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This tax measure aims to foster business networking and synergy between Québec businesses. It enables an established corporation (investor) that subscribes for shares of an innovative growth-stage corporation (qualified corporation) to obtain a non-refundable tax credit for a maximum of $225,000 per year.
A qualified corporation that wishes to issue shares of its capital stock to a qualified investor that is eligible for the Synergy Capital Tax Credit must obtain an authorized placement certificate from Investissement Québec in advance.
Investissement Québec will be able to accept an application for the issuing of an authorized placement certificate that is filed after December 31, 2020, and the Synergy Capital Tax Credit will apply in respect of a share subscription carried out after December 31, 2020.
A qualified investor, for a taxation year, will be able to claim a non-refundable tax credit equal to 30% of the total amounts, each of which is an eligible investment of the investor for the year, and not exceeding $750,000.
A corporation will be able to claim the Synergy Capital Tax Credit if it has an establishment in Québec, its main business does not consist in financing or investing and it invests in the capital stock of a qualified corporation with which it is at arm’s length and holds the shares for a minimum of five years.
A qualified corporation is a corporation whose paid-up capital for its most recent taxation year, at the time it files its application for an authorized placement certificate, is less than $15 million, that is a Canadian-controlled private corporation carrying on business in Québec and that has an establishment there. In addition, the corporation’s gross income for its most recent fiscal period must be less than $10 million and it must have been carrying on business for at least 12 months in one of the following eligible sectors:
The authorized placement amount of a qualified corporation for which the certificate is issued will be determined by Investissement Québec further to the presentation by the qualified corporation of a detailed description of the projected use of the funds from the qualified investor(s). The aggregate of the amounts for which an authorized placement certificate has been issued cannot exceed $1 million for each 12-month period.
Investissement Québec will be able to issue authorized placement certificates for an amount that cannot exceed $30 million per calendar year.
The funds must be used for investments related to the carrying on of the qualified corporation’s business in connection with its eligible activities, in compliance with the description presented to Investissement Québec and any modification thereto authorized later.
However, where the corporation’s activities are mainly in the manufacturing or processing sector, other than an activity related to life sciences, green technologies or information technologies, the funds must be used to improve the use of or connection to new technologies or to integrate technologies enabling, in particular, digitization or automation of the business’s activities.
To be entitled to issue shares of its capital stock that will enable a qualified investor to claim the Synergy Capital Tax Credit, your corporation must obtain an authorized placement certificate from Investissement Québec in advance.
A corporation that has received an authorized placement certificate will be required to provide Investissement Québec with certain information on each of the investors to which shares of the corporation’s capital stock have been issued.
Moreover, the corporation’s eligibility conditions must be respected for the taxation year including the day the application for an authorized placement certificate is filed and for a 48-month period following the end of that taxation year.
Fees are charged by Investissement Québec for the study of all eligibility certificate applications. For more information, contact an Investissement Québec advisor or see the rate schedule on our website
Fees are charged for the study of eligibility certificate applications.