The fiscal world has an abundance of more or less complex rules, so much so that it’s not surprising that the uninitiated loose themselves easily. This article will mainly be on the various policies surrounding the taxation period for the development of e-business tax credit.

It’s important to mention that the SR&ED tax credit is managed differently than other types of tax incentives.

Here are the main policies concerning the taxation period:

Revenu Québec:

Revenu Québec considers the e-business development tax credit as received when the credit amount is inferior to the tax balance on the capital to be paid, to the due date of the balance applicable to a tax payer for a taxation year. If the amount of the credit exceeds that balance, the surplus is considered as received the moment when it is actually paid to the tax payer or allocated to one of his debt.

Therefore the amount of the e-business development tax credit is considered as received the last day of the two months period that ends after the previous taxation year, date at which the tax must be paid. Consequently, the tax installments reduction that corresponds to the amount of the repayable tax credits could not be considered as a tax reduction before the moment when that tax is established.

* N.B. This text will take for support the fifth paragraph of the Interpretation Bulletin IMP. 87-6 of May 31^st, 2004.

Canadian Revenue Agency:

As for the federal, the Canadian Revenue Agency considers that a tax credit or a reduction in the tax calculation has been received at the first of the following circumstances:

• At the moment when the credit reduces the tax to be paid for a taxation year.
• At the moment when the credit is paid if it allows to obtain or increase a tax repayment.

* It has to be taken into account that all the obtaining conditions must then have been met.

What needs to be retained?

When we take into account those legislations, we note that the amount of an e-business development tax credit and its taxation period can differ between the different government levels. Let’s stress that it is allowed for a tax payer to reduce his tax installments to be made for the year of the amount of the tax credit claimed in that same fiscal year. It’s thus important to ask ourselves if some resorts are planned in order to harmonize the federal fiscal policies with the provincial ones.

To understand well the numerous existing fiscal rules, being whether provincial or Canadian, one must analyze in depth each particular case. Corporation directors would be well advised to understand well particularities relating to taxation to avoid some problems. The services of an expert can, therefore, be very useful in case of lack of understanding.