear R&D and go-to-market strategies. 
• Encourage the use of a diverse range of compute providers, helping companies remain competitive in a rapidly evolving global landscape. 

What it offers 

Eligible applicants can receive financial support offered as either a non-repayable, conditionally repayable or repayable contribution to offset compute-related costs for projects lasting up to three years (until March 31, 2028). The funding structure includes: 

• Up to 66% coverage for AI compute services from Canadian cloud providers. 
• Up to 50% coverage for AI compute services from non-Canadian providers (until March 31, 2027). 

After April 1, 2027, only Canadian-based AI computer services will be eligible for funding. 

Who can apply 

To qualify for the program, applicants must have proposals with total eligible costs between $100,000 and $5 million and meet the following criteria: 

• Company Registration: Canadian-registered for-profit company and employ fewer than 500 full-time equivalent (FTE) employees, ensuring that the initiative supports small to medium-sized enterprises in the technology sector. 
• AI Development Focus: Be actively engaged in the development of artificial intelligence products or services, accompanied by a clear and viable commercialization plan that outlines strategies for bringing these innovations to market effectively. 
• Research & Development Requirements: A Canadian-based research and development (R&D) team is essential, with the company conducting all project-related activities within Canada. This requirement supports local innovation and job creation. 
• Financial Viability: Demonstrate existing revenue streams or secure a Series A investment to showcase financial stability and the potential for growth, which is crucial for the sustainability of the AI projects. 
• Contractual Agreements: have established (or be in the process of securing) contracts with compute service providers to ensure access to the necessary technological infrastructure required for their AI development and deployment. 

By fulfilling these criteria, applicants will be better positioned to leverage the resources and support available for AI innovation in Canada. 

Eligible Activities and Costs 

Funding can be used for activities such as: 

• Training AI models prior to commercial launch 
• Running inference services 
• Fine-tuning or improving existing AI models 

Eligible expenditures include: 

• Core compute and storage costs 
• AI/ML processing 
• Compute-specific licensing, security, and monitoring 

Costs like taxes, legal fees, and prepaid services beyond the agreement period are not eligible. 

How to Apply 

• Create an Account 

Applicants must create a My Canada Business Account and verify their identity to access the AI Compute Access Fund portal. 

• Submit a Statement of Interest (SOI) 

Applicants must provide standard business information and a high-level overview of their project, including how it will benefit from AI compute services and contribute to AI innovation in their industry and in Canada.
The program team will assess eligibility and alignment with program goals and respond within 5 business days. Approved applicants will be invited to submit a full application. 

• Submit a Full Application 

Only applicants who pass the SOI stage can submit a full application during the official Call for Proposals (CFP) period. 

The full application must include: 

• Business background and project scope 
• Budget and funding sources 
• Market potential and commercialization readiness 
• Team composition and compute service arrangements 
• Anticipated innovation, economic, and public benefits 

NOTE: Applicants may be asked to submit additional documentation within 5 business days. 

• Implementation and Monitoring 

Once approved, a Contribution Agreement will be signed. Recipients can begin claiming eligible costs and will be subject to regular progress check-ins. A final report will be required at the end of the project. 

Applications close on July 31, 2025, at 11:59 PM EST. 

Evaluation and Selection Criteria 

• After the application period closes, proposals will undergo a due diligence assessment based on: 
• Market potential and commercialization readiness 
• Management and financial capacity 
• Technology maturity 
• Economic, innovation, and public benefits to Canada 
• Alignment with Government of Canada priorities (e.g., job creation, IP development, environmental impact) 
• Funding decisions will also consider portfolio balance, including regional representation, ownership diversity, business size, and risk profile. 

The AI Compute Access Fund is a crucial initiative designed to empower Canadian AI companies by providing them with essential access to public funding for their innovative projects. As the demand for advanced computing resources rises, many businesses in the AI sector face the challenge of high infrastructure costs, which can impede their growth and development. This fund aims to alleviate some of these financial burdens by offering support tailored to companies that are keen on scaling their AI solutions. 

FI Group can help you. 

If your organization is leading innovative AI applications and wants to enhance its market presence, now is the perfect time to pursue funding opportunities. Consulting experts like FI Group can significantly boost your chances of success.  

We specialize in helping companies secure funding for their R&D efforts through effective management of R&D Tax Credits. With over 1.400 qualified professionals, we support businesses of all sizes in identifying qualifying activities and accessing available benefits. Our goal is to optimize your research initiatives by providing additional resources for your innovative projects. 

Actions to improve the province

Ontario’s Minister of Finance Peter Bethlenfalvy presented the 2025 Budget on May 15, 2025. In the current economic landscape – marked by trade conflicts, new or increased U.S. tariffs and threats against the Canadian economy – Ontario is focusing on a plan to protect workers, businesses and communities from economic uncertainty.

For that, this plan aims to ensure the creation of jobs and support business growth. Investments in manufacturing, the expansion of interprovincial trade, the increase of the province’s electricity capacity, the encouragement of innovation and support for small businesses are among the key strategies the government is implementing to safeguard Ontario’s economy and its citizens.

One example is the expansion of the Ontario Made Manufacturing Investment Tax Credit, which will provide an additional $1.3 billion over three years to enhance the competitiveness and resilience of the manufacturing sector.

In addition, the government has introduced other measures focused on research, development, and innovation, which we outline below:

I. Ontario research and development tax credit (ORDTC)

The ORDTC remains unchanged in the 2025 Budget. Its key features continue as before, including a non-refundable tax credit of 3.5% on eligible R&D expenditures incurred in Ontario by Canadian-controlled private corporations (CCPCs) with a permanent establishment in the province.

Similarly, the carryback and carryforward provisions remain intact, allowing unused portions of the tax credit to be carried back up to three years or forward for 20 years.

II. Ontario innovation tax credit (OITC)

Same as the ORDTC, no changes on the OITC. Qualifying corporations can claim a refundable tax credit of 8% for qualified expenditures on Scientific Research and Experimental Development performed in Ontario. To qualify for this tax credit, the corporation needs to have a permanent establishment in Ontario, conduct scientific research and development during the year in Ontario and file a Federal SRED tax schedule T661 for the tax year.

III. Ontario Made Manufacturing Investment Tax Credit (OMMITC)

This program announced in the 2023 Budget, was expanded to include non-Canadian Controlled Private Corporations (non CCPCs) and private companies (CCPCs). Furthermore, the rate was improved from 10% to 15%. For credit purposes, capital investments for buildings (acquisition, construction, or renovation), machinery and equipment that are used for manufacturing or processing of goods in Ontario are eligible.

IV. Life Sciences Innovation Fund (LSIF)

This fund will receive a reinvestment of $ 15 million over 3 years, to continue supporting innovative startups for the commercialization of innovations in health and biotechnology.

V. Ontario Vehicle Innovation Network (OVIN)

Additional funding to continuethis program will be provided through an investment of $73 million over the next four years, supporting regional technology development sites, research and development (R&D) partnerships, and incubator projects for automotive and mobility small and medium-size enterprises (SMEs).

VI. Advanced Manufacturing and Innovation Competitiveness (AMIC)

As announced in the 2024 Ontario Economic Outlook and Fiscal Review, the government is providing an additional $40 million to extend the AMIC Stream starting in 2025–26 as part of the government’s Advancing Ontario Made Manufacturing Plan.

VII. Critical Minerals Innovation Fund (CMIF)

Ontario has invested so far $20 million to support projects through this fund. In the Budget 2025, the government announces an additional $5 million over two years in the CMIF to encourage innovation in the critical mineral sector and reduce reliance on foreign sources of critical minerals and their processing.

VIII. Hydrogen Innovation Fund

To boost the Electricity Grid with Hydrogen, the Ontario government is launching a new round of the Hydrogen Innovation Fund, investing $30 million to unlock hydrogen’s potential to drive economic growth, create jobs and support the province’s position as a leader in the clean energy.

The updates related to innovation, R&D, commercialization announced represent improvements for taxpayers engaged in these activities, as well as protection mechanisms from the rates imposed by the U.S.

For more information, contact our team!

Major changes are being made to R&D and e-business

The Quebec Ministry of Finance Eric Girard delivered his speech on the 2025-2026 budget on March 25, 2025. In a context of political, commercial, and diplomatic turbulence, Quebec is focusing on fiscal aid measures aimed at increasing companies’ capacity to innovate and commercialize. Thus, the government plans $604.1 million over five years to: stimulate innovation and commercialization through a renewed fiscal aid regime; promote innovation in strategic sectors; modernize public services to increase efficiency; and support high-potential SMEs.

Significant changes are being made to Research and Development (R&D) aid measures, which are generally enhanced, and to the e-business tax credit program (e-business / CDAE), which is being reoriented towards the integration of Artificial Intelligence in companies’ business processes.

We present here the main measures related to SR&ED, e-business, along with some additional sectorial measures.

1.New tax credit for research, innovation, and commercialization (CRIC)

This new credit will replace eight fiscal measures, namely the four R&D tax credits (R&D salary credit, university research, private partnership pre-competitive research and contributions and fees paid to a research consortium), the industrial design tax credit, the tax credit for technological adaptation services, and the two tax holidays aimed at hiring for foreign researchers and experts.

The R&D Salary tax credit, which offered, in addition to the federal RS&DE credit, a rate varying from 14% to 30% of eligible expenses (R&D salaries, 50% R&D subcontracting contract) is therefore replaced by the CRIC, which will cover not only eligible R&D expenses but also pre-commercialization expenses (activities which is aimed at carrying out a validation and demonstration of technologies before commercialization).

Pre-commercialization activities will include, among other things, activities aimed at meeting regulatory requirements necessary to obtain a registration or certification for the commercialization of a product. Product design activities will also be considered pre-commercialization activities. However, these activities must be carried out in continuity with R&D activities conducted in Quebec.

The R&D credit for university research is replaced by the CRIC for expenses (50%) related to a contract concluded with a university, a public research center, or a research consortium.

The private partnership pre-competitive research tax credit is also replaced by the CRIC and provides for the same types of expenses mentioned above.

The research credit for contributions and fees paid to a research consortium, as well as the tax holidays for foreign researchers and experts, are abolished.

The CRIC will be refundable (regardless of the type of company) and therefore provides for:

• A rate of 30% on the first million dollars of eligible expenses that exceed the exclusion threshold (this limit of $1 million must be shared among the companies in a group of associated companies).
• A rate of 20% for eligible expenses beyond $1 million
• An exclusion threshold, which corresponds to the highest of:
  • The sum of the personal base amount of the personal income tax system applicable for each employee, adjusted in proportion to their time spent on R&D and pre-commercialization activities
  • $50,000
• Eligible expenses for R&D or pre-commercialization work:
  • Salaries and wages
  • 50% of the cost of a contract concluded with a subcontractor having employees located in Quebec (e.g., university)
  • Capital expenditures related to the acquisition of goods*

*Capital assets acquired for R&D or pre-commercialization activities must be new and used exclusively in Quebec, at least 90% of the time, for R&D or pre-commercialization activities, for at least 730 consecutive days following the start of their use. Otherwise, a special tax will apply. The CRIC cannot be claimed for assets used or acquired as part of a major investment project that qualifies for a tax holiday.

**Any assistance amounts, whether governmental or not, allocated to expenses related to R&D or pre-commercialization activities will reduce the eligible expense base. However, federal investment tax credits will not be considered governmental assistance for the purposes of the CRIC.

• Interaction of the CRIC with the SR&ED federal tax credit

The CRIC will support companies’ salaries beyond the SR&ED stage, while the inclusion of equipment expenses will encourage the acquisition of technologies and productive assets used in R&D or pre-commercialization activities.

Since these expenses are currently not eligible for the federal SR&ED tax credit, the CRIC aid associated with them will not affect the amount of federal fiscal aid.

Regarding R&D salary expenses, a company will be able to continue to accumulate both tax credits (SR&ED federal and CRIC provincial).

Note that the adoption of improvements to the federal SR&ED credit presented in the fall of 2024 remains uncertain, due to the prorogation of the federal Parliament until March 24, 2025, which suspends work on current and upcoming bills. These improvements included the reinstatement of the eligibility of capital expenses, the increase in the spending cap eligible for the enhanced rate, from $3 million to $4.5 million, the expansion of eligibility for the enhanced tax credit to Canadian public companies, and the increase in taxable capital thresholds applying to the spending cap eligible for the enhanced rate.

We will know more during the presentation of the next federal budget.

• Effective application date of the CRIC

The new fiscal aid regime for innovation will come into effect for corporate tax years starting after March 25, 2025. The abolished tax credits can be claimed for corporate tax years that began no later than the day of the budget speech.

2. Replacement of CDAE (e-business tax credit) by e-business integrating artificial intelligence (CDAE^IA)

Since its establishment in 2008, the CDAE has mainly supported activities related to the design and development of computer systems and software. However, IT services and solutions have evolved rapidly in recent years, particularly with the integration of artificial intelligence (AI) into companies’ business processes.

Some activities supported by the CDAE are considered to be of too low added value, and to encourage higher value-added IT activities and focus fiscal aid on AI, the government plans to replace the CDAE, starting from fiscal years beginning after December 31, 2025, with the e-business integrating artificial intelligence (CDAE^IA)

Here are the new criteria for CDAE^IA:

Eligible companies	IT companies with an establishment in Quebec, a minimum of 6 eligible employees, and meeting the following three gross revenue criteria: – 75% of its gross revenue must come from the IT sector – 50% of its gross revenue must derive from development, software publishing and data processing and hosting activities* – 75% of its gross revenue from eligible activities must come from services ultimately provided to third parties or from services relating to applications developed for use exclusively outside Québec** *To meet the activity criterion, a company must demonstrate that at least 75% of its gross revenue comes from eligible activities as defined by the Law, and that at least 50% of its gross revenue comes from activities within four specific NAICS codes: -511210 (software publishers) -541510 (computer systems design and related services) -561320 (temporary help services) -561330 (permanent staffing services) Data processing, hosting, and related services activities within the group described under NAICS code 51821 will be added to the list of NAICS codes to meet the 50% test. ** To meet the criteria related to services provided, the company must demonstrate that 75% of the gross revenue from activities within the four specific NAICS codes relates to either: – Services whose ultimate beneficiary is a person not related to the company. – Services related to an application developed by the company that is used exclusively outside Quebec. Data processing, hosting, and related services activities will also be added as eligible activities considered in the analysis of the service criterion.
Eligible activities	Mainly related to e-business that incorporate significant AI functionalities and concerning: – IT consulting services (as long as they relate to the other two activities listed below) related to technology, system development, or e- business processes and solutions – Development and integration of information systems and technological infrastructures – Development of security and identification services. The definition of an eligible activity will be limited so that, for the application of the employee certification, the activity must be primarily related to electronic business that significantly integrates AI functionalities. In other words, an activity will be considered primarily related to electronic business that significantly integrates AI functionalities when the tasks performed by the employee are mainly related to electronic business and pertain to a mandate, a project, or a product that significantly integrates AI functionalities. For the employee certification, activities related to the maintenance or evolution of information systems or technological infrastructures will no longer be considered eligible. Consequently, tasks necessary to ensure the proper functioning of systems and infrastructures, as well as those aimed at resolving or preventing problems, will no longer be eligible.
Eligible expenditures	Labor expenses in excess of an exclusion threshold per eligible employee corresponding to the basic personal amount under the personal income tax system ($18,571 in 2025 and indexed annually). Eligible employees must be full-time and spend at least 75% of their time on eligible activities, excluding salaries related to certain government contracts.
Tax credit rates		2025	2026	2027	2028
	Refundable tax credit	23%	22%	21%	20%
	Non-refundable tax credit	7%	8%	9%	10%

• Special case of foreign company subsidiaries

To be eligible for the CDAE^IA, a company cannot carry out IT activities for the benefit of its group of companies. However, in the case of a subsidiary of a foreign company that provides IT services for the benefit of its parent company, these services may be eligible for the CDAE^IA under certain conditions, like the current situation with the CDAE.

Thus, the company certification must indicate the proportion of gross revenue from NAICS codes 511210 (software publishers), 51821 (data processing, hosting, and related services), and 541510 (computer systems design and related services), attributable to services related to an application used exclusively outside Quebec by an ultimate beneficiary related to the company. This proportion must also be indicated for activities within NAICS codes 561320 (temporary help services) and 561330 (permanent staffing services), attributable to services provided related to the activities of the three NAICS codes mentioned previously. When one of these proportions represents at least 50% of a company’s gross revenue, the credit rate will be reduced by half for that tax year.

• Effective Date of CDAE^IA

These modifications will be applicable to a tax year beginning after December 31, 2025. That said, a company can choose to apply them to a year beginning after March 25, 2025 and before January 1, 2026, by submitting this choice in writing to Investissement Québec within the prescribed deadlines (before the ninth month following the due date for filing its tax return for the relevant tax year).

3. Digital transformation offensive

The government announces $14.0 million over three years to continue the OTN, initiated in 2020 and aimed at encouraging companies to increase their productivity through investments in automation, the integration of artificial intelligence into their activities, and the transition to digital.

4. Support for Quebec suppliers in the electrical industry

Launched in 2022, the Quebec Strategic Electrical Procurement Project (PASQE) has supported projects that have increased the capacity of Quebec companies to produce various components necessary for the hydroelectric sector, notably to replace critical imported equipment and components for the production and transport of electricity. The government plans $7.0 million over two years to extend and enhance the initiative, which will become PASQE 2.0, to improve the supply chain and promote economic benefits in Quebec.

5. Promoting the realization of export projects

The government plans $15.8 million over two years to promote the realization of export projects. This amount will:

• Support regional export promotion organizations (ORPEX) that assist companies in their export projects, market diversification, or that promote the attraction of foreign direct investments
• Grant an additional $2 million per year over two years to Investissement Québec to support Quebec companies in their diversification efforts in the rest of Canada and internationally.

The updates related to innovation, R&D, commercialization, and electronic business announced represent a significant improvement for taxpayers engaged in these activities. More details will be provided in the coming days.

For more information, contact our team!