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37 Can. Tax J. 969 (1989)
Les Avantages Fiscaux a la Recherche Scientifique et au Developpement Experimental au Quebec

handle is hein.journals/cdntj37 and id is 993 raw text is: Les avantages fiscaux a' la recherche scientifique et au ddveloppement experimental au Qudbec Guy Lord, avocat, et Pierre Gagn6, notaire* ABSTRACT Over the years, Quebec has introduced several tax measures to promote scientific research and experimental development in the province. Some of these measures were changed substantially following amendments to the federal Income Tax Act as part of the tax reform. For example, the measures promoting R&D financing through limited partnerships had to be eliminated and replaced with other types of tax incentives as a result of the federal government's decision to curtail the R&D deductions for limited partners and other partners not actively engaged in the activities of the partnership. Quebec has decided to harmonize its legislation with the federal legislation with respect to general tax measures relating to R&D, such as tightening the relationship between R&D expenditures and the taxpayer's business and excluding buildings from R&D tax benefits. The Quebec legislation, however, differs from the federal legislation, particularly with respect to R&D financing. For example, passive investors (in other words, those who do not participate in a business carrying on R&D) are entitled to tax benefits under the Quebec legislation, but not under the federal Income Tax Act. This article describes the existing tax measures applied by Quebec to R&D. It summarizes the federal and Quebec tax benefits, focusing on the aspects that the measures have in common as well as the differences. It then reviews the definition of R&D and leads to the conclusion that it is identical in both Acts. Thus, the administrative procedures followed by the tax authorities should be the same. In the computation of R&D expenditures deductible for income tax purposes, the Quebec Taxation Act differs from the federal Income Tax Act in that the Quebec R&D tax credits do not reduce the amount deductible. Under the federal legislation, the R&D expenditures must be reduced by the investment tax credits. However, there is a * Des bureaux de Samson B61air A Montr6al et A Qudbec. Mc Guy Lord fait maintenant partie de l'6tude Clark Woods Rochefort Fortier de Montr6al. Lesauteurs remercient M, Diane Bruneau pour ses commentaires sur une version prbliminaire de ce texte. July-August 1989/juillet-aoat 1989 969

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