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Tax credit for job creation in the aluminum industry in the
Saguenay–Lac-Saint-Jean region

This tax credit may be claimed by a corporation that carries on a recognized business in the administrative region of Saguenay–Lac-Saint-Jean and is based on the increase in the total payroll attributable to eligible employees.

The tax credit is equal to 30% of the payroll increase (in relation to the base period) attributable to the eligible employees of the corporation. The operation of the recognized business must begin no later than the 2007 calendar year.

Any corporation that already qualifies for the tax credit may continue to receive it, in accordance with the terms and conditions previously stipulated, until December 31, 2009.

The purpose of the credit is to foster processing and manufacturing of finished and semi-finished aluminum products possessing a high added value. The credit is also designed to defray the cost of training new employees in the aluminum manufacturing sector.

Corporations that may apply for the credit

In order to claim the credit, the corporation must carry on a recognized business in the administrative region of Saguenay–Lac-Saint-Jean.

A recognized business is a business that has obtained a qualification certificate from Investissement Québec.

Expenses giving entitlement to the credit

The qualified expenditures are the salaries and wages paid to eligible employees. To be eligible, an employee must spend at least 75% of his or her working hours in undertaking, supervising or supporting work that is directly related to one of the following activities:

• manufacturing (and, if applicable, commercializing) finished or semi-finished products made from aluminum which has already undergone primary processing
• designing or engineering (and, if applicable, commercialization) related to the manufacture of finished or semi-finished products made from aluminum
• reclaiming and recycling waste and residues from aluminum processing

Since the 2001 calendar year, salaries and wages paid to specified shareholders may also be taken into account for purposes of the credit. General administration duties cannot be taken into account.

As a rule, the same expenditure cannot be claimed for more than one credit. Corporations that are also claiming the tax credit for an on-the-job training period should keep this in mind.

As of the 2003 calendar year, an employee is considered an eligible employee if the corporation has obtained an annual qualification certificate from Investissement Québec. The certificate must attest that the employee's duties meet all eligibility requirements for a given calendar year.

Associated corporations

Corporations that are associated at the end of a calendar year and that carry on a recognized business must file an agreement with Revenu Québec specifying how the payroll increase is to be apportioned.

Major unforeseeable event

Following a major unforeseeable event that results in an interruption or reduction of its activities, a corporation may request the cancellation of a qualification certificate issued for a given calendar year.

If the corporation resumes its activities, it can apply for a certificate respecting a subsequent year, provided it meets the other eligibility requirements. However, the corporation must resume its activities in the same municipality or in a municipality that is no more than 40 kilometres away, before the end of the second calendar year following the year in which it had to cease its activities.

In certain situations involving circumstances beyond the corporation's control, the corporation may resume its activities more than 40 kilometres from its original location. However, the reference calendar year for the new certificate will be the same as the calendar year of the certificate that was cancelled.

2001 economic situation

Beginning in 2003, a corporation that obtained the cancellation of its qualification certificate as a result of the 2001 economic situation, and that carries on more than one recognized business, may determine the increase in its payroll on the basis of the base period indicated on the cancelled certificate, or on the basis of the base period indicated on the other certificate issued with respect to the other recognized business it carries on.

How to apply for the credit

To apply for the credit, the corporation must complete form CO-1029.8.36.RV, Crédit d'impôt pour la création d'emplois dans une région désignée, and enclose the form with its income tax return or file the form no later than 12 months after the filing deadline for the return.

If the corporation is a member of a group of associated corporations in the year, it must also complete form CO-1029.8.36.RX, Entente concernant le crédit d'impôt pour la création d'emplois dans une région désignée, and enclose the form with its income tax return or file the form no later than 12 months after the filing deadline for the return.

The corporation must also enclose with its return a copy of the valid qualification certificate issued by Investissement Québec with regard to the recognized business, and a copy of all the qualification certificates issued with regard to its eligible employees.