CDAE/CDAE-AI
Overview
The Tax Credit for the Development of E-Business, commonly referred to as "CDAE" (its French-language abbreviation), is being replaced by the CDAE-AI for taxation years beginning after December 31, 2025. Introduced in Québec to support specialized information technology corporations, the program now prioritizes high-value-added projects that meaningfully integrate artificial intelligence (AI) and automation into business processes. Under the new framework, traditional software and IT projects lacking substantial AI integration will no longer be eligible.
What can you expect to receive?
The tax credit remains equal to 30% of each eligible employee's qualified salary (calculated on an annual basis), combining refundable and non-refundable portions:
• Rate Structure Transition: Starting in 2025 at 23% refundable and 7% non-refundable, the refundable portion decreases by 1% each year while the non-refundable portion increases by 1% until reaching 20% refundable and 10% non-refundable in 2028.
• Salary Rules: The historical $83,333 salary cap has been eliminated. An indexed annual exclusion threshold (tied to Québec's basic personal amount, e.g., $18,571 in 2025) is subtracted from each employee's gross salary; only remuneration above this threshold is eligible.
• Foreign Subsidiaries: Subsidiaries of foreign corporations deriving 50% or more of their revenue from IT services provided to their non-Québec parent company remain eligible, but receive half the tax credit rate.
Are you eligible?
Your company may be eligible for the CDAE-AI if it operates through an establishment in Québec and satisfies the following criteria:
• Workforce Threshold: Your company must maintain throughout a given taxation year a minimum of six employees holding a full-time job (at least 26 hours of work per week), who devote a minimum of 75% of their time to carrying out, supervising, or directly supporting qualifying technical activities (targeting AI specialists, software developers, and technical teams).
• Revenue Criteria: Must derive at least 75% of gross revenue from the IT sector (including at least 50% from software development, publishing, or hosting), with 75% of eligible activity revenue coming from third-party services or exports outside Québec.
Investissement Québec AI Qualification Rules
To qualify, projects must integrate data-trained AI models (such as machine learning or NLP) that are central to the software’s core functionality, deliver measurable operational impact, and be supported by real-time technical documentation.
Combining credits: the most advantageous choice
Along with the CDAE-AI tax credit program, other incentives can be coordinated to maximize your overall funding and protect against overlapping claims: SR&ED, Multimedia Tax Credit, Design Tax Credit.
Call us today to find out what is the most advantageous strategy to maximize your benefits.
