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Outsourcing contract

Certain activities carried out by a corporation under an outsourcing contract with a foreign financial entity may be eligible for a refundable tax creditA refundable tax credit is one that will be paid to the corporation even if it does not have to pay tax for the taxation year. if they are carried out under certain conditions.

WHAT YOU SHOULD KNOW

To access the tax benefits administered by the Ministère des Finances, the corporation must, first and foremost, hold the qualification certificates and annual certificates required under the Act respecting the sectoral parameters of certain fiscal measures (CQLR, chapter P-5.1) This link leads to the Publications du Québec website. and, to that end, hold the status of international financial center.

ELIGIBILITY REQUIREMENTS

A qualifying outsourcing contract is a service agreement between a corporation and a foreign financial entity. A foreign financial entity is a natural person, a corporation or a partnership located outside Canada and which has signed an eligible contract with the corporation. It represents one of the following entities or a group of these entities:

  • bank
  • savings and credit union
  • trust company
  • securities broker
  • insurance company
  • other financial, insurance or services institutions similar to the previous entities
  • securities portfolio advisor or portfolio manager
  • damage or personal insurance broker
  • corporation whose entire issued share capital belongs to one or more of the above-mentioned entities

The subcontracted activities must relate, wholly or substantially (at least 90%), to a business operated by the foreign financial entity outside Canada. This business must not have been previously operating in Canada.

Eligible activities are classified into two categories: main activities and related activities.

The outsourcing contract must include, at all times, more than 50% of main activitiesIn accordance with the legislation, “main activities” refers to qualifying international financial operations (QIFO).. The proportion of main and related activities included in an outsourcing contract is measured by the number of eligible employees assigned to each activity.

The contract is valid for a maximum of ten years. During these ten years, new activities may be added to the contract; they will be valid for the remainder of the period covered by the contract.

Eligible financial activities

Main activities

In accordance with the legislation, main activities include:

  • compliance services
  • corporate finance and taxation
  • data quality control
  • due diligence
  • know your customer (KYC)
  • risk management
  • etc.

  Learn more about main activities

Related activities

In accordance with the legislation, related activities are:

  • human resources management
  • material resources management
  • information technologies (IT)
  • promotion and marketing

  Learn more about related activities

OTHER ACTIVITIES THAT MAY BE ELIGIBLE FOR TAX CREDITS

In addition to financial activities relating to an outsourcing contract, a corporation may also carry out other types of activity that may be eligible for tax benefits.

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