Qualifying corporations can claim a non-refundable tax credit on eligible scientific research and experimental development expenditures performed in Ontario to reduce their Ontario corporate income tax payable.
If a corporation's taxation year is from January 1, 2017 to December 31, 2017, the tax credit rate is 3.5 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:
- 4.5 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
- 3.5 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.
= (4.5% × 152 / 366) + (3.5% × 214 / 366)
= 3.9153%Example 3
If a corporation's taxation year is from January 1, 2015 to December 31, 2015, the tax credit rate is 4.5 per cent.
Do I qualify?
A corporation can claim the tax credit, if the corporation:
An eligible expenditure:
Eligible expenditures are reduced by government assistance, non-government assistance and contract payments, but not the Ontario Research and Development Tax Credit or federal Scientific Research and Experimental Development Investment Tax Credit. However, the Ontario Innovation Tax Credit is one form of government assistance that reduces eligible expenditures for the tax credit.
Under certain conditions, corporations dealing at non‑arm's length may file an agreement and transfer eligible expenditures.
Corporations may claim the tax credit on Schedule 508 and file it with their T2 corporation income tax return.
The tax credit can only be used to reduce the Ontario corporate income tax payable.
Any unused portion of the tax credit may be:
Recapture rules apply if the property that was included in a previous tax credit claim is being subsequently disposed of or converted to commercial use. The 23.56% rate should continue to be used to calculate recapture.
The Canada Revenue Agency administers the tax credit 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).