What’s Changing? Quebec’s CDAE (E-Business Development Tax Credit) becomes CDAEIA (AI-Enhanced E-Business Development Tax Credit) for fiscal years beginning after December 31, 2025.

Key Transition: From general e-business support to AI-focused innovation funding worth $271.5M over five years.

Tax Credit Rate: 30% total remains unchanged, but structure shifts:

  • 2025: 23% refundable, 7% non-refundable

  • 2026: 22% refundable, 8% non-refundable

  • 2027: 21% refundable, 9% non-refundable

  • 2028+: 20% refundable, 10% non-refundable

New Eligibility Requirements

  • What Qualifies

    • AI applications using machine learning, neural networks
    • Data processing and hosting (NAICS 51821) [NEWLY ADDED]
    • AI model development and training
    • AI system integration for business automation
    • Personalized customer experience solutions
    • Big data analysis with AI components

  • What No Longer Qualifies

    1. System maintenance activities
    • Infrastructure evolution (even if ancillary)
    • General IT support without AI integration
    • Routine software updates

EMPLOYEE REQUIREMENTS

  • Minimum 6 full-time
    eligible employees
  • 75% of time devoted to
    AI-related activities
  • Labor expenses above basic personal tax amount threshold

REVENUE CRITERIA

  • 75% of revenue from IT/AI activities
  • 50% of employees in eligible technical roles
  • Enhanced criteria adapted for AI business models including hosting/data processing

Implementation Timeline & Action Plan

IMMEDIATE ACTIONS (2025 – Transition Year)

  • Audit current projects for AI integration opportunities

  • Document AI components in existing development work

  • Reclassify activities to highlight AI functionality

  • Train teams on new documentation requirements
  • Establish tracking systems for AI-specific development hours

2026+ OPTIMIZATION

  • Align project portfolios across CDAEIA and SR&ED programs
  • Structure R&D activities to capture both experimental (SR&ED) and implementation (CDAEIA) components
  • Maintain meticulous documentation proving AI integration significance

Competitive Advantage Opportunities

Future-Proofing Benefits

  • Early AI positioning prevents credit loss during transition
  • Demonstrates innovation leadership to clients and investors
  • Preserves/increases refundable credits through FY26+

PORTFOLIO STRATEGY BY COMPANY STAGE

Early-Stage (<$1M): Focus on SR&ED for experimental AI research

Growth-Stage ($1M-$10M): Combine CDAEIA for implementation + SR&ED for R&D

Mature ($10M+): Strategic balance across both programs + capital expenditure benefits

How Boast Maximizes Your CDAEIA Success

Transition Support

  • Project Reclassification: Position current work to highlight AI integration
  • Proactive FY26 Planning: Build CDAEIA compliance into workflows now
  • Documentation Excellence: Audit-ready tracking of AI-related activities
  • Flexible Pricing: Smooth transition structures aligned with your growth

Strategic Optimization

  • Dual Program Management: Maximize both CDAEIA and SR&ED benefits
  • Lifecycle Alignment: Match funding strategy to your company growth stage
  • Compliance Assurance: Navigate evolving requirements with expert guidance
  • ROI Maximization: Strategic project structuring for optimal credit capture

Next Steps

  • Book a Strategy Session to assess your AI integration opportunities
  • Review Current CDAE Claims for reclassification potential
  • Develop FY26 Compliance Plan with Boast’s expert guidance
  • Implement Documentation Systems for seamless CDAEIA transition

Ready to optimize your Quebec AI tax credit strategy?

Contact Boast today to ensure you maximize every available dollar while staying compliant with CDAEIA requirements.

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