Ontario Innovation Tax Credit (OITC)

A corporation must meet several criteria to qualify for the Ontario innovation tax credit.

• The corporation must have a permanent establishment in Ontario.
• The corporation must carry out scientific research and experimental development in Ontario during the year.
• The corporation must be eligible to claim the federal investment tax credit under section 127 of the federal Income Tax Act (Canada).
• The corporation must not be exempt from corporation income tax.
• The corporation must have filed a scientific research and experimental development expenditures claim on federal form T661 for the tax year.

Who is eligible?

Eligible expenses

The Ontario Innovation Tax Credit supports projects focusing on scientific research and experimental development in Ontario. Eligible activities include those directly engaged in advancing scientific research and the implementation of experimental development processes.

• Conducting scientific research in Ontario related to the development of new products, processes, or technologies.
• Undertaking experimental development projects aimed at improving existing products or processes within Ontario.

Eligible geographic areas

This grant is available to corporations with a permanent establishment in Ontario. Eligibility is aligned with the regional focus of the grant, which aims to support innovation within the province.

• Corporations with a permanent establishment in Ontario.

There are evaluation and selection criteria for this grant. The criteria include:

• Corporation must have a permanent establishment in Ontario
• Carries out scientific research and experimental development in Ontario during the year
• Eligible to claim the federal investment tax credit under section 127 of the federal Income Tax Act (Canada)
• Has filed a scientific research and experimental development expenditures claim on federal form T661 for the tax year

Here are additional relevant details for the Ontario Innovation Tax Credit:

• The Ontario Ministry of Finance requires detailed documentation of eligible activities and expenditures in case of an audit.
• The refundable nature of the tax credit allows for a refund even if there is no tax payable, providing cash flow benefits to qualifying corporations.
• The tax credit can be carried back three years or carried forward 20 years, allowing flexibility in financial planning for corporations.
• Corporations should maintain clear records of any government or non-government assistance to accurately adjust qualified expenditures.