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.

Activities funded

Conducting scientific research projects in Ontario.
Developing experimental innovations or new technologies through research initiatives.

Examples of admissible projects:

$ 21,000

Launching a renewable energy research center

$ 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

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

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.

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).

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.

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.

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.

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.

Documents and links

Ontario Research and Development Tax Credit (ORDTC)

Apply to this program

Frequently Asked Questions about the Ontario Research and Development Tax Credit (ORDTC) Program

Here are answers to the most common questions about the Ontario Research and Development Tax Credit (ORDTC). This section explains what the program is, how much funding is available, eligibility requirements, application deadlines, and other important details to help you determine if this grant is right for your business.

What is the Ontario Research and Development Tax Credit (ORDTC)?

How much funding can be received?

What expenses are eligible under Ontario Research and Development Tax Credit (ORDTC)?

What is the deadline to apply?

Is the Ontario Research and Development Tax Credit (ORDTC) a grant, loan, or tax credit?

Who are the financial supporters of the Ontario Research and Development Tax Credit (ORDTC)?

Who is eligible for the Ontario Research and Development Tax Credit (ORDTC) program?

To be eligible for the Ontario Research and Development Tax Credit (ORDTC) program, you must: 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).