Tax Breaks for Innovative Companies!
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TAXBREAKSFORINNOVATIVECOMPANIES!
LOUIS-PIERREGRAVELLE*
ROBIC,
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AWYERS,PATENTANDTRADE-MARKAGENTS
TheQuébecgovernmentannouncedinitsbudgettabledMarch17,2016tax
measuresforinnovativecompanies.Thesemeasuresareinadditiontoother
measuresinplacetopromoteresearchanddevelopment,andthecommercialization
ofthisresearch.
R&DTaxCredits
Québec,likemanyotherjurisdictions,providesataxcreditforR&Dactivities.
Althoughthegovernmenthassetaneligibilitythresholdof$50,000non-repayablein
2015,thismeasureaimstoencouragebusinessestoconductR&D,andpromotesa
moredynamicenvironment.
FirstPatentProgram
Lastyear,thegovernmentalsolaunchedthefirstpatentprogram.Thisprogramis
designedtoreimbursethecostsassociatedwithfilingandobtainingapatentfor
Québeccompaniesthathavenotpreviouslyfiledpatentapplications.Theallocated
moniesforthe2015-2016yeararenowexhausted,butthisprogram,accordingtoall
expectationswillberenewedin2016-2017and2017-2018.Thegovernmentdidnot
disclosetheexactnumberofcompaniesabletoqualify,soitisdifficulttomeasure
therealimpactofthisprogram.
TaxReductionforInnovativeCompanies
Thegovernmentcontinuestobuildontheseincentives,andannouncedatax
reductionforinnovativecompanies,tooffersupporttothecommercializationof
intellectualpropertyinQuébec.Thismeasure,sometimescalled”patentbox”is
designedtotaxincomefromtheexploitationofapatentedtechnologydifferentlyfrom
otherincome.Thus,asof1January2017,thisdeductionwillallowmanufacturing
companiesmarketingaproductthatincorporatesapatentedtechnologytobenefit
fromataxrateof4%insteadof11.8%.
©CIPS,2016.*FromROBIC,LLP,amultidisciplinaryfirmofLawyers,andPatentandTrade-markAgents.Published
intheSpring2016(Vol.19,no.3)Newsletterofthefirm.Publication068.205E.
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MONTREAL1001Square-Victoria-BlocE-8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.:+1514987-6242Fax:+1514845-7874QUEBEC2828LaurierBoulevard,Tower1,Suite925
Quebec,Quebec,CanadaG1V0B9
Tel.:+1418653-1888Fax.:+1418653-0006
2
Thegovernment’savowedgoalistoencourageinvestmentininnovative
manufacturingcompanies,retainintellectualpropertyinQuébec,andtoincreasethe
competitivenessofQuébeccompanies.Italsotriestoencouragetheproductionand
marketingofgoodsresultingfrompatentsforinventionsmadeinQuébec.In
documentsaccompanyingtheprovincialbudget,italsostatesthatitwants
encourageinnovativecompaniestochooseQuébecfortheiractivitieswithhighvalue
addedmanufacturingandR&D.
Specificdetailsregardingeligibilityhavenotyetbeendisclosed.However,weknow
thatqualifyingcompaniesarecompaniescarryingonbusinessinQuébecwhose
capitalexceeds$15MandwhoseactivitiesinQuebecaremainlymanufacturingand
processingactivities.
RevenuesmustbegeneratedfromaproductmanufacturedinQuébecincorporating
technologycoveredbyaqualifyingpatent.Onemaythinkthatnotonlypatentson
objectsassuchwillqualify,butalsothemethodofpatentsformanufacturingthe
objectinquestion.ThequestionariseswithrespecttobiotechnologyandICT
industries-willthegovernmenttakeagenerousinterpretationoftheword”object”,or
isthegovernmenttargetingtraditionalmanufacturingcompanies?Weareclosely
monitoringthisissue,andassoonasmoreinformationbecomesavailable,wewill
provideupdates.
Forapatenttobeadmissible,itmustbeheldbyacorporationwithanestablishment
inQuébec.Itmustalsoprotectaninventionwhosedevelopmentwassupportedwith
R&DtaxcreditsclaimedinQuébec.Thisrequirementarticulatestheintentionofthe
governmenttoprovideaclosedlooppackage–forthecompanytobenefit,itmust
havepreviouslybeenactiveinQuébecandclaimedR&DtaxcreditsinQuébec.Itis
thereforenotintendedtoencouragecompanieswhodonotalreadyhavesuch
activitiesinQuébecfromimmediatelybenefitingfromthededuction.
Anotherimportantconditioninordertoqualifyintheprogramisthatthepatentisthe
resultofanapplicationthatwasfiledthedayafterthebudgetspeech.Anapplication
mustthereforebearafilingdateafterMarch17,2016.Thequestionariseswhethera
priorityapplicationfiledlessthanayearagocouldallowacompanytobenefitfrom
thededuction.
TheintroductionofthismeasureinQuébectaxationmakesitpossibletocrystallize
thevisionofthegovernment’sfiscalandbudgetarysupportmeasuresforinnovation,
whichnowformawholefromR&Dtocommercializationandproductionoftheobject
inquestion.
AdiscussionwithyourIPprofessionalandwithyourtaxationprofessionalisrequired
toputinplacetheprocessestoprepareandfilepatentapplicationsthatarethe
resultofR&DeffortsinQuébecandidentifyincomefromtheexploitationofIPforthe
benefitofthereducedtaxrate.
ROBIC,LLPwww.robic.ca
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MONTREAL1001Square-Victoria-BlocE-8thFloor
Montreal,Quebec,CanadaH2Z2B7
Tel.:+1514987-6242Fax:+1514845-7874QUEBEC2828LaurierBoulevard,Tower1,Suite925
Quebec,Quebec,CanadaG1V0B9
Tel.:+1418653-1888Fax.:+1418653-0006
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