REFUNDABLE TAX CREDIT PROGRAM FOR

INTERNATIONAL FINANCIAL CENTRES (IFC)

PROGRAM SUMMARY

MAY 2014


REFUNDABLE TAX CREDIT PROGRAM FOR

INTERNATIONAL FINANCIAL CENTRES (IFC)

ELIGIBILITY CRITERIA

Eligible activities

A corporation may be eligible if its activities focus on at least one of the 25 categories of qualified international financial transactions (QIFTs) and if it satisfies the other conditions stipulated in the legislation regarding the refundable tax credit program for IFCs.

Generally speaking, QIFTs must be carried out on behalf of:

a customer that does not reside in Canada;

or

a customer that does reside in Canada, in which case the QIFT must focus on “foreign exposure” financial products.

For the list of QIFTs and for more details on the eligibility conditions specific to each of them, please see sections 7 and 8 of the Act respecting international financial centres.

Other conditions

Under the provisions of the legislation regarding the refundable tax credit program for IFCs, an IFC means a business or part of a business that satisfies the following conditions:

it is operated by a corporation;

it employs, at all times, a minimum of six eligible full-time employees;

For the purposes of this criterion, the expression “eligible employees” includes foreign specialists and local employees who hold an employee – local or foreign specialist– qualification certificate issued by the Minister of Finance.

its activities focus on QIFTs;

the activities enabling the QIFTs effected in the course of its operations to be carried out must be managed entirely within the territory of the agglomeration of Montréal;

its activities are grouped together in one place within the territory of agglomeration of Montréal;

it holds an annual eligibility certificate for itself and for its eligible employees issued by the Minister of Finance.

Eligible employees

Local employees – for the purposes of the refundable tax credit

To be eligible, a local employee must hold a full-time job at least 75% of whose duties with the IFC are devoted to the execution of qualified international financial transactions (QIFTs).

The duties of an employee are devoted to the execution of QIFTs when they are directly attributable to the specific transactional process of a given QIFT.

For greater clarity, the expression “full-time” means a minimum of 26 hours of work per week, for a stipulated minimum of 40 weeks.

Foreign specialist employees – for the obtaining of a personal tax benefit

Generally speaking, a foreign specialist employee is eligible where at least 75% of his duties with the IFC are devoted to the operations of the IFC.

An IFC operator that wishes to have a foreign specialist employee benefit from this measure must first apply to the Minister of Financeto have a foreign specialist certificate issued for him.

Eligible salaries for the purposes of calculating the tax credit

The eligible salary, for a taxation year, means the salary calculated according to the Taxation Act of Québec and paid in the year to its eligible employees other than foreign specialists.

The eligible salary, regarding an eligible employee, is limited to an amount of $66 667, calculated on an annual basis,i.e. according to the number of days of the taxation year of the eligible corporation during which the employee qualifies as an eligible employee.

Special requirements

  • Certification process

To be entitled to the refundable tax credit, a corporation that intends to operate an IFC must first obtain a qualification certificate from the Minister of Financefor the IFC it intends to operate, on the one hand, and for its eligible employees, on the other.

  • Annual certification process

Subsequently, to be entitled to the tax credit for a taxation year, the corporation must enclose with its tax returna copy of the annual eligibility certificate issued by the Minister of Financeregarding the IFC's activities as well as a copy of the annual eligibility certificate issued for the eligible employees of the IFC for whom it is applying for this tax credit.

To obtain these eligibility certificates for a taxation year, the corporation must apply for them to the Ministère des Finances.

ELIGIBILITY PERIOD AND DURATION

No time limit is currently scheduled for the duration of this tax credit.

The eligibility period of a foreign specialist for a personal tax benefit is five years.

FEATURES OF THE TAX ASSISTANCE

Nature of the assistance

Under the measure, a corporation that holds an IFC certificate can receive, for a taxation year, a refundable tax credit (RTC) representing 30% of the eligible salary incurred for the year regarding its eligible employees other than foreign specialists, up to an annual maximum of $20000per employee.

In addition, a foreign specialist employee who works at an IFC can claim, for a period of five years, a deduction in calculating all of his taxable income at an annual rate that varies as follows:100% the first two years and 75%, 50%, and 37.5% respectively for subsequent years.

FEES

Examination of an application

Fees are payable for the examination of applications received under the refundable tax credit program for IFCs.

These fees are payable to the Minister of Financein a single payment when the application is filed.

To view the fees applicable to various types of applications, please consult the fee schedule.

IFC’s annual contribution

The following annual contribution is payable by a corporation that holds an IFC certificate issued by the Minister of Finance:

for the first year, $10000;

for each subsequent year, $3000.

The annual contribution by IFCs is allocated to fund activities designed to promote and develop Montréal as a centre of international finance.

The contribution is payable to the Minister of Financein a single payment no later than the last day of February of the following calendar year.

PROCEDURE

To apply for an IFC qualification certificate, please contact Ministère des Financesadvisor who will answer your questions and guide you through the certification process for your business taking your situation and your particular needs into account.

TO REACH US

Ministère des Finances du Québec

Gestion des mesures relatives aux CFI

380, rue Saint-Antoine Ouest, bureau 6100

Montréal (Québec) H2Y 3X7

Telephone:514499-6569

Fax:514873-3915

Email:

Website: