Ontario Innovation Tax Credit
ON, Canada
Refundable tax credit for R&D in Ontario
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|noCondition
grant_single|deadlines
- grant_single|openingDateNovember 14, 2019
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- Professional, scientific and technical services
grant_single|grantors
- Ontario Ministry of Finance
- Government of Ontario
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grant_card_status|open
grant_single_labels|preview
Get a refundable tax credit of 8% for innovative scientific research and experimental development expenditures.
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This tax credit is specifically for corporations with a permanent establishment in Ontario, Canada, conducting qualifying scientific research and experimental activities. These geographical requirements ensure the credit supports local innovation and development.
- Corporations with a permanent establishment in Ontario, Canada.
grant_single|admissibleProjectsExample
$20,000
New quantum computing research project
$17,600
Biofuel research project aiming for renewable energy solutions
$16,000
Development of sustainable bioplastics
$12,000
Development of a new AI algorithm for medical diagnostics
$14,400
Innovative agricultural techniques for crop yield improvement
$13,600
Development of a new cybersecurity protocol to protect smart cities
grant_single_labels|admissibility
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.
grant_eligibility_criteria|who_can_apply
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.
grant_eligibility_criteria|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.
grant_eligibility_criteria|zone
Eligible expenses for the Ontario Innovation Tax Credit include expenditures directly related to scientific research and experimental development.
- Expenditures incurred for scientific research and experimental development carried on in Ontario.
- Expenditures that qualify under section 127 of the federal Income Tax Act (Canada).
- Expenditures incurred when the corporation has a permanent establishment in Ontario and the expenditure is attributable to that permanent establishment.
- Includes 40% of capital expenditures made prior to 2014.
- Includes 100% of current expenditures.
- Qualified expenditures are reduced by government assistance, non-government assistance, and contract payments.
grant_single_labels|criteria
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
grant_single_labels|register
- Step 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.
- Step 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.
- Step 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.
- Step 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.
- Step 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.
grant_single_labels|otherInfo
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.
Apply to this program
Maximize Your Innovation with Ontario's Tax Credit
The Ontario Innovation Tax Credit provides a financial incentive for corporations engaged in scientific research and experimental development within the province. Corporations can claim an 8% refundable tax credit for qualified expenditures, offering substantial support for innovation-driven projects and developments.
Unlocking Innovation through the Ontario Innovation Tax Credit
The Ontario Innovation Tax Credit (OITC) is a crucial financial tool designed to drive scientific research and experimental development (SR&ED) activities across the province. By offering a refundable tax credit, this program incentivizes corporations to invest in innovation, ultimately contributing to Ontario’s competitive position in the global market. This tax credit applies to corporations that have permanent establishments in Ontario and undertake qualifying SR&ED expenditures. Understanding the intricacies of this program and leveraging its benefits can be a game-changer for companies looking to enhance their research output and innovation capabilities.
For taxation years commencing after May 31, 2016, the OITC rate stands at 8%, while for those ending before this date, the rate was set at 10%, showcasing substantial backing for businesses during critical periods of economic activity and technological advancement. The prorated rate is meticulously computed for tax years straddling this date, ensuring an equitable distribution of credits in transitional periods. The maximum tax credit, predicated on an expenditure limit of $3 million, can reach up to $240,000 for qualifying corporations in the period after June 1, 2016. This provides significant fiscal relief, enabling companies to reinvest savings into further research, acquiring advanced technologies, or enhancing their workforce qualifications.
The eligibility criteria are straightforward yet crucial. Corporations must submit the required SR&ED expenditures claim using federal form T661 and meet several conditions, such as not being exempt from corporation income tax. This tight integration with federal tax measures underscores the program’s holistic approach, maximizing potential benefits through synchronized provincial and national schemes. Additionally, expenditures eligible for the OITC must qualify under section 127 of the federal Income Tax Act and encompass current expenditures incurred while the corporation has a permanent base in Ontario.
Qualified SR&ED expenditures are integral to claiming the OITC and include costs associated with advances in scientific knowledge and technology. However, these expenditures must be reduced by both government and non-government assistance and relevant contract payments. The program clearly defines that certain tax credits, like the Ontario Research and Development Tax Credit and the Ontario Business Research Institute Tax Credit, are not deemed government assistance, allowing more comprehensive claim processing and optimizing the benefit for businesses.
Claiming the OITC is seamlessly integrated into the federal tax administration system, managed by the Canada Revenue Agency. Corporations can claim this credit by completing Schedule 566 and filing it alongside their T2 corporation income tax return. This straightforward administration allows corporations to manage their tax credits efficiently, reducing bureaucratic obstacles and focusing on innovative advancements.
In summary, the Ontario Innovation Tax Credit is more than merely a financial lever; it's an essential component of Ontario's strategy to foster a dynamic research and development landscape. By judiciously utilizing this credit, corporations can not only alleviate their tax burden but also channel these savings towards groundbreaking research endeavors. As Ontario continues to cultivate an environment conducive to innovation, programs like the OITC represent a significant incentive for businesses seeking to position themselves at the forefront of technological and scientific development.
By participating in the OITC, companies not only gain fiscal advantages but also align themselves with Ontario’s broader vision of a thriving, knowledge-based economy. This synergy between corporate ambition and public policy initiative creates a fertile ground for transformative innovations that can propel individual businesses and the entire province towards a horizon of sustainable growth and robust economic health.
