IFC Tax Credit
The IFC Tax Credit program is intended to encourage the establishment and development of new projects by businesses specializing in international financial activities in the urban agglomeration of Montréal.
A corporation that operates an international financial centre (IFC) may receive a tax credit for the salaries of its eligible employees. The tax benefit for a corporation holding IFC status can reach $18 000 per year, per employee. The type of tax benefit and amounts awarded vary according to the category of activities carried out by the corporation.
An eligible foreign specialist employed by an IFC may benefit from a deduction in the calculation of his or her taxable income for a period of five consecutive years.
To be eligible, a corporation needs to carry out one or more activities among the following categories:
INTERNATIONAL FINANCIAL TRANSACTIONS (FRONT OFFICE ACTIVITIES)
- Financial transactions carried out on behalf of a foreign client or including a foreign component — a product with foreign exposure, a foreign consideration, etc.
- Examples: trading in securities, securities advising or portfolio management, letter of credit, fiduciary services.
BACK OFFICE ACTIVITIES FOR A THIRD PARTY (ADMINISTRATIVE SUPPORT)
- Back office activities arising from international financial transactions carried out by another entity (can be affiliated).
- Examples: registration of transactions, securities settlement, clearing, fund accounting, etc.
FINANCIAL ACTIVITIES CARRIED OUT UNDER AN OUTSOURCING CONTRACT
- Activities carried out under a service agreement related to financial transactions conducted outside Canada by a foreign financial entity (can be affiliated).
- Examples: compliance services, data quality control, corporate finance and taxation, and information technologies (IT).
A local employee is considered an eligible employee for a given period of time if his or her duties are directly attributable to the carrying out of qualifying international financial activities. He or she must work full-time, have an employment contract for a minimum of 40 consecutive weeks, and spend at least 75% of his or her duties to carrying out only one of the three categories of eligible activities mentioned above.
For more information on the IFC Tax Credit program, contact us.
To learn more about Montreal as a financial center of choice, contact the IFC team.
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