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CDAE vs CDAEIA: How to Maximize Quebec's Tech Tax Credit in 2026

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6 min read

The rules have changed. Quebec's CDAE has been replaced by the CDAEIA — and most tech companies haven't adapted yet. Here's what it means for your tax credit strategy in 2026.

What was the CDAE — and why was it replaced?

The E-Business Development Tax Credit (CDAE) was for years one of the most accessible tax credits for Quebec tech companies. It covered a broad range of digital development work.

The problem: it became too broad. Companies were claiming it for routine development, low-value integrations, and non-innovative implementations. The government tightened the criteria.

The result: the E-Business and Artificial Intelligence Tax Credit (CDAEIA).

The fundamental shift: AI must be at the core

CDAE — before
  • General digital development
  • Various software solutions
  • Undifferentiated IT activities
  • Low innovation requirement
CDAEIA — now
  • AI central to the product
  • Measurable performance improvement
  • Automated decision-making
  • Technically defensible AI value
Critical requirement

AI cannot be a surface-level feature. It must drive the core functionality of the product — not merely accompany it.

What qualifies under the CDAEIA

The key question: does AI drive the core functionality of what you're building?

  • AI-driven platforms — recommendation systems, predictive models
  • Intelligent automation — automated decision pipelines
  • Advanced data processing — high-complexity analytical pipelines
  • Algorithm-based optimization tools — learning-based optimization models
  • Hosting and processing activities — if AI is materially integrated

What no longer qualifies (or becomes risky)

Standard web or app development
CRM or ERP integrations
Digital marketing tools
General IT consulting
Low-complexity automation
Hybrid consulting + tech business models

CDAEIA credit estimator

Estimate your CDAEIA credit

Adjust the parameters to see your estimated annual credit potential.

Annual technical payroll$500,000
% of time on eligible activities60%
Company structure
Independent
Group / related entity
Primary business model
Tech product
Hybrid consulting/tech
IT services
Estimated CDAEIA credit
$90,000
Estimate based on Quebec provincial rate
Rate applied
30%
$300,000
Eligible salaries
$54,000
Refundable portion
$36,000
Non-refundable portion

Credit structure: what has changed

The maximum amount remains attractive — up to 30% of eligible salaries — but the structure has evolved:

  • The refundable portion decreases over time
  • The non-refundable portion increases
  • No salary cap — a major advantage for senior AI teams
  • A minimum salary threshold now applies
Strategic opportunity

The removal of the salary cap is a significant advantage for companies hiring AI engineers, data scientists, and highly compensated senior developers.

The related-company risk

This is one of the most overlooked angles. If your company develops solutions for a related entity, operates within a group structure, or deploys its solutions outside Quebec, your credit can be reduced — from 30% down to 15%.

The definition of "dependency" has expanded beyond ownership. It now includes commercial agreements, licensing structures, and service contracts.

Risk to monitor

The key question: where is value created — and where is it used? If the answer involves a related entity, a structural analysis is required before filing.

The 4 pillars to maximize your CDAEIA

01 — Projects
AI at the core

AI must be central, technically defensible, and clearly documented across every project claimed.

02 — Revenue
Tech-first model

Demonstrate that IT/AI activities dominate your operations. A hybrid model dilutes eligibility.

03 — Contracts
Clearly defined scope

Every contract must reflect technical scope, AI components, and value creation in Quebec.

04 — Team
Aligned roles

Identify technical roles precisely, allocate time correctly, and align responsibilities with eligibility criteria.

Frequently asked questions

If we claimed the CDAE, are we automatically eligible for the CDAEIA?+
No. The CDAEIA requires that AI be central to the project — not merely present. Many companies that qualified under the CDAE will need to restructure their activities to maintain eligibility.
Can a web development agency still qualify?+
This is one of the highest-risk profiles. An agency whose projects include AI only peripherally — a basic chatbot, simple auto-suggestions — will be difficult to defend. AI must drive the primary value of the delivered product.
Can CDAEIA be combined with SR&ED?+
Yes — and it's often the optimal strategy. SR&ED covers experimental research activities tied to technical uncertainty, while CDAEIA covers salaries linked to tech/AI production work. The two programs are complementary and can apply to the same teams on different expenditures.
Our product uses third-party AI APIs (OpenAI, etc.) — do we qualify?+
Using third-party APIs alone is insufficient. The credit targets the development of intelligent systems, not consumption of AI services. If you're building a significant application layer around these APIs with proprietary logic, a case-by-case analysis is required.
How do we document that AI is "central" to our product?+
Documentation must demonstrate that without the AI component, the product either wouldn't function or would lose its primary value. This includes: technical model specifications, before/after performance metrics, architectural decisions tied to AI, and justification for why a non-AI approach would have been insufficient.
Does CDAEIA apply to early-stage startups?+
Yes, provided revenue and structure criteria are met. Early-stage startups building AI-native products are well positioned — especially if they can demonstrate that AI is at the heart of their value proposition from day one.
What's the risk if our claim is reviewed by Revenu Québec?+
Revenu Québec evaluates the centrality of AI, the revenue structure, and technical documentation. Weak files — vague narratives, peripheral AI, poorly segmented hybrid models — are the most exposed. A solid file with rigorous technical documentation generally passes without significant friction.

Are you still eligible — or already exposed?

The CDAEIA isn't just an update. It's a filter. Some companies will benefit more than ever. Others will quietly fall out of eligibility. The difference won't be technical — it will be strategic.

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