• Tax credit for resources
  • Tax credit for the production of ethanol
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Tax credit for the production of ethanol

To promote the diversification of Québec's energy supplies, a temporary refundable tax credit has been introduced for the production of ethanol in Québec.

Corporations that may apply for the credit

Any corporation, other than an excluded corporation, which has an establishment in Québec where it carries on an ethanol production business may, under certain conditions, claim the tax credit for the production of ethanol.

The credit is granted to an eligible corporation for a maximum of ten years beginning no earlier than April 1, 2006, and ending no later than March 31, 2018. Where an eligible corporation begins to carry on an ethanol production business in Québec after March 31, 2008, the corporation may claim the tax credit for a period not exceeding the number of years from the year production begins to March 31, 2018, inclusively.

For information concerning eligibility requirements, consult Investissement Québec.

Expenditures giving entitlement to the credit

An eligible corporation's ethanol production must be sold in Québec to a person holding a collection officer's permit issued under the Fuel Tax Act. The maximum rate of the tax credit for a given month is $0.185 per litre.

For a given taxation year, the tax credit is granted for a maximum ethanol production of 126 million litres. No tax credit is granted

• for a month in which the average monthly price of crude oil is equal to or greater than US $65; or
• where the total cumulative production of ethanol exceeds 1.2 billion litres.

How to apply for the credit

To apply for the tax credit, a corporation must complete form CO-1029.9.36.OL-V, Tax Credit for the Production of Ethanol in Québec, 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.