Validation certificate for pre-competitive research consortiums

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This tax measure is for businesses that are members of pre-competitive research consortiums.¹ It is designed to encourage businesses in the same sector of activity or in related sectors to participate in or set up pre-competitive research consortiums in order to engage jointly in pre-competitive research activities.

This refundable tax credit gives businesses tax breaks similar to those granted to partnerships with recognized public research centres or university entities.

The research consortiums are financed through members' dues and business contracts. This funding formula enables them to:

• Carry out the generic phase of developing a new process, product or service
• Cut the costs and share the risks associated with expensive R&D projects
• Use specialized resources and equipment to solve specific problems
• Bolster the technological capability of the sector concerned in regard to international competition

¹ Pre-competitive research consists of basic or applied research, and can include part of the development phase. At the pre-competitive stage, research results are not immediately marketable even though they are the basic tools for creating new products and processes.

Research activities, being generic in nature, can lead to the development of applications in various industrial sectors or commercially different products by each business on a needs basis.

Qualified businesses

• Businesses in the same industrial sector or in related sectors of activity forming a recognized pre-competitive research consortium, that is, a private centre duly constituted in Canada and active in Québec whose members:
  - are predominantly private companies
  - may include public or semi-public bodies in the same field or in related sectors

Eligible projects or activities

• Scientific research and experimental development activities of a pre-competitive nature and relating to the scientific and technological interests of the members of the consortium

Note: The results obtained must be accessible to all members, which may use and develop them according to their specific needs.

Terms of application of the tax credit

The businesses belonging to a recognized research consortium can obtain a refundable tax credit of up to 35% of the dues or fees reasonably attributable to scientific research and experimental development carried out by the consortium in Québec. Expenditures relative to the dues or fees are fully deductible, regardless of the tax credit concerned.

Tax credits can also be claimed regarding research contracts concluded with an accredited consortium. However, the consortium must first obtain an advance ruling from Revenu Québec.

Research contracts concluded between a research consortium and a taxpayer are considered to be research contracts entered into with a prescribed public research centre. A refundable tax credit of up to 35% of all qualified expenditures may be claimed regarding such contracts.

How to claim the tax credit

Before claiming the tax credit from Revenu Québec, the research consortium or the business mandated by the group to set up a research consortium must obtain a validation certificate from the ministère du Développement économique, de l'Innovation et de l'Exportation.

Relevant guide

• Employer's Guide to Applying for an Eligibility Certificate

For more information

To find out more about this program, contact the Department:

Ministère du Développement économique, de l'Innovation et de l'Exportation
Direction de l'innovation et du transfert
380, rue Saint-Antoine Ouest, 4^e étage - Tour sud
Montréal (Québec) H2Y 3X7
Telephone: (514) 873-8330 or (418) 643-8757
Toll-free: 1 877 511-5889

Last update: December 19, 2007