Provincial Budget 2025: New Refundable Tax Credit for Research, Innovation and Commercialization (CRIC)

May 23, 2025

As part of the Quebec budget for 2025, the provincial government has announced a host of new tax measures and changes to existing tax measures. This series of bulletins will provide an overview of three of these measures which introduce significant tax changes and will have a considerable impact on many Quebec businesses: the introduction of the CRIC, changes to the tax credit for the development of e-business (TCEB) and changes to the public utility tax (PUT).

Research and development tax credits, such as the R&D tax credit for salaries and wages, the university research tax credit and the pre-competitive research tax credit, all have a very important place in Quebec’s tax and economic systems. They were designed to provide substantial tax support for businesses investing in research and development (R&D), while reducing the financial risks inherent to such activities. The new CRIC simplifies and centralizes these tax measures by grouping them under a single tax credit, making application for Quebec businesses more consistent and efficient.

This new credit’s basic rate will be 20%, with an increased rate of 30% applicable to the first million dollars of eligible expenses. This structure is designed to be internationally competitive and help Quebec businesses maintain a significant tax advantage over their counterparts in other jurisdictions.

To benefit from the credit, a business must carry out R&D or commercialization activities in Quebec and incur eligible expenses in the course of these activities. Eligible expenses include salaries directly linked to research, payments to subcontractors and research organizations and certain capital expenditures, save for those made to acquire real estate property such as land, buildings and rights of use over buildings. The real estate exclusion is intended to ensure that tax support is spent on technological innovation rather than real estate investments.

The credit takes effect for all tax years ending after March 25, 2025.

The tax credits for scientific research and experimental development, university research or public research centres, private partnership pre-competitive research, fees and dues paid to a research consortium, technological adaptation services and industrial design are all abolished, as they are now included in the new CRIC.

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Written by

Luc Pariseau
Partner, Lawyer
François Rizcallah
Lawyer

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April 4, 2025

Airudi: Rapid, people-centric growth powered by AI

Growth is nothing new at Airudi. This rising AI star has consistently doubled or even tripled its sales every year since its launch in 2019. “We’re HR specialists. Growth is in our DNA,” says Amanda Arciero, Co-founder and VP Operations at Airudi. Airudi’s algorithm automates HR decision-making processes, helping companies make strategic decisions faster. Its AI-powered solution is designed by and for people and is rapidly gaining in popularity. “It’s like a virtual HR manager,” says Pape Wade, CEO and Co-founder of Airudi. Pape was once HR director of a large company with 3,000 employees, and Amanda was his senior advisor when they made the same observation: “HR was essentially a support function. Most professionals were consumed by repetitive tasks and time-consuming processes,” says Amanda. “Plus, we were seeing tons of data accumulate in filing cabinets and spreadsheets that we weren’t using at all.” Amanda and Pape decide to leave their respective jobs to pursue an ambitious goal: to use the data accumulated by HR departments to automate administrative workflows and put people back at the heart of organizations. Thus Airudi was born. The two entrepreneurs landed their first major contract worth $3 million in 2020. Year after year, they continued to gain new customers in Canada, Europe and, more recently, Africa. Their growth has been organic but skyrocketing. In five years, Airudi has become a leader in the AI community and the HR sector. Thanks to strategic partnerships, over 5,000 companies worldwide now use their products. From left to right: Amanda Arciero and Pape Wade. Airudi’s added value With some 50 employees in Quebec, Ontario and Senegal, Airudi currently offers three AI-powered solutions: workforce prediction and allocation, occupational health and safety, and enhanced recruitment. “Our goal is to reach around $100 million in profit by 2028,” says Amanda. The company’s name, Airudi, is pronounced like the word érudit (“erudite” in French). It’s a nod to Airudi’s multi-disciplinary team of artificial intelligence, data science, human resources and business intelligence experts. The secret to their success? According to the two entrepreneurs, it’s a combination of several factors. 1. Putting people first First of all, Airudi’s algorithm addresses a major concern for the HR sector. We’re using digital intelligence to make HR teams more efficient and productive, allowing them to focus on what matters: creating human connections. Amanda Arciero, Co-founder and VP Operations, Airudi Amanda gives the example of the recruitment platform, which helps customers recruit better, faster and on a larger scale by automatically matching profiles to vacant positions and ensuring fast and efficient follow-up and interview scheduling. “By reducing the time spent on recruitment, our customers can spend more time building relationships with candidates and successfully onboarding them into the company,” says Amanda. Two other strengths of the Airudi solution: quality and granularity. “The CFO of a company with 3,000 employees is not at all the same thing as the CFO of a company with 30 employees. Our algorithm captures this kind of nuance.” 80%: Reduction in recruitment time when using Airudi’s enhanced recruitment solution. A people-centric approach guides the company’s own business strategy, not just its product development. The first team that Airudi hired—even before building a technology team and thinking about fundraising—was an advisory board made up of experienced businesspeople including Robert Dutton, ex-CEO of Rona, Frantz Saintellemy, President and CEO of LeddarTech, and Julie Plouffe, Partner, SVP Finance and Chief Accounting Officer at Sagard. “We learned together and built Airudi together,” says Pape. “Our advisory board continues to give us invaluable insight.” Next, the two entrepreneurs established strategic partnerships with researchers working in Quebec’s top AI network. With highly skilled employees ranging from masters-holders to post-docs, Airudi has developed an SaaS (Software as a Service) business model that guarantees financial stability through recurring revenues. 2. Building strategic partnerships Strategic partnerships were also important to the company’s growth. “We operate mainly through redistribution partnerships or marketing agreements,” says Amanda. “We talk more about partners than customers at Airudi.” One of Airudi’s most promising partnerships is with the Maritime Employers Association (MEA), the organization that manages the workforce at the Port of Montreal. Since ship arrivals and departures don’t follow a regular daily schedule, the MEA had to ask terminal operators to determine their labour requirements for the next day. Port employees’ schedules were generated daily at 6 p.m. Taking into account port traffic, weather conditions, and the quantity and type of cargo, Airudi developed an algorithm that optimizes workforce allocation while respecting collective agreements, the availability of port workers and the skills required. “Our solution accurately predicts ship arrival times up to 21 days in advance, ensuring smooth operations in the port and reducing workforce allocation errors from 30% to 15%, generating significant savings in labour costs,” says Amanda. The partnership with the Port of Montreal has opened doors in Europe. The Quebec-based company subsequently developed a strategic partnership with SOGET, a French company specializing in streamlining logistics flows, covering 40 logistics sites in 8 countries. More recently, Airudi has adapted its predictive solution to provide Urgences-santé with a similar paramedical staff planning tool. 3. You’re never too small to go international International expansion is another successful strategy that has put wind in the company’s sails. “Innovation is experienced differently in North America, Europe and Africa,” says Pape. “We’re an innovative company. It’s important to have these different perspectives.” Many companies say to themselves: We’re going to make our name on the Quebec market, then go international. I think this is a mistake. We had five employees and were already developing the international market.” Pape Wade, CEO and Co-founder of Airudi Airudi has already had customers in Europe for two years and has just opened offices in Pape’s native Senegal. The growth and innovation potential of the African market is still underestimated. “Our Cameroonian-born scientific director, Foutse Khomh, ranks as the world’s fourth most prolific researcher in terms of publications in AI, and he ranks first in Canada. There’s a lot of talent and growth potential on the African continent,” says Amanda. Currently, 80% of Airudi’s sales are generated in Canada, 12% in Europe and 8% in Africa. As it expands its international footprint, the SME remains firmly rooted in the Quebec technology community. “When it comes to innovation, we’re very strong in Quebec, with access to the best talent and researchers,” says Pape, who also sits on the board of Mila – Quebec AI Institut. Growth, but not at any price AI is a powerful tool, but one that raises a number of ethical issues. “We’re making the same mistake we made with the environment. If we don’t put the responsible side of AI first, we’ll soon hit a wall.” Pape Wade, CEO and Co-founder, Airudi Each year, Pape and Amanda participate in a strategic planning exercise to ensure that Airudi’s business objectives and technological advancement are aligned with its values. Are we creating a positive impact for the benefit of society, employees and customers? Do we create people-centric products? Are we making good use of technology? “We put a lot of thought into all our decisions. If there’s growth potential, but it’s not aligned with our values, we won’t consider it.” Amanda Arciero, Co-founder and VP Operations, Airudi Pape likes to use the analogy of agriculture when talking about Airudi’s growth strategy: “Seeds are carefully sown and tended until they flower successfully. You have to be patient.” For example, the strategic partnership with SOGET came about after a year and a half of work and meetings. “A partnership that opens the door to 40 ports around the world certainly takes time,” says Pape. Conclusion Putting people back at the centre of organizations. Customers who become partners. Learning from other perspectives and approaches. Growth, but not at any price. In five years, Pape and Amanda have built a winning strategy. Today, Airudi is a solid company rooted in sustainable values. What’s next? According to Amanda, the more we look to the future, the more technology will be part of our lives. It’s essential to shore up companies against current challenges, including labour shortages, the arrival of new generations on the job market and inflation. Airudi is currently looking for ways to further democratize access to its solutions, so that all organizations can benefit from them—while still centring people, being responsible, and creating value for companies and workers. “Our philosophy is not to make money. Our philosophy is to create innovative, caring, people-centred technology that creates a positive impact. Usually, when you focus on good business, success and growth naturally follow,” says Amanda.

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June 9, 2025

Provincial Budget 2025: Major Changes to the Tax Credit for the Development of E-Business (TCEB)

In this bulletin, we will be discussing the TCEB as part of our series on the 2025 Quebec budget and corporate taxation. This particular tax credit aims to boost innovation and competitiveness in the digital marketplace by providing strategic tax assistance to businesses specializing in information and communication technologies. It was introduced to spur the growth of Quebec’s technology sectors through tax incentives granted to companies developing or integrating e-business solutions. Before the 2025 Quebec budget reform, the TCEB comprised a 24% refundable tax credit, coupled with a 6% non-refundable tax credit. In 2024, the government began adjusting TCEB rates as part of the updated economic priorities, gradually reducing the refundable credit to 20% by 2028 and increasing the non-refundable credit to 10%. New adjustments were announced in the 2025 provincial budget to ensure that the incentives align more closely with the changing technological landscape, in particular by shifting the focus to the integration of recent emerging technologies, such as artificial intelligence (AI) and data processing and hosting. The new rules provide that only activities that incorporate artificial intelligence functionalities in a significant way will be eligible for the TCEB going forward. In addition, data processing and hosting services (NAICS 51821) have been added to the list of eligible activities, which shows the increasingly important role they play in today’s technological landscape. However, activities aimed at maintaining or upgrading information systems and technological infrastructure have been removed from the list, refocusing the program on cutting-edge technologies. Businesses engaged in inter-company outsourcing, mainly with subsidiaries of foreign companies, are particularly affected by the changes, in that credit rates will be reduced by half if the proportion of such outsourcing reaches 50% or more. The idea is to encourage those businesses to contribute more directly to the local economy and technological innovation in Quebec. The changes will apply to tax years beginning after December 31, 2025, but companies have the option of electing to apply them to tax years beginning after the budget presentation, provided the election is made before the end of the ninth month following the deadline by which they are required to file their tax returns. Read our first bulletin on the 2025 provincial budget titled “Provincial Budget 2025: New Refundable Tax Credit for Research, Innovation and Commercialization (CRIC)”

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June 2, 2025

Charting Your Course: Ensuring Language Compliance Beyond and During the Deal

This article is part of our two-part series on what foreign buyers of, and investors in, business ventures need to know about the Charter of the French language (the “Charter”) in the context of a business transaction involving operations and employees in Quebec. The first instalment focused on French language issues during the due diligence process. Reference is made to the following hyperlink for access to part one. Continuing our exploration of the Charter in the context of merger and acquisition transactions, this part two focuses on the importance of language compliance during and after the deal-making process, from incorporating language obligations into representations and warranties to post-closing strategies for addressing compliance issues. 6. In the Deal-Making Process: Your Closing Documents Representations and warranties in transaction documents shall generally address language-related matters. For example, the target corporation may be required to represent and warrant that it has fulfilled its language obligations as imposed by the Charter. As a foreign buyer/investor, you may want to ensure that findings from the due diligence investigation are incorporated into the representations and warranties of your share or asset purchase agreement. As you prepare your closing agenda, it is of utmost importance to assess whether the principal and accessory agreements themselves will be subject to French language requirements. For example, it will be advisable to translate into French restrictive covenant agreements or intellectual property assignment agreements that will be applicable to Quebec-based employees or other agreements that may be deemed contracts of adhesion. The requirement to translate any agreement or documents following the results of the due diligence analysis can be included as a closing deliverable in a form satisfactory to the foreign buyer/investor. 7. Post-Closing: Addressing Language Compliance Beyond the Deal Obviously, not all aspects of French language compliance under the Charter will be addressed during the merger and acquisition transaction itself. Potential areas of non-compliance noted during the due diligence stage can give dealmakers a roadmap of steps to undertake after closing to mitigate risks. In recent transactions, there has been a growing need for law firms to provide post-closing support in French language matters. If a purchase price adjustment clause is included in the share or asset purchase agreement, a buyer/investor could benefit from using the costs associated with rectifying any translation defaults as a lever for the negotiation of the price to be paid. This could also include any penalties imposed by the OQLF on the target corporation. Recent amendments to the Charter have significantly increased the fines that a corporation may face for non-compliance with an order issued by the OQLF, which range from $3,000 to $30,000. These fines are doubled for a second offence and tripled for subsequent offences. If an offence persists for more than one day, it is considered a separate offence for each day it continues. Additionally, directors of the corporation are presumed to have committed the offence unless they can demonstrate that they exercised due diligence by taking all necessary precautions to prevent the offence. In cases of complaints, our experience indicates that the OQLF tends to prioritize achieving compliance rather than imposing fines when companies are responsive to complaints. This presents a positive outlook for foreign buyers/investors, as it underscores that the intent of the new Charter and its enforcement provisions is not to penalize foreign buyers/investors, but rather to reaffirm the status of the French language as the official language of work and business in Quebec. Conclusion Prospective foreign buyers/investors may question the wisdom of doing business in Quebec, given its Charterrequirements. However, achieving Charter compliance can provide a distinct competitive edge. By embracing it, you open doors to the predominantly French-speaking market in and outside Quebec, unlock opportunities in thriving sectors like mining, renewable energy and aerospace, and pave the way for lucrative partnerships with the Quebec government. However, considerations relating to the French language shall not be overlooked when it comes to due diligence or other phases of a merger and acquisition transaction as compliance is key to accessing the thriving Quebec market. Moreover, failing to address these aspects could result in various challenges to a buyer/investor’s entry into the market, such as the unenforceability of restrictive covenant agreements with key employees, potential fines, penalties and director liability. A reputational risk can also be associated with non-compliance with the Charter, in light of the media attention that surrounds this type of issue in the Quebec landscape. By adhering to the requirements of the Charter, foreign buyers/investors can position themselves as responsible corporate citizens and set the stage for successful ventures in Quebec's dynamic business landscape. As more guidance becomes available regarding the application of the new provisions of the Charter, and as we gain practical experience from upcoming transactions with foreign investor/buyers, additional instalments to this series will be published.

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May 5, 2025

Reminder: Canada’s Modern Slavery Act Report Due by May 31, 2025

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March 27, 2025

Businesses: Four tips to avoid dependency or vulnerability in your use of AI

While the world is focused on how the tariff war is affecting various products, it may be overlooking the risks the war is posing to information technology. Yet, many businesses rely on artificial intelligence to provide their services, and many of these technologies are powered by large language models, such as the widely-used ChatGPT. It is relevant to ask whether businesses should rely on purely US-based technology service providers. There is talk of using Chinese alternatives, such as DeepSeek, but their use raises questions about data security and the associated control over information. Back in 2023, Professor Teresa Scassa wrote that, when it comes to artificial intelligence, sovereignty can take on many forms, such as state sovereignty, community sovereignty over data and individual sovereignty.1 Others have even suggested that AI will force the recalibration of international interests.2 In our current context, how can businesses protect themselves from the volatility caused by the actions of foreign governments? We believe that it’s precisely by exercising a certain degree of sovereignty over their own affairs that businesses can guard against such volatility. A few tips: Understand Intellectual property issues: Large language models underlying the majority of artificial intelligence technologies are sometimes offered under open-source licenses, but certain technologies are distributed under restrictive commercial licenses. It is important to understand the limits imposed by the licenses under which these technologies are offered. Some language model owners reserve the right to alter or restrict the technology’s functionality without notice. Conversely, permissive open-source licenses allow a language model to be used without time restrictions. From a strategic standpoint, businesses should keep intellectual property rights over their data compilations that can be integrated into artificial intelligence solutions. Consider other options: Whenever technology is used to process personal information, a privacy impact assessment is required by law before such technology is acquired, developed or redesigned.[3] Even if a privacy impact assessment is not legally required, it is prudent to assess the risks associated with technological choices. If you are dealing with a technology that your service provider integrates, check whether there are alternatives. Would you be able to quickly migrate to one of these if you faced issues? If you are dealing with custom solution, check whether it is limited to a single large language model. Adopt a modular approach: When a business chooses an external service provider to provide a large language model, it is often because the provider offers a solution that is integrated to other applications that the business already uses, or because it provides an application programming interface developed specifically for the business. In making such a choice, you should determine whether the service provider can replace the language model or application if problems were to arise. If the technology in question is a fully integrated solution from a service provider, find out whether the provider offers sufficient guarantees that it could replace a language model if it were no longer available. If it is a custom solution, find out whether the service provider can, right from the design stage, provide for the possibility of replacing one language model with another. Make a proportionate choice: Not all applications require the most powerful language models. If your technological objective is middle-of-the-road, you can consider more possibilities, including solutions hosted on local servers that use open-source language models. As a bonus, if you choose a language model proportionate to your needs, you are helping to reduce the environmental footprint of these technologies in terms of energy consumption. These tips each require different steps to be put into practice. Remember to take legal considerations, in addition to technological constraints, into account. Licenses, intellectual property, privacy impact assessments and limited liability clauses imposed by certain service providers are all aspects that need to be considered before making any changes. This isn’t just about being prudent—it’s about taking advantage of the opportunity our businesses have to show they are technologically innovative and exercise greater control over their futures. Scassa, T. 2023. “Sovereignty and the governance of artificial intelligence.” 71 UCLA L. Rev. Disc. 214. Xu, W., Wang, S., & Zuo, X. 2025. “Whose victory? A perspective on shifts in US-China cross-border data flow rules in the AI era.” The Pacific Review, 1–27. See in particular the Act respecting the protection of personal information in the private sector, CQLR c. P-39.1, s. 3.3.

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