This short note aims to clarify the notion of admissible incomes relating to Personnel Supply Activities in an E-Business Development (CDAE) scope.

In July 2010, NAICS codes regarding Personnel Supply Activities were added to the two already used codes relative to activities percentage, being the 75% and the 50% ones. These two NAICS codes are:

• 561320 – Substitute Personnel Supply Activities;
• 561330 – Permanent Personnel Supply Activities.

In the case where the Personnel Supply Activities mandate was carried out by an employee of your company, the admissibility of the revenues coming from these NAICS codes depend on the respect of three criteria:

• It is less important than the software conception and edition activities (541510/511210);
• It concerns IT employees supply;
• It was carried out for a client’s benefit, without dependence links.

What happens when Personnel Supply Activities are in fact Subcontractor Supply Activities?

Instead of simply stating the three criteria, I chose to introduce them by giving you the following example:

An A company appeals an IT advice B company in order that the latter supplies it with personnel. Not having sufficient in-house resources (employees), the B company asks a C company (a subcontractor) to carry out the mandate, in order to fulfill the A company needs. Because the B company did not use its own resources, the income generated by this mandate will be considered as inadmissible. Why? Like most subsidies and tax credits available in Québec, the E-Business Development tax credit aims at the creation of stable, full-time jobs in the information technologies domain.

I would like to remind you the importance of each mandate identification for a company. Since subcontracting activities are part of the 25 % inadmissible incomes, the distinction between personnel placement and subcontractors placement represents an important element to specify. If you want more information on this subject, please contact one of our experts.