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 credit 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) 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 activities. 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.