Ontario Research and Development Tax Credit (ORDTC)
Last Update: April 27, 2025
ON, Canada
Non-refundable tax credit for R&D in Ontario
Ontario Research and Development Tax Credit (ORDTC) at a glance
Eligible Funding
- No Condition
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 Research and Development Tax Credit (ORDTC) program
Reduce your corporate income tax with a credit of 3.5% for scientific research and experimental development expenditures in Ontario.
Financing terms and conditions
- Non-refundable tax credit equal to 3.5% of eligible scientific research and experimental development expenditures performed in Ontario for taxation years commencing after May 31, 2016.
- For taxation years that straddle June 1, 2016, the tax credit rate is prorated between 4.5% (before June 1, 2016) and 3.5% (after May 31, 2016).
- For taxation years ending before June 1, 2016, the tax credit rate is 4.5% of eligible expenditures.
- Unused tax credits can be carried back three years or carried forward up to 20 years.
Eligible projects & activities
- Conducting scientific research projects in Ontario.
- Developing experimental innovations or new technologies through research initiatives.
Examples of admissible projects:
$ 12,250
Developing a new AI system to optimize energy consumption
$ 13,300
Developing a sustainable agriculture technology
$ 17,500
Innovative water purification research initiative
$ 14,000
Creating a biotech lab for cancer research
$ 15,750
Implementing a new healthcare data analysis system
$ 21,000
Launching a renewable energy research center
Eligibility criteria of the Ontario Research and Development Tax Credit (ORDTC) program
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.
Eligibility criteria of the Ontario Research and Development Tax Credit (ORDTC) program
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 to the Ontario Research and Development Tax Credit (ORDTC) program
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.
Apply to this program
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