IFC benefits

Features of the IFC Tax Credit

Under the measure, a corporation that holds an IFC certificate and which conducts back-office operations can receive, for a taxation year, a refundable tax credit representing 24% of the eligible salary incurred for the year regarding its eligible employees other than foreign specialists, up to an annual maximum of $16,000 per employee. A qualified corporation which conducts front-office operations can receive, for a taxation year, a non-refundable tax credit representing 24% of the eligible salary incurred for the year regarding its eligible employees, up to an annual maximum of $16,000 per employee.

In addition, a foreign specialist employee who works at an IFC can claim, for a period of five years, a deduction in calculating all of his taxable income at an annual rate that varies as follows: 100% the first two years and 75%, 50%, and 37.5% respectively for subsequent years.

Tax credit for IFCs
(dollars)
Salary paid ($) Maximum amount
of tax credit
Greater than Without exceeding
30 000 40 000  9 600
40 000 50 000 12 000
50 000 60 000 14 400
60 000 70 000 16 000
70 000 --- 16 000

Eligible activities

A corporation may be eligible if its activities focuses on at least one of the 25 categories of qualified international financial transactions (QIFTs) and if it satisfies the other conditions stipulated in the legislation regarding the tax credit program for IFCs.

Generally speaking, QIFTs must be carried out on behalf of:

  • a customer that does not reside in Canada;

or

  • a customer that does reside in Canada, in which case the QIFT must focus on “foreign exposure” financial products.

Eligible transactions (QIFTs)

To qualify as an IFC, the corporation's financial transactions must fall under at least one of the following categories:

  1. Transaction on outstanding securities or securities distribution
  2. Operation of a clearing house
  3. Securities advising or portfolio management
  4. Deposit of money
  5. Lending of money
  6. Lending or borrowing of money between corporations operating an IFC
  7. Acceptance or issuance of a letter of credit
  8. Financing or refinancing by means of a bill of exchange
  9. Execution of foreign exchange transactions
  10. Financial packaging services
  11. Financial engineering services
  12. Damage insurance brokerage services
  13. Reinsurance of a risk arising from a damage insurance contract
  14. Trust services
  15. Factoring services
  16. Leasing services
  17. Organization of a qualified investment fund
  18. Administration of shares of a qualified investment fund
  19. Management of a qualified investment fund
  20. Distribution of shares of a qualified investment fund
  21. Cash management
  22. Back office activities for a third party
  23. Documentary collection
  24. Activities performed under the Québec Immigrant Investor Program (QIIP)
  25. Discount operation carried out regarding a letter of credit or a commercial instrument

Other conditions‎

Under the provisions of the legislation regarding the tax credit program for IFCs, an IFC means a business or part of a business that satisfies the following conditions:

  • it is operated by a corporation;
  • it employs, at all times, a minimum of six eligible full-time employees (for the purposes of this criterion, the expression “eligible employees” includes foreign specialists and local employees who hold an employee – local or foreign specialist – qualification certificate issued by the Minister of Finance);
  • its activities focus on QIFTs;
  • the activities enabling the QIFTs effected in the course of its operations to be carried out must be managed entirely within the territory of the agglomeration of Montréal;
  • its activities are grouped together in one place within the territory of agglomeration of Montréal;
  • it holds an annual eligibility certificate for itself and for its eligible employees issued by the Minister of Finance.

Eligible employees

Local employees – for the purposes of the tax credit

To be eligible, a local employee must hold a full-time job at least 75% of whose duties with the IFC are devoted to the execution of qualified international financial transactions (QIFTs).

  • The duties of an employee are devoted to the execution of QIFTs when they are directly attributable to the specific transactional process of a given QIFT.
  • For greater clarity, the expression “full-time” means a minimum of 26 hours of work per week, for a stipulated minimum of 40 weeks.

Foreign specialist employees – for the obtaining of a personal tax benefit

Generally speaking, a foreign specialist employee is eligible where at least 75% of his duties with the IFC are devoted to the operations of the IFC.

An IFC operator that wishes to have a foreign specialist employee benefit from this measure must first apply to the Minister of Finance to have a foreign specialist certificate issued for him.

Eligible salaries for the purposes of calculating the tax credit

The eligible salary, for a taxation year, means the salary calculated according to the Taxation Act of Québec and paid in the year to its eligible employees other than foreign specialists.

The eligible salary, regarding an eligible employee, is limited to an amount of $66 667, calculated on an annual basis, i.e. according to the number of days of the taxation year of the eligible corporation during which the employee qualifies as an eligible employee.

Eligibility period and duration

  • The tax credit program for IFCs is unlimited in duration.
  • The eligibility period of a foreign specialist for a personal tax benefit is five years.

Certification process

To be entitled to the tax credit, a corporation that intends to operate an IFC must first obtain a qualification certificate from the Minister of Finance for the IFC it intends to operate, on the one hand, and for its eligible employees, on the other.

Annual certification process

Subsequently, to be entitled to the tax credit for a taxation year, the corporation must enclose with its tax return a copy of the annual eligibility certificate issued by the Minister of Finance regarding the IFC's activities as well as a copy of the annual eligibility certificate issued for the eligible employees of the IFC for whom it is applying for this tax credit.To obtain these eligibility certificates for a taxation year, the corporation must apply for them to the Ministère des Finances du Québec.

Application process

Finance Montréal has set up a very simple STEP 1, STEP 2 application process. You can count on its experts and consultative approach. You can contact us at any time to obtain further information.

STEP 1 – Pre-application

Finance Montréal has created a 10-working-day validation process with the Ministère des Finances du Québec, which administers the tax program.
The company must provide Finance Montréal with an executive summary of its business intentions for their Montréal office.

STEP 2 – Application for a certificate of eligibility

Once the Ministère des Finances du Québec approves the pre-application, the company that intends to operate an IFC must obtain a certificate of eligibility. Finance Montréal will provide you with all the information needed when you reach this point.

For more details concerning fees for the corporation and employees, please consult the Table on Tariffs and Annual Contributions.

Please send the executive summary to the attention of Steve Gauthier, Vice-President, Corporate Development 

+1 (514) 287-1540 ext: 222