Quebec just made a historic $271.5 million commitment to AI innovation, and it’s fundamentally changing how the province supports tech companies. On October 16, our Quebec-based specialist Joshua Martin joined me to break down what this means for your business and how to capitalize on this unprecedented opportunity.
If you missed our live webinar, don’t worry. We’ve distilled the key insights below, and you can watch the full recording to dive deeper into the strategies that matter most for your company.
The Biggest Provincial Funding Shift in Over a Decade
Starting in 2026, Quebec’s familiar CDAE (e-Business Tax Credit) program transforms into CDAE-IA, with an exclusive focus on AI integration. This isn’t just a name change; it’s a complete strategic repositioning that creates both significant opportunities and challenges for Quebec tech companies.
As Joshua explained during our session, “CDAE was initially conceived in the nineties to support the adoption of e-business, IT infrastructure—almost think of it like the first wave of the internet. Fast forward to today, Quebec wants to shift this program towards the adoption of AI, which is another fundamental revolution.”
Who Wins with CDAE-IA?
The transformation opens doors for several key groups:
AI-Native Companies
If you’re building AI-first solutions, this program was designed for you. The CDAE-IA program comes with exclusive focus on AI integration, creating unprecedented opportunities for AI-native companies. You can now stack CDAE-IA with SR&ED and other federal programs to dramatically increase your non-dilutive funding.
Traditional Software Companies
Don’t panic if you’ve been claiming CDAE for years. The key is understanding how AI already plays a role in your development process and documenting it properly. Many traditional software companies are already using AI tools, developing predictive algorithms, or incorporating automation. The transition simply requires highlighting these activities strategically and embracing further adoption.
Data Processing & Hosting Providers
This is a game-changer. Under the new CDAE-IA program, the threshold for data processing and hosting revenues has been significantly increased, bringing these activities under the program as eligible. Companies that were previously disqualified due to high hosting/processing revenue percentages now have a clear path to eligibility.
The Strategic Window: What You Need to Do Now
Here’s the critical timeline everyone needs to understand:
Q4 2025: This is your preparation quarter. Don’t wait until 2026 to develop your CDAE-IA strategy. Companies should be:
- Finalizing 2025 CDAE claims under current rules
- Analyzing which projects qualify under CDAE-IA requirements
- Adjusting documentation systems to highlight AI integration
- Training teams on new documentation requirements
January 2026: CDAE-IA takes effect for fiscal years beginning January 1, 2026 or later. By this point, your documentation processes should start to reflect the new requirements.
As Joshua emphasized during our discussion, “Do not wait until 2026 to develop your CDAE-IA strategy. We’re already working currently with our clients to make sure they’re up to speed.”
The “Significant AI Integration” Question
The biggest gray area right now? Quebec requires a “significant amount of AI use” for project eligibility, but hasn’t defined exactly what that means.
Our approach at Boast is straightforward: Highlight as much AI integration as possible. AI is a broad term that encompasses:
- Machine learning algorithms and predictive models
- LLM integration and AI-powered chatbots
- Data preparation and quality processes for AI systems
- Automation workflows powered by AI
- Integration of third-party AI tools into your solutions
The key is documenting the AI components of your work from day one, even if the exact threshold remains undefined.
Multi-Program Strategy: Why CDAE-IA + SR&ED Matters
One of the most powerful aspects of CDAE-IA is how it stacks with federal SR&ED credits. During the webinar, Joshua addressed a common question about whether CDAE is more advantageous than SR&ED:
“I wouldn’t use the word advantageous here. Both credits can be used to fully maximize your total claim amounts. It really depends on your business, your expenditures, your employee count, your activities. The SR&ED program might be a better fit for you, the CDAE program might be a better fit, or both combined together might be the best thing to do.”
CDAE-IA operates differently from SR&ED in that it’s more about general activity types versus technical narratives showing complexity of work. If you’re doing AI activities or AI plays a significant role in your business activities, you’re likely eligible for CDAE-IA.
The predictability of CDAE-IA is also valuable for financial planning. As Joshua noted, many clients have been claiming CDAE for years and can count on specific return amounts, whereas SR&ED returns can vary based on the complexity and uncertainty of activities year to year.
Documentation: The Make-or-Break Factor
Success with CDAE-IA hinges on proper documentation, but that doesn’t mean creating burdensome new processes for your development team.
Our recommended approach includes:
- Leveraging existing tools: Use Jira, Tempo, Harvest, or your current time-tracking systems
- Light-touch tagging: Add CDAE-IA tags to projects with AI integration
- AI-focused framing: Reframe existing work to highlight AI components (e.g., “data quality exercise for AI implementation”)
- Quarterly check-ins: Regular validation that documentation captures eligible activities
As Joshua explained, “We do not want to add a cumbersome process that your team’s not going to follow. Our mandate and our strategy is: How can we have a light-touch approach to increasing and making sure that your Jira tickets, your time-tracking systems are compliant under the new program?“
Common Mistakes to Avoid
Based on our experience helping companies prepare for this transition, here are the biggest pitfalls to avoid:
Waiting for perfect clarity: Uncertainty doesn’t mean doing nothing. Start documenting AI integration now, even if final guidelines aren’t published.
Underestimating implementation time: AI integrations that you can claim under CDAE-IA take time to develop and document properly. Starting in January 2026 will be too late.
Ignoring existing AI usage: Many companies already use AI tools throughout their workflows but don’t document or highlight this usage. Audit your current processes for AI integration opportunities.
Neglecting time tracking: CDAE requires that 75% of an employee’s time must be spent on eligible activity types. Without proper time tracking, you can’t demonstrate this threshold.
The Broader Context: Federal Enhancements Coming Too
Quebec’s CDAE-IA transformation isn’t happening in isolation. The federal government is also proposing significant SR&ED enhancements, including restored capital expenditure eligibility and increased expenditure limits.
Joshua shared this perspective during our discussion: “Governments, both federal, provincial, and municipal, are really trying to support innovation in Canada, and they’re doing it through the enhancement of longstanding programs. There’s a lot of really great things happening and support coming for Canadian innovators.”
This creates a unique window where companies can maximize multiple enhanced programs simultaneously if they prepare properly.
Your Next Steps
If you’re a Quebec-based tech company, here’s your action plan:
- Assess your 2025 CDAE eligibility and submit claims under current rules
- Audit your AI integration across all projects and workflows
- Update documentation systems to highlight AI components
- Plan Q1 2026 projects with CDAE-IA eligibility in mind
- Evaluate multi-program strategy combining CDAE-IA with SR&ED and other credits
Don’t navigate this transformation alone. At Boast, we’ve been helping Quebec companies maximize R&D tax credits for over a decade, and we’re already working with clients to ensure seamless transitions to CDAE-IA.
Resources to Help You Succeed
We’ve created comprehensive guides to support your CDAE-IA journey:
2025 CDAE Quick Reference Guide: Everything you need to finalize your current-year claims
CDAE-IA Transition Guide: Deep-dive into the new program requirements and opportunities
CDAE-IA FAQ: Answers to dozens of the most common questions about the transformation
Watch the Full Webinar
Want to dive deeper into specific strategies for your business type? Watch the complete webinar recording where Joshua and I cover:
- Detailed eligibility criteria for different company profiles
- Advanced multi-program stacking strategies
- Real-world examples of successful transitions
- Live Q&A addressing your specific concerns
The CDAE-IA transformation represents Quebec’s commitment to maintaining its position as an AI innovation hub. Companies that prepare now will maximize funding while competitors scramble to catch up. The window of opportunity is open, but it won’t stay open forever!
