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Ontario Research and Development Tax Credit (ORDTC)
Last Update: March 4, 2026
Ontario, Canada
Non-refundable tax credit for R&D in Ontario
Tax Credits
Overview
Reduce your corporate income tax with a credit of 3.5% for scientific research and experimental development expenditures in Ontario.
At a glance
Funding available
Financing goals
- Research and experimental development
- Reduce the ecological footprint
Eligible Funding
- No Condition
Timeline
- Open continuously
Eligible candidates
Eligible Industries
- Professional, scientific and technical services
Location
- Ontario
Legal structures
- For-profit business
Annual revenue
- All revenue ranges
Organisation size
- All organization sizes
Audience
- All groups
Activities funded
- Conducting scientific research projects in Ontario.
- Developing experimental innovations or new technologies through research initiatives.
Examples of admissible projects:
$ 13,300
Developing a sustainable agriculture technology
$ 15,750
Implementing a new healthcare data analysis system
$ 21,000
Launching a renewable energy research center
$ 12,250
Developing a new AI system to optimize energy consumption
$ 17,500
Innovative water purification research initiative
$ 14,000
Creating a biotech lab for cancer research
Eligibility
A corporation must meet certain criteria to be eligible for the Ontario research and development tax credit.
- The corporation must have a permanent establishment in Ontario.
- The corporation must carry on 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
- Corporations conducting scientific research and experimental development in Ontario
Who is not eligible
- Corporations that are exempt from corporation income tax.
Eligible expenses
- Expenditures incurred for scientific research and experimental development activities carried out in Ontario.
Eligible geographic areas
This tax credit is exclusively available to corporations with a permanent establishment in a specific region of Canada. The focus is on businesses conducting qualifying research and development within these geographical boundaries.
- Corporations with a permanent establishment in Ontario, Canada.
Selection criteria
There are evaluation and selection criteria for this grant. The evaluation and selection criteria include:
- Having a permanent establishment in Ontario
- Carrying out scientific research and experimental development in Ontario
- Being eligible to claim the federal investment tax credit under section 127 of the federal Income Tax Act
- Not being exempt from corporation income tax
- Filing a scientific research and experimental development expenditures claim on federal form T661 for the tax year
How to apply
1
Determine Eligibility
- Verify that your corporation has a permanent establishment in Ontario and is engaged in scientific research and experimental development in Ontario.
- Ensure the corporation is eligible to claim the federal investment tax credit and is not exempt from corporation income tax.
- Confirm that a federal form T661 scientific research and experimental development expenditures claim has been filed for the tax year.
2
Identify Eligible Expenditures
- Determine expenditures incurred for scientific research and experimental development carried out in Ontario.
- Ensure expenditures meet criteria outlined in section 127 of the federal Income Tax Act (Canada) and are attributable to a permanent establishment in Ontario.
- Reduce eligible expenditures by government assistance, non-government assistance, and contract payments (excluding the Ontario Research and Development Tax Credit or federal Scientific Research and Development Investment Tax Credit).
3
Complete the T2 Corporation Income Tax Return
- Download and complete the Schedule 508, Ontario Research and Development Tax Credit form.
- Prepare the T2 Corporation Income Tax return with all applicable financial data.
4
Submit the Tax Credit Application
- File the completed Schedule 508 along with the T2 Corporation Income Tax return to the Canada Revenue Agency.
- Ensure all documentation is accurate and submitted before the deadline.
5
Manage Unused Tax Credits
If there is an unused portion, determine if it can be carried back three years or carried forward up to 20 years.
6
Address Recapture Rules
Utilize the 23.56% rate for calculating recapture if applicable, in cases where property previously claimed is disposed of or converted to commercial use.
Additional information
- Any unused portion of the tax credit may be carried back three years or carried forward twenty years.
- Recapture rules apply if property previously claimed is later disposed of or converted to commercial use.
- The Canada Revenue Agency administers this credit on behalf of Ontario through the federal tax system.
- The tax credit rate is prorated for taxation years that straddle key rate change dates.
