R&D Funding Programs for Innovative Corporations in Ontario

R&D Tax Credits in Ontario

The province of Ontario offers a variety of R&D tax credits to corporations with a permanent establishment within Ontario. R&D funding in Ontario is available to businesses of all sizes and encourages corporations to research within the province. Annually R&D Ontario programs offer more than $3 million in tax credits for local businesses.

Scientific Research & Experimental Development (SR&ED)

Scientific Research and Experimental Development is a tax incentive program for corporations with a permanent establishment in Ontario. This credit helps innovative companies in Ontario receive refunds on eligible expenditures. Qualified expenditures are based on funds that pay staff, go towards research and innovation, and more. Ontario research and development is crucial and is eligible for both non-government and government assistance.

Ontario innovation tax credit (OITC)

After December 31, 2008, the Canada Revenue Agency administered the Ontario Innovation Tax Credit (OITC). The OITC is available for corporations that have a permanent establishment within Ontario and are focused on scientific research and development (SR&ED programs) within this province. OITC tax credits are based on qualified expenditures and refundable at the following rates: 

• Tax year ending June 1, 2016 or later: 8 percent

This tax credit is available based on the lesser amount of a corporation’s expenditures that were accrued in Ontario and the annual expenditure limit. When a corporation’s paid-up capital from the preceding year exceeds $25 million, its annual expenditure limit is $3 million, which is then phased out. If capital reaches over $50 million, the expenditure is then eliminated.

Only expenditures related to SR&ED programs and those who qualify for the SR&ED tax credit are eligible for the OITC credit. This tax credit can be waived if a corporation submits a waiver with its return. This is required to be completed within 6 months after the tax year has ended or on an amended return. 

Ontario business-research institute tax credit (OBRITC)

The Ontario Business Research Institute Tax Credit (OBRITC) was established by the Canada Revenue Agency after December 31, 2008. Fully refundable at a rate of 20 percent of qualified expenditures, the OBRITC has an annual cap of $20 million and must be allocated within a specific group of corporations. Corporations that are members or corporations that have a partnership with a qualified establishment within Ontario qualify for the OBRITC tax credit.

Ontario research and development tax credit (ORDTC)

Based on qualified expenditures the Ontario Research and Development Tax Credit was administered by the Canada Revenue Agency after December 31, 2008. This non-refundable credit is based on the following rate: 

• Tax year ending June 1, 2016: 3.5 percent

This tax credit is available to Corporations that are permanently established within Ontario. Those who take part in SR&ED programs and qualify for the SR&ED tax credit in this province are eligible. The OBRITC can be carried back three years but carried forward no more than 20 years.

When you need a waiver, this tax credit can be waived by submitting a waiver with an amended return or six months before the tax year-end.

Ontario transitional tax debits and credits

Administered by the Canada Revenue Agency, corporations within Ontario may be subject to Ontario transitional tax debits and credits. This is due to a recent change that combined two legislative acts that control both federal and Ontario based income taxes. This is available to corporations that claim the Ontario transitional tax credit or are subject to the tax debit.