Quebec’s SR&ED Tax Credit Overhaul: Meet the New CRIC Incentive

For decades, Quebec has positioned itself as a powerhouse of innovation within Canada. The province’s generous tax incentives have long been a cornerstone of this strategy, helping businesses offset the substantial costs associated with research and development (R&D).  

However, the landscape is shifting. With the release of its 2025 provincial budget, the Quebec government is turning the page on its legacy models in favor of a streamlined, modernized system designed to do more with less. 

The introduction of the Tax Credit for Research, Innovation, and Commercialization (CRIC) marks a pivotal moment for Quebec-based businesses. Whether your organization is a returning claimant of Scientific Research and Experimental Development (SR&ED) tax credits or just beginning to explore government funding, these changes represent a fundamental overhaul of how innovation is rewarded in the province.  

The CRIC tax credit aims to reduce administrative complexity while enhancing economic productivity. With new rules and responsibilities for applicants, understanding the nuances of the CRIC is essential for maximizing your claim potential in the coming fiscal years. 

A Strategic Shift: Understanding the New CRIC Program 

For years, Quebec’s support for R&D was composed of a patchwork of various tax credits. While effective in specific niches, the system had become cumbersome to navigate, often requiring businesses to manage multiple overlapping claims to see a return on their investment. In this year’s budget, the province announced a wholesale restructuring of these incentives. 

For taxation years beginning after March 25, 2025, Quebec will consolidate these various legacy credits into the new CRIC. The government hopes that by simplifying the system, it can deliver more predictable and effective support to businesses. This isn’t a re-branding exercise; it’s a strategic realignment of provincial resources to focus on high-impact areas. By eliminating credits deemed less productive or administratively burdensome, the province aims to provide focused support that drives genuine innovation and commercial success. 

This overhaul represents a double-edged sword for businesses. On the one hand, the simplification of rates provides clarity we haven’t seen in years. On the other hand, the shift in audit focus and exclusion thresholds means companies must be far more diligent in their documentation than ever before. 

Decoding the Key Changes: What’s New in Quebec’s R&D Landscape 

The transition to CRIC brings several critical changes that businesses must digest immediately to adjust their financial planning. 

Consolidated Focus Areas 

The new framework eliminates the previous scattershot approach and focuses on three primary pillars of innovation expenditure: 

• Salaries and Wages: Consistent with the previous program, this remains the largest component of the CRIC. It provides a tax credit for wages paid to employees directly engaged in R&D activities. For example, a technology firm developing proprietary algorithms can include the salaries of its developers. In accordance with prior rules, 50% of amounts paid to arm’s-length contractors remain eligible. 
• University and Public Research: Collaboration remains a priority. Research conducted by universities, public research centers, or research consortiums remains eligible. However, a significant change is the reduction in the eligible portion of amounts paid. This will drop from 80% to 50%, aligning it with standard subcontracting expenses. While this standardizes the calculation, it effectively lowers the benefit for pharmaceutical or biotech companies that rely heavily on university partnerships. 
• Private Partnership Pre-Competitive Research: The eligibility for private partnership pre-competitive research remains intact. This supports consortiums, such as automotive manufacturers jointly developing battery technologies, ensuring that collaborative industry advancements are still incentivized. 

Notably, the province will eliminate the tax credit for fees paid to research consortiums and the tax holiday for foreign researchers. 

A Simplified Rate Structure 

Perhaps the most welcome change is the simplification of rates. Under the old system, tax credit rates fluctuated between 14% and 30% based on a complex matrix of corporation type and worldwide assets. 

The CRIC introduces a flat structure applicable to all corporations, regardless of ownership or asset size: 

• 30% refundable tax credit on the first $1 million of eligible expenses exceeding the exclusion threshold. 
• 20% refundable tax credit on eligible expenses greater than $1 million. 

This universality makes it significantly easier for chief financial officers (CFO) and finance directors to forecast cash flows and budget for R&D projects. 

The “Moving Target” of Exclusion Thresholds 

While rates are simpler, calculating the exclusion threshold has become more complex. The threshold is now the greater of $50,000 or the basic personal amount per employee, prorated based on time spent on R&D. 

Consider a practical example: if a business has 10 employees dedicated 100% to R&D in 2025, the exclusion threshold is the basic personal amount ($18,751) multiplied by 10, totaling $187,510. However, if those employees only spend 50% of their time on R&D, the basic personal amount must be prorated, reducing the excluded amount. In many cases, this exclusion threshold will become a moving target, requiring precise time-tracking data to calculate accurately. 

Expansion of Eligible Expenditures 

Traditionally, Quebec’s SR&ED credits ceased once technological uncertainty was resolved. The CRIC expands this horizon significantly. Businesses can now claim expenditures related to pre-commercialization activities, including: 

• Technological validation 
• Testing and studies for regulatory certification 
• Work on prototypes and pilot plant production processes 
• Product design activities (formerly covered by a separate design credit) 

Additionally, capital expenditures (such as depreciable equipment used in labs) are eligible for the first time in years. This is a massive win for capital-intensive industries like manufacturing and biotech, where infrastructure costs are high. 

Funding Snapshot: CRIC 

To help you visualize how this program fits into your funding strategy, here is a snapshot of the CRIC parameters. 

Program Objective:  

• To simplify the R&D tax incentive landscape, reduce administrative burden, and stimulate innovation and commercialization within Quebec. 

Funding Amount: 

• 30% Refundable Tax Credit: Applied to the first $1 million of eligible expenses (post-exclusion threshold). 

• 20% Refundable Tax Credit: Applied to eligible expenses exceeding $1 million. 

Eligible Applicants:  

• Corporations carrying on business in Quebec that undertake SR&ED within the province. 

Eligible Projects: 

• Standard R&D activities (basic research, applied research, experimental development). 
• New: Pre-commercialization activities, including prototyping, pilot plants, and regulatory compliance testing. 
• New: Product design activities. 

Timeline:  

• The new CRIC rules apply to taxation years beginning after March 25, 2025. 

What This Means for Your Business: Implications and Strategy 

The provincial government is optimistic that these structural changes will boost productivity and investment. However, businesses must be realistic about the operational adjustments required. 

Navigating the Audit Landscape 

While consolidating credits simplifies the application, the expanded eligibility creates a new challenge: correctly identifying and documenting activities previously ineligible. Provincial government auditors may initially struggle to verify claims involving pre-commercialization and capital assets, as their current expertise is rooted in narrower federal SR&ED definitions. This discrepancy between federal and provincial audit approaches could lead to friction during reviews. 

Strategic Planning Is Key 

Given the scope of these changes, a “business as usual” approach to tax planning is risky. Organizations must adopt a proactive strategy, aligning new project initiatives in Quebec with the CRIC eligibility criteria. 

We advise undertaking a comprehensive review of your R&D activities now. Ensure your documentation processes are robust enough to capture the nuances of pre-commercialization work and prorated employee time. By doing so, you can optimize the amount of government support received and maximize the impact of your total R&D spend. The expansion of capital expenditures and pre-commercialization effectively bridges the “valley of death” for many products, supporting them all the way to market readiness. 

Our Ryan Team Can Help 

Quebec’s transition to the CRIC represents a new era for innovation funding. By offering stronger incentives for commercialization and simplifying the rate structure, the province is laying the groundwork for a more robust economy. However, the complexity of the exclusion thresholds and the novelty of eligible expenditures require expert navigation. 

Speak with a member of the Ryan Canada SR&ED team to find out how your business can stack funding from both the Canadian federal SR&ED program and the Quebec provincial CRIC tax credit program. Contact us to determine your eligibility. 

Peter Kustec 
Principal, Scientific Research and Experimental Development 
Peter.Kustec@ryan.com  

Raphaël Joziak 
Director, Finance and Tax, Scientific Research and Experimental Development 
Raphael.Joziak@Ryan.com