For taxation years that commence after May 31, 2016, qualifying corporations can claim a 3.5 per cent non‑refundable tax credit on eligible scientific research and experimental development expenditures performed in Ontario. For taxation years that end before June 1, 2016, the tax credit rate is 4.5 per cent. The tax credit rate is prorated for taxation years straddling June 1, 2016. The credit may be applied to reduce Ontario corporate income tax otherwise payable.
This tax credit and the Ontario innovation tax credit may be claimed on the same scientific research and experimental development expenditures.
You 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:
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).