The synergy tax credit for Québec businesses ("CSEQ") is provided under s. 776.1.38 of the Taxation Act (“T.A.”) in an amount equal to 30% of the lesser of $750,000 and the aggregate of the qualified investor’s eligible investments for the year in corporations in relation to an authorized investment certificate. The amount of the CSEQ that a qualified investor may deduct cannot exceed the amount of tax otherwise payable under the T.A. The unused portion of a qualified investor's CSEQ for a taxation year may be carried forward for the 20 taxation years following that taxation year or carried back to the three taxation years preceding the particular year.
Regarding when the amount of the credit reduced the ACB of the eligible investments pursuant to s. 53(2)(k), CRA stated:
According to the CRA's longstanding position, a tax credit or reduction in the calculation of tax - which is not applied to reduce instalments payable by the taxpayer … is considered to have been received, where all the conditions for obtaining it have been satisfied, at the earliest of the following times:
- when it reduces the tax payable for a taxation year;
- at the time it is paid if it allows for or increases a tax refund.
In view of the foregoing, where … a qualified investor attaches the prescribed Documents to the tax return that must be filed for a taxation year … in order to claim an amount in respect of the CSEQ, and the amount of the tax credit is less than the balance of tax payable for the year, the CRA is of the view that the CSEQ is received or is entitled to be received on the date of filing of the tax return. …
… [T]he qualified investor will be entitled to receive the unused portion of the CSEQ … when the qualified investor files a carryover request, on the date the carryover request is filed.