Quebec has just made a historic $271.5 million commitment to AI innovation, fundamentally reshaping how the province supports tech companies. On 2023-10-16, our Quebec-based expert Joshua Martin joined me to break down what this means for your business—and how you can take full advantage of this unprecedented opportunity.

If you missed our live webinar, don’t worry. We’ve summarized the key takeaways below, and you can watch the full recording to get in-depth strategies tailored to your company.

The Biggest Provincial Funding Shift in Over a Decade

Starting in 2026, Quebec’s well-known CDAE (e-Business Tax Credit) program will become CDAE-IA, with a dedicated focus on AI integration. This isn’t just a name change—it’s a complete strategic overhaul that brings both major opportunities and new challenges for Quebec tech companies.

As Joshua explained during our session, “CDAE was originally created in the 1990s to support the adoption of e-business and IT infrastructure—think of it as the first wave of the internet. Fast forward to today, and Quebec wants to pivot this program toward AI adoption, which is another fundamental revolution.”

Who Benefits from CDAE-IA?

This transformation opens the door for several key groups:

AI-Native Companies

If you’re building AI-first solutions, this program was designed with you in mind. The CDAE-IA program’s exclusive focus on AI integration creates unprecedented opportunities for AI-native companies. You can now combine CDAE-IA with SR&ED and other federal programs to significantly boost your non-dilutive funding.

Traditional Software Companies

Don’t worry if you’ve been claiming CDAE for years. The key is to understand how AI already fits into your development process and to document it properly. Many traditional software companies are already using AI tools, developing predictive algorithms, or automating workflows. The transition simply means highlighting these activities strategically and embracing further AI adoption.

Data Processing & Hosting Providers

This is a game-changer. Under the new CDAE-IA program, the threshold for data processing and hosting revenues has been significantly increased, making these activities eligible. Companies that were previously excluded due to high hosting or processing revenue percentages now have a clear path to eligibility.

No more salary cap

CDAE-IA also marks the removal of the $83,444 qualified salary cap that was previously in place under the legacy CDAE program. There is, however, the implementation of the Exclusion threshold, where the first $18,571 (the basic personal amount) on salaries is not eligible for the CDAE-IA calculations.

The Strategic Window: What You Need to Do Now

Here’s the critical timeline you need to know:

Q4 2025: This is your preparation quarter. Don’t wait until 2026 to develop your CDAE-IA strategy. Companies should be:

  • Finalizing 2025 CDAE claims under the current rules
  • Analyzing which projects will qualify under CDAE-IA requirements
  • Updating documentation systems to highlight AI integration
  • Training teams on the new documentation requirements

2026-01-01: CDAE-IA takes effect for fiscal years beginning January 1, 2026 or later. By then, your documentation processes should already reflect the new requirements.

As Joshua emphasized during our discussion, “Don’t wait until 2026 to develop your CDAE-IA strategy. We’re already working with our clients to make sure they’re ready.”

The “Significant AI Integration” Question

The biggest grey area right now? Quebec requires a “significant amount of AI use” for project eligibility, but hasn’t defined exactly what that means.

Our approach at Boast is simple: Highlight as much AI integration as possible. AI is a broad term that includes:

  • Machine learning algorithms and predictive models
  • LLM integration and AI-powered chatbots
  • Data preparation and quality processes for AI systems
  • Automation workflows powered by AI
  • Integration of third-party AI tools into your solutions

The key is to document the AI components of your work from day one, even if the exact threshold hasn’t been defined yet.

Multi-Program Strategy: Why CDAE-IA + SR&ED Matters

One of the most powerful aspects of CDAE-IA is how it can be combined with federal SR&ED credits. During the webinar, Joshua addressed a common question about whether CDAE is more advantageous than SR&ED:

“I wouldn’t say one is more advantageous than the other. Both credits can be used to fully maximize your total claim amounts. It really depends on your business, your expenses, your employee count, your activities. The SR&ED program might be a better fit for you, the CDAE program might be a better fit, or combining both could be the best approach.”

CDAE-IA works differently from SR&ED in that it’s more about general activity types rather than technical narratives showing the complexity of your work. If you’re doing AI activities or AI plays a significant role in your business, you’re likely eligible for CDAE-IA.

The predictability of CDAE-IA is also valuable for financial planning. As Joshua noted, many clients have been claiming CDAE for years and can count on specific return amounts, while SR&ED returns can vary depending on the complexity and uncertainty of activities each year.

Documentation: The Make-or-Break Factor

Success with CDAE-IA depends on proper documentation—but that doesn’t mean creating burdensome new processes for your development team.

Our recommended approach includes:

  • Leveraging existing tools: Use Jira, Tempo, Harvest, or your current time-tracking systems
  • Light-touch tagging: Add CDAE-IA tags to projects with AI integration
  • AI-focused framing: Reframe existing work to highlight AI components (e.g., “data quality exercise for AI implementation”)
  • Quarterly check-ins: Regularly validate that your documentation captures eligible activities

As Joshua put it, “We don’t want to introduce a complicated process that your team won’t actually use. Our goal and our approach are simple: How can we make it easy for you to ensure your Jira tickets and time-tracking systems meet the new program’s requirements?”

Common Mistakes to Avoid

Based on our experience helping companies prepare for this transition, here are the biggest pitfalls to avoid:

Waiting for perfect clarity: Uncertainty doesn’t mean you should do nothing. Start documenting AI integration now, even if the final guidelines aren’t published.

Underestimating implementation time: AI integrations you can claim under CDAE-IA take time to develop and document properly. Waiting until January 2026 will be too late.

Ignoring existing AI usage: Many companies already use AI tools throughout their workflows but don’t document or highlight this usage. Audit your current processes for AI integration opportunities.

Neglecting time tracking: CDAE requires that 75% of an employee’s time must be spent on eligible activity types. Without proper time tracking, you can’t demonstrate this threshold.

The Broader Context: Federal Enhancements Coming Too

Quebec’s CDAE-IA transformation isn’t happening in isolation. The federal government is also proposing major SR&ED enhancements, including restored capital expenditure eligibility and increased expenditure limits.

Joshua shared this perspective during our discussion: “Governments—federal, provincial, and municipal—are really working to support innovation in Canada, and they’re doing it by enhancing longstanding programs. There’s a lot of great support coming for Canadian innovators.”

This creates a unique window where companies can maximize multiple enhanced programs at the same time if they prepare properly.

Your Next Steps

If you’re a Quebec-based tech company, here’s your action plan:

  1. Assess your 2025 CDAE eligibility and submit claims under the current rules
  2. Audit your AI integration across all projects and workflows
  3. Update documentation systems to highlight AI components
  4. Plan Q1 2026 projects with CDAE-IA eligibility in mind
  5. Evaluate a multi-program strategy combining CDAE-IA with SR&ED and other credits

Don’t navigate this transformation alone. At Boast, we’ve been helping Quebec companies maximize R&D tax credits for over a decade, and we’re already working with clients to ensure a smooth transition to CDAE-IA.

Resources to Help You Succeed

We’ve created comprehensive guides to support your CDAE-IA journey:

2025 CDAE Quick Reference Guide: Everything you need to finalize your current-year claims

CDAE-IA Transition Guide: A deep dive into the new program requirements and opportunities

CDAE-IA FAQ: Answers to dozens of the most common questions about the transformation

Watch the Full Webinar

Want to dive deeper into strategies for your business? Watch the full webinar recording where Joshua and I cover:

  • Detailed eligibility criteria for different company profiles
  • Advanced strategies for stacking multiple programs
  • Real-world examples of successful transitions
  • Live Q&A addressing your specific concerns

WATCH FULL WEBINAR HERE

The CDAE-IA transformation shows Quebec’s commitment to remaining a leader in AI innovation. Companies that prepare now will maximize their funding while competitors scramble to catch up. The window of opportunity is open—but it won’t stay open forever!