Budget 2024-2025: What You Need to Know About Quebec’s CDAE and Multimedia Tax Credits

Quebec’s Budget 2024-2025 unveils significant adjustments to tax assistance measures, particularly targeting the  IT and video game development sectors.

In response to Quebec’s $11 billion budget deficit for 2024, adjustments to the tax credit for the development of e-business (CDAE) and tax credit for multimedia titles (MMTC) aim to rein in costs, which reached nearly $850 million CAD in 2023. With the proposed changes, the cost of tax assistance programs for businesses is estimated to decrease by approximately $1B over four years.

This blog post explores the key changes announced for the CDAE and MMTC programs.

The E-Business Tax Credit (CDAE)

The CDAE enables businesses that are developing and selling software licenses or services (ie. Software-as-a-Service or SaaS) to receive a tax credit for each eligible employee. By providing tax credits for qualified expenditures related to software development, the CDAE encourages businesses to embrace digital transformation and expand their online presence.

First, a run-down on eligibility:

To be eligible, corporations in Quebec’s IT sector must demonstrate that at least 75% of their activities fall within specific NAICS codes related to information system design or software publishing. Additionally, during a taxation year, they must maintain a minimum of six eligible full-time employees. These employees must dedicate at least 75% of their time to relevant activities.

Budget 2024-2025 announced significant adjustments to the CDAE, aimed at optimizing the support offered. Here is a breakdown of the key changes:

Adjustment of Tax Credit Rates

To ensure greater harmony in the support offered by both CDAE and MMTC, the Quebec government is gradually adjusting the tax credit rates of both programs, harmonizing the levels refundability.

Currently, the CDAE comprises a refundable portion at 24% and a non-refundable portion at 6%. Over the next 5 years, the non-refundable portion will increase by 1% annually until reaching 10%, while the refundable portion will decrease to 20% accordingly. This gradual adjustment aims to maintain the competitiveness of businesses while managing costs effectively.

Fiscal year beginning during the year Refundable Non-refundable
2024 24% 6%
2025 23% 7%
2026 22% 8%
2027 21% 9%
2028 20% 10%

Labour Expenditure Limit Replaced by Exclusion Threshold

The budget also announced the removal of the $83,333 limit on qualified labour expenditure per eligible employee under the CDAE. Instead, an exclusion threshold per eligible employee will be introduced, aligning with the Quebec basic personal amount ($18,056 for 2024).  In other words, the tax credit is now offered only on the portion of salary that is typically taxable for personal income tax purposes.

Effectively, these changes enable businesses to claim the tax credit for higher-salary employees. Additionally, this adjustment means that the effective rate will increase based on an employee’s salary rather than decrease.

Find the effective rates of the CDAE based on an employee’s eligible salary below:

Employee’s eligible salary 2024

(Before Budget 2024-2025)


(After Budget 2024-2025)

$50,000 30.0% 18.1%
$100,000 25.0% 24.1%
$150,000 16.7% 26.0%

The Multimedia Tax Credit (MMTC)

The MMTC is designed to support the creation and production of multimedia titles, including video games, interactive media, and digital content. By offering tax credits for qualified labour expenditures incurred during multimedia production, the MMTC aims to incentivize companies to invest in multimedia projects, attract talent, and develop high-quality content, thereby fostering innovation and creativity in Quebec’s multimedia sector.

Like CDAE, the MMTC will undergo several adjustments to better align with the evolving landscape of multimedia production. Here are the key changes proposed in Budget 2024-2025:

Adjustment of Tax Credit Rates

To harmonize tax credit rates with CDAE, the MMTC now comprises both a refundable and non-refundable portion. The non-refundable portion will be introduced gradually, starting at 2.5% in 2025 and increasing by 2.5% annually until reaching 10%. At the same time, the refundable portion will incrementally decrease to 20%.

Fiscal year beginning during the year Refundable Non-refundable
2024 30%
2025 27.5% 2.5%
2026 25% 5%
2027 22.5% 7.5%
2028 20% 10%

Note that the MMTC will continue to offer a 7.5% refundable premium for titles available in French, promoting the production of French video games.

Qualified Labour Expenditure Limit Replaced by Exclusion Threshold

Similar to CDAE changes, the MMTC’s $100,000 limit on qualified labour expenditure per eligible employee will be removed and replaced by an exclusion threshold per eligible employee that mirrors the Quebec basic personal amount.

Effective rates of the MMTC based on an employee’s eligible salary:

Employee’s eligible salary 2024

(Before Budget 2024-2025)


(After Budget 2024-2025)

$50,000 37.5% 22.7%
$100,000 37.5% 30.1%
$150,000 25% 32.6%

Final Thoughts

The changes outlined in Quebec’s Budget 2024-2025 signify a strategic move towards optimizing tax assistance programs for businesses while managing costs effectively. These changes are generally positive for the CDAE program, which now permits claims for higher-salary employees. However, for the MMTC, these changes are less favourable; the introduction of a non-refundable portion may discourage smaller companies with limited cash flow from submitting claims. Additionally, the MMTC effective rates suffer a more considerable decrease.

However, by reducing the overall “generosity” of these programs, the government seeks to reduce government expenditures while still supporting key sectors like e-business development and multimedia production. As Quebec strives to achieve a fully balanced provincial budget by 2028, the successes of the local software and multimedia industries are poised to play a pivotal role in revitalizing economic conditions across the province.

Your Questions About CDAE, Answered by an R&D Partners Expert


The Tax Credit for the Development of E-Business, commonly referred to as “CDAE” – its French-language abbreviation – is a provincial tax credit available in Quebec for businesses developing e-business software solutions in the province.

To be eligible, a business must have a minimum of 6 eligible employees spending 75% or more of their time on technical activities, and 75% of the company’s gross revenue must be coming from IT sector activities.

The funding is structured as a maximum 24% refundable and 6% non-refundable tax credit for each eligible employee’s salary.

This quick overview does not cover every detail of the CDAE tax credit. For more information on the program, read our dedicated blog post.

We often get questions about CDAE, so we’ve asked a member of our team of experts to answer the most common ones for you below.

The expert

Sahar Ansary, M. Eng.

Sahar has assisted hundreds of small to large-sized organizations across Canada with SR&ED and E-business tax credit programs for over ten years and has led work on over $50M in related claims.

She specializes in identifying and optimizing the technical and financial aspects of various funding programs, maximizing overall tax credits, and managing major accounts. Sahar has significant experience in the aerospace, medical device, and software industries.

The questions

What is meant by “e-business” when it comes to the CDAE credit?

The CDAE Tax Credit criteria defines “e-business” much more broadly than just e-commerce.  It is not limited to the transactional side of e-commerce that we traditionally think of; the program guidelines state that it “concerns the organization of work in a company as well as how the company communicates and exchanges data with its customers, subcontractors, suppliers and partners.”

Eligible companies are therefore those who develop software for other businesses to evolve in that direction and digitize their operations at various levels – HR, procurement, accounting, and more. Traditional e-commerce is also eligible if a company is developing a software solution allowing monetary transactions, but the program includes a lot more than this under the umbrella of “e-business.”

Who can be considered an eligible employee?

Eligible employees for the CDAE tax credit are full-time indeterminate salaried employees in Quebec that work a minimum of 26 hours per week and spend over 75% of their time on technical activities.

When an individual is temporarily absent from his or her work for grounds considered to be reasonable (e.g. temporary illness, maternity leave, paternal etc.), Investissement Québec (IQ) may deem that the employee continued to work throughout the period of absence for the purpose of determining tax credit eligibility. For instance, someone who worked  20 weeks during the fiscal year because they were on sick leave during the rest will still be considered as an eligible full-time employee.

What counts as a “technical activity”?  

The CDAE eligibility guidelines stipulate that an employee must be devoting at least 75% of his/her time to carrying out, supervising, or directly supporting eligible activities to be eligible. Those activities must be technical and some examples include the following:

  • Design and development of e-business solutions
  • Quality control (testing, 2nd and 3rd level support)
  • Maintenance and evolution of e-business solution
  • IT consulting services for e-solution (customization, integration, deployment)
  • Technical coaching and supervision of technical employees/team.

If an employee spends more than 25% of their time on non-eligible activities during the fiscal year, then that employee will not be eligible for the CDAE tax credit because they won’t respect the 75% rule (ex. an HR employee or a CEO would not be eligible, because they spend a lot of time on administrative tasks and very likely do not spend 75% of their time on eligible technical work).

Do you need to continuously have 6 technical employees or more to remain eligible for the CDAE credit?

Yes, and no. What you need are 6 eligible positions maintained throughout the year. The requirement is not tied to any individual employee because you obviously do not control if someone leaves the company during the year.

For example – if one back-end developer leaves, and you fall below the 6 required eligible employees, you do not suddenly become ineligible. As long as you have the intention to replace this employee with another back-end developer (i.e. someone in the same position) and do so within around 6 months, everything should work out fine. You will essentially have had two employees in one role in the year, and both will be eligible.

Past the 6 month timeline, you may need to provide stronger arguments to explain why a replacement could not be found. However, note that none of this applies if you “lay off” an employee (i.e. ROE indicates code A in box 16 ) as no replacement can be justified in this case.

Can employees join during the year and still be eligible?

If an employee was hired towards the end of the fiscal year and, as such, worked for less than 40 weeks, they are eligible if they still hold the same position at the company beyond the fiscal year end. If an employee worked less than 40 weeks and quit during the fiscal year, they will only be eligible for the tax credit if the company found a replacement or if the company is still actively looking for one. The rule stating that they must have spent 75% of their time on eligible technical activities also still applies, of course.

How is the CDAE calculated if an employee joins during the year?

When employees join during the year and they meet the 75% rule, their maximum eligible salary cap of $83,333 is prorated based on the number of days they worked in that fiscal year.

For example, if an employee is hired at the beginning of Q3 and worked 100 days before the end of the fiscal year, their salary cap will be prorated by the following ratio:  Once we apply it to the maximum cap offered by the program, we get 100/365 x $83,333 = $22,830.


If you have any questions about CDAE that this blog post left unanswered, or if you are considering submitting a claim, don’t hesitate to contact our team at:  1-800-500-7733, ext.102.


Disclaimer: The views expressed in this article are provided for informational purposes only. It is not intended to nor can it replace the evaluation of your specific e-business tax credit claim by a dedicated consultant.