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Tax credit for book publishing
This refundable tax credit is designed to help Québec publishers develop foreign markets for Québec works, undertake major publishing projects and increase their presence in the translation market.
The credit is granted to a qualified corporation for an eligible work or a work that is part of an eligible group of works. It is equal to the total of:
- 35% of the qualified labour expenditures attributable to preparation costs
- 26.25% of the qualified labour expenditures attributable to printing costs
The credit may not exceed $437,500 per eligible work (or work that is part of an eligible group of works). Where the work is published jointly, the credit must be apportioned among the publishers that are qualified corporations. In this case, the certificate issued by the Société de développement des entreprises culturelles (SODEC) indicates each publisher's share in the publishing costs, the labour expenditures and the maximum amount.
Corporations that may apply for the credit
A qualified corporation is a corporation (other than an excluded corporation) that, in the year, has an establishment in Québec and carries on a book publishing business that is a qualified business and that is a publishing house recognized by SODEC. To find out the eligibility requirements, contact SODEC.
An excluded corporation is a corporation that is in one of the following situations:
- It is directly or indirectly controlled, at some time in the year or in the 24 months preceding the year, by one or more persons not resident in Québec.
- It is exempt from income tax for the year.
- It is a Crown corporation or a subsidiary wholly-owned corporation of a Crown corporation.
After March 11, 2003, shares held by persons not resident in Québec must be hypothetically attributed to a hypothetical person. If such attribution means that control of the corporation is given to the hypothetical person, the corporation is considered to be controlled by a person not resident in Québec.
Residency requirement
The salaries and wages claimed for the credit must have been incurred with regard to individuals who were resident in Québec at some time during the taxation year in which the services were rendered.
The remuneration included in calculating the corporation's labour expenditures for a taxation year must have been paid to:
- an individual who was resident in Québec at some time during the taxation year in which the services were rendered
- a corporation or partnership (as applicable) with an establishment in Québec
Where an employee of a subcontractor provides services, the employee must be resident in Québec at some time during the taxation year in which the services are rendered.
Expenses giving entitlement to the credit
Preparation costs
These costs must be paid by the time the credit is claimed. Eligible preparation work is the work done to carry out the stages involved in publishing the work, from the initial stage to the stage preceding the production in print form, including the following:
- editing
- design
- research
- art work
- mock-up production
- layout
- typesetting
- pre-press work
Labour expenditures attributable to preparation costs must be incurred and paid by the time the credit is claimed. These expenditures are as follows:
- the salaries or wages paid to the employees of the corporation
- the non-refundable advances paid to a Québec author or a holder of the rights of a Québec author
- the remuneration (other than salaries, wages and non-refundable advances) attributable to the provision of services by an individual, corporation or partnership carrying on a business in Québec, having an establishment in Québec, and not dealing at arm's length with the corporation that receives the services. If the service provider (individual, corporation or partnership) is dealing at arm's length with the corporation that receives the service, half of the remuneration constitutes a labour expenditure.
Printing costs
Printing costs must be paid by the time the credit is claimed. Eligible printing work is the work done to carry out the printing stages in respect of the work, including the first printing, first assembly and first binding.
The labour expenditures attributable to printing costs are the same as those attributable to preparation costs, except with regard to non-refundable advances paid to Québec authors and the remuneration paid to a person or partnership dealing at arm's length with the qualified corporation. In this case, a third of the remuneration constitutes printing costs.
The amount of the labour expenditures must be reduced by any government or non-government assistance and any benefit or advantage. However, do not subtract the following amounts from the labour expenditures:
- amounts deemed paid to Revenu Québec for a taxation year with respect to the tax credit for book publishing
- amounts paid under the federal Book Publishing Industry Development Plan (BPIDP)
- amounts paid under the SODEC program known as the "Programme d'aide aux entreprises du livre et de l'édition spécialisée"
- amounts paid by the Canada Council for the Arts as a publisher's grant, an international translation grant or a grant for co-operative projects in writing and publishing
How to apply for the credit
To apply for the credit, the corporation must complete form CO-1029.8.36.EL, Crédit d'impôt pour l'édition de livres, 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 return must also be accompanied by a copy of the certificate or favourable advance ruling (as applicable) issued by SODEC with regard to the eligible work or the work that is part of an eligible group of works.
