With the introduction of the Canadian Digital Adoption Program (CDAP) and the Quebec C3i and ITC tax credits, government support for digital transformation can help qualified Canadian organizations looking to invest. Here’s how to know what’s covered in each program, if your organization qualifies, and how to get started.
Contents
- Canada Digital Adoption Program
- Grow Your Business Online
- Boost Your Business Technology
- Quebec Tax Credits for Digital Transformation
- C3i Tax Credit
- Investment Tax Credit
- Digital Transformation Strategy
Canada Digital Adoption Program (CDAP)
Providing Government Support for Digital Transformation
Introduced in 2021, the Canada Digital Adoption Program is a two-part program encouraging digital transformation for qualifying organizations via eCommerce and business technology investment. These programs are known as Grow Your Business Online and Boost Your Business Technology. These programs cover different areas of investment and offer different benefits for organizations seeking digital transformation assistance.
Grow Your Business Online
Under the CDAP, small businesses can apply for a microgrant of up to $2,400 providing eCommerce assistance in what’s known as the Grow Your Business Online initiative. This program seeks to help consumer-facing organizations access e-commerce advisors and adopt new technologies. Qualifications and the application process are explained here.
Boost Your Business Technology
Under the Boost Your Business Technology initiative, small and medium-sized enterprises (SMEs) can apply to have up to 90% of the cost of retaining a digital advisor (up to $15,000) covered by this program. The selected digital advisor will work closely with the organization to develop a joint plan for digital transformation including global digital strategy and a plan for acquiring new technology.
In conjunction with this program, the Business Development Bank of Canada (BDC) is offering 0% interest loans up to $100,000 for the purchasing of new technology. Subsidized work placements for recent college graduates are also available, so that qualified SMEs can hire top-tier talent in areas recommended by digital advisors.
In order to qualify, organizations must have fewer than 500,000 employees, and must make over $500,000 in annual recurring revenue. The application and more details for this program can be accessed here.
Quebec Tax Credits for Digital Transformation
Quebec has two different programs that offer tax credit for qualified organizations that have made specific investments within a given time window. The C3i and ITC programs both provide tax credit for specific purchases, but the programs cover different time windows and effective rates. Because the programs can overlap, it is best to consult with a tax professional as to which program offers the most benefit according to your circumstances.
C3i Tax Credit
The C3i tax credit, known as the Credit for Investments and Innovation, offers up to 20% back on purchases made between March 10, 2020 and December 31, 2024. Temporarily, the amount of available tax credit has been increased up to a maximum of 40% for qualifying purchases made after March 25, 2021 through December 31, 2022.
Qualifying purchases include investments in equipment and management software. The management software specified in C3i includes operational software that integrates business functions, software that connects with customers by using communication channels, and manufacturing and inventory control software. The effective rate of the C3i varies based on region. In order to qualify for the enhanced rate, the software investment cannot be purchased or utilized by an organization prior to March 25, 2021.
C3i organizational eligibility is dependent on maintaining a Quebec business address. Only for-profit organizations are eligible. Entities must also operate within Quebec, with more than 50% of the organization’s salaries being paid within Quebec in the first year of the acquiring the software solution. More information on the C3i program can be found here.
Investment Tax Credit (ITC)
The Investment Tax Credit allows qualified organizations to claim a tax credit for qualifying purchases up to 24% between January 1, 2017 and December 31, 2022. A temporarily enhanced ITC of 5-45% is available for purchases made before 2022. The effective rate is dependent on region, the amount of eligible purchases made, and paid-up capital (PUC).
Digital Transformation Strategy
The Business Development Bank of Canada offers this guide to starting successful digital transformation projects. Considerations include budgeting, obtaining buy-in from other departments, prioritizing projects with the best returns and analyzing an organization holistically, as opposed to looking at disjointed departments.
At Direct Impact Solutions, we specialize in digital transformation, and can make recommendations all the way from the planning stage, to the development of custom applications, to the final implementation of our solutions. We offer several development platforms for the build of your application(s) and can make recommendations as to which platform and digital transformation tools would be the best fit for you, taking into consideration your budget, timeline, integrations and unique technical requirements.
If you’d like to see how we can digitally transform your organization, reach out here to get started.