At a glance
At the end of 2025, Quebec updated the CDAE e-business tax credit with the CDAEAI tax credit that puts artificial intelligence at the centre of eligibility. This post explains what changed, what it means for Quebec software companies, and strategic actions to take before your next fiscal year.
Since 2008, Quebec’s CDAE tax credit has been one of the most valuable incentives available to Canadian IT companies with up to 30% back on eligible labor costs, stackable with federal SR&ED, and available regardless of company size or profitability.
At the end of 2025, it changed fundamentally. Quebec’s 2025-2026 budget updated the CDAE with the CDAEAI tax credit (Crédit d’impôt pour le développement des affaires électroniques intégrant l’intelligence artificielle), effective for taxation years beginning after December 31, 2025. Artificial intelligence is now at the centre of eligibility and several activities that previously qualified have been removed.
Same credit rate, new AI requirement
The CDAEAI keeps the same 30% rate on eligible salaries, split between a refundable portion (paid as cash) and a non-refundable portion (applied against taxes). But that split is shifting annually:
- 2026: 22% refundable + 8% non-refundable
- 2027: 21% refundable + 9% non-refundable
- 2028+: 20% refundable + 10% non-refundable
The sooner you claim, the more cash you recover. A company with $2M in eligible salaries gets $40,000 more back in 2026 than in 2028.
What “significant AI integration” actually means
Investissement Québec evaluates whether AI fundamentally transforms the business process, not whether AI appears somewhere in the product. The fastest test: if you removed the AI component, would the product still work? If yes, the AI is a feature, not the foundation, and the project likely does not qualify.
Eligibility is assessed against six criteria in order of priority: AI Qualification, AI Essentiality, Measurable Impact, AI vs. Traditional Methods, Process Integration, and Investment Effort. The first two carry the most weight.
What to do now to qualify for CDAEAI?
Assess your AI integration honestly.
If the product still works without AI, it doesn't qualify, rethink the architecture before you apply.
Document as you build.
Investissement Québec audits before filing. AI timelines, training data records, and quantified outcomes need to exist before submission, not be reconstructed after.
Check your revenue composition.
Transfer payments from related foreign entities count toward your revenue thresholds and can push you below the 75% NAICS requirement unexpectedly.
Stack CDAEIA with SR&ED.
Both can be claimed on the same projects. Combined recovery can exceed 50% for qualifying companies.
The bottom line
The CDAEAI is Quebec’s signal that government funding is moving toward genuine AI innovation, not routine software development. If your solutions put AI at the core of what they deliver, the program remains one of the most valuable tax incentives in Canada. If you’ve been claiming under broader CDAE criteria, now is the time to reassess.
Official application forms are still being finalized by Investissement Québec, use that window to prepare. Contact our team for a free eligibility assessment.
Assess your CDAEAI eligibility today
R&D Tax Credits
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