Overview Questions
Quebec’s Tax Credit for the Development of E-Business (CDAE) is transforming into CDAEIA (Tax Credit for the Development of E-Business Integrating Artificial Intelligence) for taxation years beginning after December 31, 2025. This represents a strategic shift from supporting general IT activities to focusing specifically on AI-integrated business solutions.
CDAEIA applies to taxation years beginning after December 31, 2025. If your fiscal year starts January 1, 2026 or later, you’ll be subject to the new CDAEIA requirements. Companies with fiscal years starting before December 31, 2025 can still claim under current CDAE rules.
Quebec is investing $271.5 million over five years to position the province as a global AI innovation hub. The government recognizes that some activities supported by CDAE no longer represent high added value, while AI integration has become critical to competitive advantage in the technology sector.
Eligibility Changes
CDAEIA-eligible activities must be closely related to information system design or software publishing AND significantly integrate AI functionalities, including:
- AI applications using machine learning and neural networks
- AI model development and training
- AI system integration for business automation
- Big data analysis with AI components
- Personalized customer experience solutions using AI
- Data processing and hosting operations (NAICS 51821) with AI integration
Starting in 2026, these activities are excluded even if they were previously CDAE-eligible:
- System maintenance and evolution activities
- Technology infrastructure maintenance
- General IT support without AI integration
- Routine software updates and patches
- Hardware installation and configuration
Quebec defines AI solutions as applications or software using advanced technologies such as machine learning and neural networks to accomplish specific tasks, automate business processes, analyze large amounts of data, and provide personalized customer experiences. The AI component must be central to the solution’s value proposition, not merely supplementary.
The basic thresholds remain: Companies must maintain at least 6 eligible full-time employees with 75% of their time devoted to eligible activities. However, under CDAEIA, the 75% threshold specifically applies to AI-related activities rather than general IT work.
Financial Impact
The total 30% rate remains unchanged, but the composition shifts gradually:
- 2025: 23% refundable, 7% non-refundable
- 2026: 22% refundable, 8% non-refundable
- 2027: 21% refundable, 9% non-refundable
- 2028+: 20% refundable, 10% non-refundable
Under current CDAE rules (2025), companies can receive up to $25,000 per eligible employee annually based on the $83,333 salary cap. For taxation years beginning after December 31, 2024, the salary cap is eliminated and replaced with an exclusion threshold equal to the basic personal amount (approximately $18,751 in 2025), prorated based on time spent on eligible activities.
The gradual shift from refundable to non-refundable credit means companies will receive slightly less immediate cash refund over time. By 2028, the refundable portion drops from 23% to 20%, meaning companies need taxable income to fully utilize the 10% non-refundable component.
Strategic Considerations
Yes, absolutely. 2025 represents the final opportunity for traditional software companies to claim under broader CDAE eligibility criteria. Companies that don’t qualify for AI-focused CDAEIA in 2026 should maximize their 2025 CDAE claims while they still can.
Yes, for different taxation years. A company with a December 31 fiscal year-end can claim CDAE for their 2025 taxation year and CDAEIA for their 2026 taxation year, provided they meet the respective eligibility criteria.
AI-native companies should maximize 2025 CDAE claims under current rules while simultaneously preparing comprehensive documentation for CDAEIA. These companies are well-positioned to potentially increase their benefits under the AI-focused program.
Traditional IT companies should:
- Maximize 2025 CDAE claims immediately
- Begin integrating AI components into existing products and services
- Document AI integration efforts for future CDAEIA qualification
- Consider partnerships or acquisitions to accelerate AI capabilities
- Develop training programs to build AI expertise within their teams
Program Stacking and Coordination
Yes. CDAEIA and federal SR&ED can be claimed for overlapping activities, provided the activities meet both programs’ respective eligibility criteria. SR&ED focuses on experimental development and technological uncertainty, while CDAEIA focuses on AI integration and implementation.
CRIC (Tax Credit for Research, Innovation and Commercialization) is Quebec’s replacement for the provincial SR&ED component and can be coordinated with CDAEIA. Companies conducting both R&D activities (CRIC-eligible) and AI implementation work (CDAEIA-eligible) can potentially access both programs.
Through strategic coordination of federal SR&ED (up to 35% for CCPCs), provincial CRIC (30% on first $1M), and CDAEIA (30% total), Quebec AI companies can potentially achieve 60%+ effective funding coverage on eligible activities, though careful structuring is required to avoid double-counting.
Sector-Specific Questions
Yes, this is a significant change. Data processing and hosting companies (NAICS 51821) are newly eligible under CDAEIA, provided they demonstrate significant AI integration in their services. Basic hosting without AI functionality does not qualify.
SaaS companies that don’t integrate AI significantly will face challenges qualifying for CDAEIA. These companies should either maximize 2025 CDAE benefits or begin integrating AI features such as predictive analytics, personalized recommendations, or automated optimization.
Yes, machine learning consulting firms that develop AI solutions for clients are well-positioned for CDAEIA, provided the work meets the significant AI integration threshold and is performed in Quebec by eligible employees.
Documentation and Compliance
CDAEIA requires documentation demonstrating:
- Significant AI integration in activities (machine learning algorithms, neural networks, etc.)
- Technical descriptions of AI functionality and implementation
- Employee time allocation to AI-specific work (75% threshold)
- Evidence that AI creates core value rather than being supplementary
- Project documentation linking activities to eligible AI categories
Implement tracking systems that:
- Separate AI development from general software work
- Document machine learning model training and optimization
- Record AI system integration and testing activities
- Track time spent on AI-specific vs. general development
- Maintain technical logs of AI functionality implementation
Revenu Québec may audit CDAEIA claims to verify AI integration claims. Companies need comprehensive documentation including technical specifications, project plans, time tracking records, and evidence of AI functionality. Working with experienced advisors helps ensure audit-ready compliance.
Transition Timing
Companies must obtain Investissement Québec certification within 15 months after their fiscal year-end. For a December 31, 2025 fiscal year-end, the certification deadline is March 31, 2027. However, earlier application is strongly recommended.
Immediately. Companies should begin AI integration and documentation in 2025 even while claiming under current CDAE rules. This preparation ensures smooth transition and maximizes chances of CDAEIA qualification in 2026.
No. CDAEIA only applies to taxation years beginning after December 31, 2025. Work performed in 2025 or earlier taxation years must be claimed under current CDAE rules if eligible.
Business Strategy
Companies that successfully transition to CDAEIA gain:
- Cost structure advantages through sustained funding access
- Accelerated AI development capabilities
- Market positioning as AI-integrated solution providers
- Enhanced ability to attract AI talent
- Investor appeal through demonstrated innovation focus
No. Begin AI integration immediately in 2025. This allows companies to claim 2025 CDAE while building the foundation for 2026 CDAEIA qualification. Delayed AI adoption risks both funding gaps and competitive disadvantage.
Companies should prioritize hiring employees with AI expertise (machine learning engineers, data scientists, AI researchers) to meet the 75% AI activity threshold. Traditional developers may need upskilling in AI technologies to maintain CDAEIA eligibility.
Common Mistakes to Avoid
- Waiting until 2026 to start AI integration planning
- Failing to maximize 2025 CDAE claims under current rules
- Not documenting AI components in existing work
- Assuming general software development qualifies for CDAEIA
- Missing the 15-month certification deadline for 2025 claims
Develop a dual-track strategy: maximize 2025 CDAE benefits while simultaneously building AI capabilities and documentation for 2026 CDAEIA. This ensures continuous funding access throughout the transition.
- Failing to distinguish AI-specific work from general development
- Inadequate technical description of machine learning implementation
- Missing employee time tracking for 75% threshold verification
- Insufficient evidence of AI’s central role in solution value
- Not maintaining separate records for multiple funding programs
Getting Expert Help
Immediately if you:
- Currently claim CDAE and want to maintain funding access
- Are uncertain whether your AI integration meets CDAEIA thresholds
- Want to coordinate CDAEIA with federal SR&ED and provincial CRIC
- Need help structuring activities to maximize multiple programs
- Face complex multi-jurisdictional funding situations
Seek advisors with:
- Deep expertise in both CDAE and emerging CDAEIA requirements
- Experience coordinating federal SR&ED with provincial programs
- Technical understanding of AI technologies and integration
- Proven track record with Investissement Québec certifications
- Multi-program optimization capabilities (SR&ED, CRIC, CDAEIA)
Boast provides comprehensive support including:
- 2025 CDAE maximization strategies
- AI integration assessment and positioning
- Multi-program coordination (federal and provincial)
- Documentation systems for audit-ready compliance
- Strategic planning across the transition period
- Ongoing optimization as CDAEIA requirements evolve
Additional Resources
- Investissement Québec: Official CDAEIA program administration
- Revenu Québec: Tax credit forms and technical requirements
- Quebec Budget 2025-2026: Original program announcement details
- Boast resources: Strategic guides, webinars, and consultation services
Yes, Quebec companies should also explore:
- CRIC (Tax Credit for Research, Innovation and Commercialization)
- Federal SR&ED (enhanced with higher expenditure limits)
- Municipal innovation programs (Montreal, Quebec City)
- IDCI (Incentive Deduction for Commercialization of Innovations)
Ready to optimize your CDAE-to-CDAEIA transition strategy?
Contact Boast for a comprehensive assessment of your funding opportunities across the transition period. Our Quebec-based experts help companies maximize current CDAE benefits while positioning for enhanced CDAEIA access in 2026 and beyond.
