SR&ED in Quebec: Why This Province Is the Best Place in Canada to Fund Your R&D

Every Canadian province offers some form of R&D tax support. But if you run an innovative company in Quebec and you are not actively claiming every layer of available funding, you are operating with one hand tied behind your back.

Quebec has quietly built the most generous stacked R&D incentive structure in the country. The combination of federal SR&ED credits, Quebec’s own provincial program, and a dense ecosystem of sector-specific grants means that a qualifying small business can recover a substantial portion of its R&D salary costs, in cash, every year.

This article breaks down exactly how the Quebec R&D funding stack works, what makes it different from the rest of Canada, and what companies need to do to capture it fully.

First, a Quick Primer: SR&ED vs. CRDSGE

Most people have heard of SR&ED, the federal Scientific Research and Experimental Development program administered by the Canada Revenue Agency. It is the foundation of R&D tax support across Canada, available to any company doing qualifying technical work on Canadian soil.

What fewer people know is that Quebec has its own parallel program: the Crédit d’impôt pour la recherche scientifique et le développement expérimental, or CRDSGE, administered by Revenu Québec. The two programs use similar eligibility criteria, which means the work that qualifies federally almost always qualifies provincially as well.

You file both claims in the same tax cycle. They are separate filings, separate credits, and separate cheques, but the underlying project documentation supports both simultaneously.

SR&ED and CRDSGE are not either/or. Every qualifying Quebec company should be claiming both, every year. Filing only the federal claim while ignoring the provincial one is one of the most common and most expensive mistakes in the Quebec innovation ecosystem.

The Quebec Stack: What You Can Actually Claim

Here is a simplified picture of what a qualifying Quebec CCPC (Canadian-Controlled Private Corporation) can recover on eligible R&D salaries:

PROGRAM                                    RATE        TYPE

Federal SR&ED (CCPC, first $3M)           35%         Refundable

Quebec CRDSGE (small business)            up to 30%   Refundable

COMBINED EFFECTIVE RATE                    up to 65%   Cash back

That is not a typo. For a small qualifying Quebec company, the government effectively co-funds up to 65 cents of every dollar spent on eligible R&D salaries. The credits are refundable, meaning they generate cash even if the company has no taxable income, which matters enormously for early-stage companies investing heavily before they are profitable.

A Quebec startup with $600,000 in eligible R&D payroll could realistically receive $390,000 in combined federal and provincial tax credits, in cash, in a single year.

How the CRDSGE Works

The Quebec CRDSGE credit rate depends on your company’s size, measured by assets and paid-up capital. The program is structured to be most generous for smaller businesses:

• Small businesses (assets under $50M): The refundable rate reaches up to 30% on eligible R&D expenditures.
• Mid-sized companies: The rate scales down progressively as company size increases, reaching a base rate of 14% for larger businesses.
• Large corporations: The credit is non-refundable at the base rate but still provides meaningful tax offset value.

Eligible expenditures under CRDSGE closely mirror the federal SR&ED program: salaries of employees performing R&D in Quebec, contractor fees for R&D work conducted in Quebec, and materials consumed during eligible R&D activities.

One important distinction: the CRDSGE is specifically tied to work performed in Quebec. If your company has operations in multiple provinces and some of your R&D team is located outside Quebec, only the Quebec-based portion of those costs feeds into your provincial claim. This is why payroll documentation and employee location tracking matters more than most founders realize.

Revenu Quebec vs. CRA: Two Filings, One Project

The administrative reality of claiming both SR&ED and CRDSGE is that you are dealing with two separate tax authorities: the federal CRA and Revenu Quebec. Each has its own forms, its own review process, and its own timelines.

The good news is that the technical narrative and project documentation you prepare for your SR&ED claim is largely reusable for your CRDSGE claim. The eligibility criteria are similar enough that a well-prepared SR&ED file provides a strong foundation for the provincial filing as well.

The practical implication: work with a specialist who is fluent in both programs. An SR&ED consultant who does not also handle Revenu Quebec filings, or who subcontracts the provincial piece to someone else without coordinating the technical narratives, is leaving money on the table on your behalf.

Beyond Tax Credits: Quebec’s Grant Ecosystem

Tax credits are the foundation, but they are not the whole picture. Quebec has invested heavily in building a grant ecosystem that sits alongside the credit programs and can be stacked on top of them.

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Key programs worth knowing:

• Investissement Quebec (IQ): The provincial crown corporation offers loans, loan guarantees, and sometimes equity investments for innovative Quebec companies. IQ has specific streams for technology companies, export-ready businesses, and growth-stage investments. Unlike tax credits, IQ funding is typically negotiated and relationship-driven.
• PROMPT: A unique Quebec program that funds collaborative R&D projects between companies and universities. PROMPT matches private investment dollar-for-dollar and connects businesses with academic expertise and graduate student labour. It is particularly valuable for companies working on problems that intersect with ongoing university research.
• PRIMA: Quebec’s program for R&D in artificial intelligence, structured to support companies integrating AI into their operations or building AI-native products. Given Quebec’s position as a global AI hub anchored by Mila and the Montreal AI ecosystem, this program is well-resourced and actively deployed.
• MITACS: A federally funded program with strong Quebec uptake, MITACS funds internships and fellowships that place graduate students and postdocs inside companies to work on R&D challenges. The company co-funds the placement, but the effective cost per researcher is substantially below market rate.

A well-structured Quebec R&D company can combine federal SR&ED credits, provincial CRDSGE credits, IRAP grants, PROMPT matching, and MITACS internships into a funding stack that covers a remarkable share of total R&D cost. Each program feeds the others rather than competing with them.

The Montreal AI Advantage

Quebec’s R&D funding ecosystem exists within a specific geographic and intellectual context that matters: Montreal is one of the top three artificial intelligence research hubs in the world, alongside London and San Francisco.

Mila, the Quebec AI Institute co-founded by Turing Award winner Yoshua Bengio, has trained thousands of AI researchers and spun out dozens of companies. The presence of Mila, along with McGill, Universite de Montreal, Polytechnique, and ETS, means that Quebec AI companies have access to a depth of academic talent and collaborative research infrastructure that is genuinely rare globally.

For companies building AI products or integrating machine learning into their work, this matters for R&D funding in a practical way: the academic partnerships that programs like PROMPT and MITACS facilitate are far more productive in Montreal than they would be in most other cities, simply because the depth of relevant expertise is higher.

Quebec’s government has recognized this advantage and structured programs like PRIMA specifically to keep AI investment in the province. The result is a self-reinforcing ecosystem where talent, funding, and institutional support concentrate together.

Common Mistakes Quebec Companies Make

MISTAKE  Filing SR&ED but not CRDSGE. These are separate programs requiring separate filings. Claiming only the federal credit while ignoring the provincial one is a straightforward and avoidable loss.

MISTAKE  Misallocating R&D payroll across provinces. If some of your team works outside Quebec, only the Quebec-based portion qualifies for CRDSGE. Sloppy payroll allocation is a common audit trigger.

MISTAKE  Not engaging PROMPT or MITACS because the academic partnership model feels unfamiliar. These programs are well-run, the university partners are experienced at working with industry, and the cost-to-value ratio is extremely high.

MISTAKE  Using an accountant who handles SR&ED federally but outsources the Revenu Quebec filing without coordinating the technical narratives. Inconsistent narratives across the two filings create unnecessary audit risk.

What to Do This Year

If your Quebec company is doing any kind of technical R&D work and you are not already claiming both federal and provincial credits, the most valuable thing you can do in the next 30 days is have a conversation with a specialist who handles both.

A good SR&ED and CRDSGE consultant will do a free initial assessment. They will ask about your team’s technical activities, your payroll, and your fiscal year-end. Within an hour, you will have a realistic sense of what a claim might be worth and what documentation you need to support it.

If you have projects on the horizon that involve genuine technical uncertainty, contact an NRC IRAP advisor before you start. And if your work intersects with university research in any way, look at PROMPT and MITACS before you hire your next researcher.

Quebec has invested significantly in making innovation financially viable for companies willing to do the hard technical work. The programs are funded, the advisors are accessible, and the combined value of a well-built funding stack is real.

The only thing required on your end is knowing it exists and being organized enough to claim it.