Qualifying corporations can claim a refundable tax credit for qualified expenditures on scientific research and experimental development performed in Ontario.
If a corporation's taxation year is from January 1, 2017 to December 31, 2017, the tax credit rate is 8 per cent.
If a corporation's taxation year is from January 1, 2016 to December 31, 2016, the tax credit rate is calculated as follows:
The sum of:
- 10 per cent multiplied by the ratio of the number of days in the year that are before June 1, 2016 to the total number of days in the year, and
- 8 per cent multiplied by the ratio of the number of days in the year that are after May 31, 2016 to the total number of days in the year.
= (10% × 152 / 366) + (8% × 214 / 366)
If a corporation's taxation year is from January 1, 2015 to December 31, 2015, the tax credit rate is 10 per cent.
Based on an expenditure limit of $3 million:
The expenditure limit is gradually reduced if:
Associated corporations must share the expenditure limit. The limit is also reduced for a short tax year based on the number of days in the tax year, in proportion to 365.
A corporation can claim the tax credit, if the corporation:
A qualified expenditure:
Qualified expenditures are reduced by government assistance, non-government assistance and contract payments. The Ontario Research and Development Tax Credit, Ontario Business Research Institute Tax Credit, Ontario Innovation Tax Credit and federal Scientific Research and Experimental Development investment tax credit are not government assistance for purposes of determining the Ontario Innovation Tax Credit qualified expenditures. Under certain conditions, the receipt of a contract payment will not reduce qualified expenditures.
Corporations may claim the tax credit on Schedule 566 and file it with their T2 corporation income tax return.
The Canada Revenue Agency administers the program on behalf of Ontario through the federal income tax system.
Contact the Canada Revenue Agency with your questions at 1 800 959‑5525 or 1 800 665‑0354 for teletypewriter (TTY).