Ontario Innovation Tax Credit (OITC)
Last Update: February 27, 2025
ON, Canada
Refundable tax credit for R&D in Ontario
Ontario Innovation Tax Credit (OITC) at a glance
Eligible Funding
- Up to 8% of project cost
Timeline
- Open Date : November 14, 2019
Financing Type
Tax Credits
Eligible Industries
- Professional, scientific and technical services
Grant Providers
- Ontario Ministry of Finance
- Government of Ontario
Status
Open
Overview of the Ontario Innovation Tax Credit (OITC) program
Get a refundable tax credit of 8% for innovative scientific research and experimental development expenditures.
Eligible projects & activities
Examples of admissible projects:
$ 17,600
Biofuel research project aiming for renewable energy solutions
$ 20,000
New quantum computing research project
$ 16,000
Development of sustainable bioplastics
$ 14,400
Innovative agricultural techniques for crop yield improvement
$ 12,000
Development of a new AI algorithm for medical diagnostics
$ 13,600
Development of a new cybersecurity protocol to protect smart cities
Eligibility criteria of the Ontario Innovation Tax Credit (OITC) program
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?
Corporations with a permanent establishment in Ontario that engage in scientific research and experimental development can apply for the Ontario Innovation Tax Credit. These corporations must not be exempt from corporation income tax and should be eligible to claim the federal investment tax credit under section 127 of the federal Income Tax Act (Canada). They should also file a scientific research and experimental development expenditures claim using the federal form T661 for the tax year.
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.
Eligibility criteria of the Ontario Innovation Tax Credit (OITC) program
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
How to apply to the Ontario Innovation Tax Credit (OITC) program
1
Ensure Eligibility
- Verify that your corporation has a permanent establishment in Ontario.
- Ensure your corporation conducts scientific research and experimental development in Ontario.
- Confirm eligibility for the federal investment tax credit under section 127 of the federal Income Tax Act (Canada).
- Ensure the corporation is not exempt from corporation income tax.
- Make sure a scientific research and development expenditures claim has been filed on federal form T661 for the tax year.
2
Compile Qualified Expenditure Information
- Identify and calculate qualified expenditures incurred for scientific research and experimental development in Ontario.
- Ensure expenditures align with section 127 of the federal Income Tax Act.
- Adjust qualified expenditures by subtracting government and non-government assistance, excluding certain tax credits.
3
Complete Form T2 Corporation Income Tax Return
- Obtain the T2 Corporation Income Tax Return form from the Canada Revenue Agency.
- Complete all necessary information on the T2 form, reflecting your corporation's financial data.
4
Fill in Schedule 566
- Download and complete Schedule 566, Ontario Innovation Tax Credit.
- Detail all qualified expenditures and the calculated tax credit on Schedule 566.
5
Submit the Application
- Submit the completed T2 Corporation Income Tax Return along with Schedule 566 to the Canada Revenue Agency.
- Ensure submission is done within the timeline specified by CRA for filing corporation tax returns.
Additional information
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.
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