• Culture – Design
  • Book publishing
  • Production of sound recordings
  • Production of performances
  • Film dubbing
  • Film production services
  • Québec film production
  • Design activity carried out by an outside consultant
  • Design activity carried out by an employee of a corporation

Tax credit for a design activity carried out by an employee of a corporation

A corporation may claim the tax credit for an in-house design activity with respect to the qualified wages incurred with regard to a "particular designer" (an employee of an establishment of the corporation located in Québec). The activity must be fashion design or industrial design in any industrial sector.

The basic rate of the tax credit is 15% of qualified expenditures. However, the rate is 30% for small and medium-sized businesses (SMBs) with assets of $25 million or less, and varies from 15% to 30% for SMBs with assets of more than $25 million but less than $50 million. The corporation must, in particular, have generated gross revenue of at least $150,000 for the year.

Corporations that may apply for the credit

In order to claim the credit, the corporation must carry on a business in Québec and have an establishment in Québec. The corporation must also obtain a certificate from the Ministère du Développement économique, de l'Innovation et de l'Exportation, attesting that it has carried on a design activity during the year. A corporation that is a member of a partnership whose fiscal period ends after April 21, 2005, and that meets these conditions may also claim the credit.

The following corporations are not eligible for the credit:

• a corporation that is exempt from tax, other than an insurer that is exempt only with respect to a portion of its income
• a Crown corporation or a subsidiary wholly-controlled corporation of a Crown corporation

Expenses giving entitlement to the credit

The credit may be claimed for the wages that the corporation incurs with regard to the designer and the patternmaker as part of a design activity.

The wages, which cannot exceed $60,000 per year for a designer and $40,000 per year for a patternmaker, must be paid and meet both of the following conditions:

• They must be reasonably attributable to carrying out the eligible design activity.
• They must be reasonable in the circumstances.

How to apply for the credit

To apply for the credit, the corporation must complete form CO-1029.8.36.7, Crédit d'impôt pour la réalisation d'une activité de design à l'interne, 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 income tax return a valid certificate, issued by the Ministère du Développement économique, de l'Innovation et de l'Exportation, in respect of the design activity and in connection with a business carried on by the corporation.