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TAX CREDIT PROGRAMS FOR IFCs

Application for International Financial Centre Qualification Certificate

General information and application form

Tax Credit Programs for IFCs – Application for IFC Qualification Certificate (July 2018) 2 of 12

General information

ELIGIBILITY CONDITIONS

Pursuant to provisions in the legislation governing international financial centres, an IFC refers to a business or part of a business that satisfies the following conditions:

It is operated by a corporation.1

It employs, at all times, a minimum of six eligible full-time employees.2

To apply this criterion, the expression “eligible employees” includes local employees and foreign specialist employees who hold a qualification certificate issued by the Minister of Finance.

All of its activities focus on qualified international financial transactions (QIFTs);

The activities enabling the QIFTs effected in the course of its operations to be carried out must be managed entirely within the territory of the urban agglomeration of Montréal.

Its activities are grouped together in one place within the territory of the urban agglomeration of Montréal.

It holds an annual certificate for itself and its eligible employees issued by the Minister of Finance.

TAX BENEFITS ASSOCIATED WITH IFC STATUS

The applicable salary under the IFC program is capped at $75 000 a year, thereby allowing qualified corporations to receive tax assistance of up to $18 000 per employee. Depending on the case, the tax assistance offered to the operator of an IFC takes one of the following forms, or a combination thereof: Refundable tax credit (RTC)

A corporation that carries on back office activities on behalf of a third party (QIFT 7.22) and that holds an IFC certificate and a valid annual certificate can claim, for a taxation year, a refundable tax credit (RTC) representing 24% of qualified wages incurred for the year in respect of its eligible local employees assigned to those activities, to a maximum annual amount of $18 000 per employee.

Non-refundable tax credit (NRTC)

A corporation that carries on activities other than back office activities on behalf of a third party (24 other categories of QIFTs) and that holds an IFC certificate and a valid annual certificate can claim, for a taxation year, a non-refundable tax credit (NRTC) representing 24% of qualified wages incurred for the year in respect of its eligible local employees assigned to those activities, to a maximum annual amount of $18 000 per employee.

A foreign specialist employee who works at an IFC can claim, for a continuous period of five years, a deduction in

calculating all of his taxable income at an annual rate that varies as follows: 100% the first two years and 75%, 50%, and 37.5% respectively for the three subsequent years. To obtain additional information, please consult the document General Information — Applications for a Foreign Specialist available on the Ministère des Finances website.

1 General partnerships are ineligible for the program. 2 The term “full-time” means a minimum of 26 hours of work per week, for an expected minimum period of 40 weeks.


General information

PROCEDURE FOR OBTAINING AN IFC QUALIFICATION CERTIFICATE

A corporation that intends to operate an IFC must first obtain a qualification certificate from the Minister of Finance. To do so, it must complete this form and append to it the documents indicated in section 13.

FEES

Application for a qualification certificate

The application for a qualification certificate must be accompanied by a cheque payable to the Minister of Finance for the fees required to analyze the file. To determine the applicable fees, please consult the fee schedule on the Ministère des Finances website.

The analysis of the file usually includes a meeting between a representative of the Ministère des Finances and the person responsible for the application.

Annual contribution

A corporation that holds an IFC qualification certificate must also pay an annual contribution to the Fonds du centre financier de Montréal, which is allocated to fund activities to promote and develop Montréal as an international financial centre. The fee is $10 000 for the first contribution and $3 000 for subsequent contributions. It is payable to the Minister of Finance when the corporation files the application for an annual eligibility certificate.

Note: The masculine form of pronouns used in this document refers without discrimination to women and men.

WARNING

The information in this publication is provided solely for information purposes. The Act respecting international financial centres (CQLR, chapter C-8.3) and the Act respecting the sectoral parameters of certain fiscal measures (CQLR, chapter P-5.1) provide details concerning the measures.

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Contact

To obtain additional information, please contact: Ministère des Finances du Québec Gestion des mesures fiscales 380, rue Saint-Antoine Ouest, bureau 6100 Montréal (Québec) H2Y 3X7

Telephone: 514 499-6569 Fax: 514 873-3915 Email: [email protected] Website: www.finances.gouv.qc.ca/MesuresFiscales.asp

http://www.finances.gouv.qc.ca/fr/Mesures_fiscales_Secteur_financier_et_entreprises399.asp

mailto:[email protected]

http://www.finances.gouv.qc.ca/MesuresFiscales.asp


Tax Credit Programs for IFCs

Application for International Financial Centre (IFC) Qualification Certificate

Notice

The Ministère des Finances (MFQ) collects the information that you provide on this form and uses it to verify the eligibility of your activities for the tax credit programs for IFCs. Accordingly, the requested information must be provided. Failure to do so may cause your application to be denied.

The information is treated confidentially and may only be sent to third parties with the consent of the person who provided it, as stipulated in the Act respecting Access to documents held by public bodies and the Protection of personal information (CQLR, chapter A-2.1). Only authorized personnel of the MFQ has access to the information provided.

However, certain information may be disclosed to Revenu Québec without the consent of the person who provided it, if necessary for the enforcement of tax legislation. In addition, certain information may be disclosed to the Autorité des marchés financiers (AMF) without the consent of the person who provided it, if necessary for the enforcement of the statutes administered by the AMF.

The information provided may also be used by the MFQ for research, assessment, study, investigation, statistical or cost forecasting purposes, or in the course of a survey. The applicant corporation must notify the MFQ in writing as soon as possible of any significant change in the information provided. Notification must be sent to: Ministère des Finances du Québec, Gestion des mesures fiscales, 380, rue Saint-Antoine Ouest, bureau 6100, Montréal (Québec) H2Y 3X7.

1. Program(s)

Refundable tax credit (RTC) Non-refundable tax credit (NRTC)

2. General information on the applicant

Name of the corporation that intends to operate the IFC (corporate name)

Address of the corporation that intends to operate the IFC

City Province Country Postal code Website

Identification number assigned by Revenu Québec to the corporation that intends to operate the IFC

Québec enterprise number (NEQ) of the corporation that intends to operate the IFC

Name of the business or part of the business applying for IFC status ( Same name as the corporation. If different, enter the name below.)

Address of the site where the IFC will be located ( Same address as the corporation. If different, enter the address below.)

City Province Postal code Website

Québec


3. Head of the IFC3

Mr. First name Last name

Ms.

Title

Telephone Fax Email

Ext.:

4. Person responsible for this application (if different from the head of the IFC)

First name Last name Mr.

Ms.

Title

Telephone Fax Email

Ext.:

5. Fiscal period end date of the corporation that intends to operate the IFC

mm/dd

month/day

6. Registration with a regulatory body (to be completed only by investment dealers and advisers)4

Is the corporation registered with regulatory bodies such as the AMF, the OSC or the SEC?

Yes No

If so, with which ones and what kind of registration?

If not, is the corporation exempted from registering with these bodies?

Yes No

3 A resolution of the board of directors of the corporation designating the head of the IFC must be enclosed with this application for certification. 4 Please enclose with your application proof of registration or proof of exemption from registration with the relevant regulatory bodies.


7. Body of shareholders

Please indicate the names of the specified shareholders5 of the corporation that intends to operate the IFC

Name of the specified shareholder Percentage of shares held

%

%

%

%

%

%

%

Please enter the names of the shareholders having direct or indirect control of the corporation that intends to operate the IFC

Name of the shareholder Country of origin

8. Change in employment

On last December 31

On December 31 of

the first year

On December 31 of

the second year

On December 31

of the third year

A) Estimate of the number of jobs in Québec in the corporation that intends to operate the IFC

B) Estimate of the anticipated number of jobs in the IFC6

C) Estimate of the number of eligible employees within the IFC for whom the latter plans to apply for certification7

5 Generally speaking, a “specified shareholder” of a corporation, within the meaning of the Taxation Act, is, in particular, a shareholder holding at least 10% of a class of shares issued by

the corporation. 6 This refers to the total number of employees all or part of whose duties are devoted to the operations of the IFC located at the address mentioned in section 1. 7 This refers to the total number of eligible local or foreign specialist employees at least 75% of whose duties with the IFC located at the address mentioned in section 1 will be devoted to

executing QIFTs or to the operations of the IFC. The duties of an employee are devoted to the execution of QIFTs when they are directly attributable to the specific transactional process of a given QIFT.


9. Information on eligible employees

Type of position Estimated number of jobs Average annual salary

or salary range*

Minimum training required** Year 1 Year 2 Year 3

* Salary range: ** Training required

≤ $25 000 $25 001 to $30 000 $30 001 to $40 000 $40 001 to $66 666

$66 667 to $100 000 $100 001 to $125 000 $125 001 to $150 000 $150 001 to $200 000 > $200 000

DES or DEP: Secondary school diploma or secondary school vocational

DCS: Diploma of Collegial Studies

Undergraduate degree: Bachelor’s degree and certificate

Graduate degree: Master’s degree and graduate diploma

Postgraduate degree: Doctorate

Attach another sheet or sheets as necessary; indicate the number and name of the corresponding section.

10. Eligibility of international financial transactions

The analysis of the information provided in this section will enable MFQ officials to rule on the eligibility of the international financial transactions that the corporation intends to carry out.

You will be asked to identify the categories of international financial transactions that the IFC intends to carry out, to specify the context in which they will be carried out and to represent by a schema and describe the transactional process by which they will be carried out.

To this end, you must rigorously follow the four-step process indicated below:

Step 1: From the list of 25 categories of qualified international financial transactions (QIFTs) stipulated in section 7 of the Act respecting international financial centres, indicate those that the IFC intends to carry out.

Step 2: For each QIFT category selected in step 1, download and complete the most recent version of the corresponding summary sheet found in the document Appendix 1 that accompanies the application form for a qualification certificate on the MFQ website.

Step 3: Attach a diagram and a detailed description of the transactional process specific to each category or sub-category of activity that the IFC intends to carry out to each summary sheet completed in step 2.

Step 4: Confirm that all of the conditions stipulated by the legislation governing the refundable tax credit program for IFCs will be satisfied.

Instructions for each of the steps can be found below.



STEP 1: Referring to the list below, indicate each category of QIFT that the IFC intends to carry out

QIFT eligible for the refundable tax credit

7.22 Back office activities for a third party

QIFTs eligible for the non-refundable tax credit

7.01 Transaction on outstanding securities or securities distribution

7.13 Reinsurance of a risk arising from a damage insurance contract

7.02 Operating of a clearing house

7.14 Trust services

7.03 Securities advising or portfolio management

7.15 Factoring services

7.04 Deposit of money

7.16 Leasing services

7.05 Lending of money

7.17 Organization of a qualified investment fund

7.06 Lending or borrowing of money between corporations operating an IFC

7.18 Administration of units of a qualified investment fund

7.07 Acceptance or issuance of a letter of credit8

7.19 Management of a qualified investment fund

7.08 Financing or refinancing by means of a bill of exchange

7.20 Distribution of units of a qualified investment fund

7.09 Execution of foreign exchange transactions

7.21 Cash management

7.10 Financial packaging services

7.23 Documentary collection9

7.11 Financial engineering services

7.24 Activities performed under the Québec Immigrant Investor Program

7.12 Damage insurance brokerage services

7.25 Discount operation carried out regarding a letter of credit or a commercial instrument

8 For discount transactions carried out consecutively or incidentally to the acceptance or issuance of a letter of credit, please complete summary sheet QIFT 7.25. 9 For discount transactions carried out consecutively of incidentally to a documentary collection transaction, please complete summary sheet QIFT 7.25.


STEP 2: Summary sheets (qualification certificate)

For each category of QIFT selected in step 1 that the IFC intends to carry out and in respect of which the application for certification is being made, please complete and enclose the corresponding summary sheet.

The summary sheets (qualification certification) are available on the MFQ website.

STEP 3: Diagram and description of the transactional process

To each of the summary sheets that you completed in step 2, please attach a diagram accompanied by a detailed description of the transactional process specific to each category or sub-category of QIFT that the IFC intends to carry out. Clearly describe every step that the transactions should normally follow.

The diagram and description of the transactional process must cover, when applicable to your activities, all of the steps listed below. You must provide a detailed description of the steps and specify by whom10 and where they will be carried out. The description must cover, among other things, the following points:

initiation and negotiation relating to the category of QIFT to be carried out;

carrying out of the QIFT;

description of the method of remuneration specific to each category or sub-category of QIFT that the IFC intends to carry out;

back office services relating to the category of QIFT to be carried out, in particular:

the registration of QIFTs;

settlement, clearing and delivery stemming from QIFTs;

record-keeping, accounting and the production of the requisite statements or reports;

compliance;

customer services;

follow-up, control and responsibility in relation to the risks incurred;

the selection and updating of the computer tool through which the QIFT will be carried out.

10 If you anticipate that certain activities will be carried out by third parties or outside the IFC, you must provide the necessary details.



STEP 3 (continued):

Non-arm’s length relationship

Does the IFC operator intend to carry out QIFTs on behalf of a related person?11

No

Yes Please identify this person and indicate the nature of the transactions that the IFC operator has carried out on its behalf.


STEP 4: Declaration of compliance

The business that constitutes the IFC will satisfy the following eligibility conditions stipulated in the legislation governing IFCs:

It will be operated by a corporation. Yes No

It will employ, at all times, a minimum of six eligible full-time employees. Yes No

Its activities will focus on QIFTs. Yes No

The activities enabling the QIFTs effected in the course of its operations to be carried out must be managed entirely within the territory of the urban agglomeration of Montréal.

Yes No

Its activities are grouped together in one place12 within the territory of the urban agglomeration of Montréal. Yes No

If you anticipate that one or more conditions will not be satisfied, in whole or in part, please indicate the reason:


11 For example, a QIFT carried out by an IFC on behalf of its parent company, a subsidiary or a sister company constitutes a transaction between related persons. The same applies

where a corporation provides services to an individual with whom it is not dealing at arm’s length. 12 The expression “in one place” generally means at the same civic address.


11. Documents required to process the application

The head of the IFC or the person responsible for the application must enclose with the application all of the requisite documents and complete and sign the check list on the following page (section 13).

To avoid a delay in processing your application, please ensure that the check list is completed and signed.

12. Signature of the person responsible for the application for certification

I, the undersigned, hereby certify that all of the information provided in support of this application for certification of the IFC is true and complete.

Upon request, I will provide the Ministère des Finances, Revenu Québec or their representatives with any information concerning this application for certification or any question pertaining to the constitution of the IFC and its operation.

I also understand that, under the provisions of the legislation governing IFCs, the Minister may retroactively revoke any qualification certificate or annual certificate issued in respect of an IFC where information or documents brought to the Minister’s attent ion so warrant.

Lastly, I undertake to advise the Ministère des Finances, in writing as soon as possible, of any change that may arise regarding the information provided.13

yyyy/mm/dd

Signature of the person responsible for the application for certification Date

Name (please print)

Title

13 The head of the IFC is obliged to inform the MFQ of any significant change in the affairs of the IFC, such as a change of address or share ownership, a restructuring, the addition or

loss of activities or staff, the way in which the QIFTs are carried out, and so on.


13. Check list: Documents that must be sent to the MFQ

Mail the documents to the address below: Ministère des Finances du Québec Gestion des mesures fiscales 380, rue Saint-Antoine Ouest, bureau 6100 Montréal (Québec) H2Y 3X7

Please check the box beside the documents being mailed:

Space reserved for the MFQ

Application form duly completed and signed;

Summary sheet completed for each category of QIFT that the IFC intends to carry out (see steps 1 and 2);

Diagram and detailed description of the transactional process for each of the summary sheets submitted (see step 3);

The incorporation papers of the corporation that intends to operate the IFC, where applicable;

Resolution of the board of directors appointing the head of the IFC, as the case may be;

The corporation’s business plan and any other document previously requested by the MFQ;

* The most recent financial statements of the corporation that intends to operate the IFC;

* The budgeted financial statements of the business that will constitute the IFC (for the first three years of operation);

Detailed organization chart of the business that will constitute the IFC;

* Proof of registration or proof of exemption from registration with the relevant regulatory bodies, if need be (applies solely to investment dealers and advisers) (see section 6);

A cheque payable to the Minister of Finance. The fee schedule applicable to this application can be consulted on the Ministère des Finances website.

* You may mail file your application without financial statements or proof of registration with the regulatory bodies, if you indicate below the date on which you plan to send them to us.

I declare that I have enclosed all the requisite documents with the application or have explained their absence, as the case may be.

yyyy/mm/dd

Date Signature of the person responsible for the application
