Canadian Government Tax Credits and for Research and Development
If you are planning to grow your business, the likelihood is that you will incur some expenses related to research and development. Businesses that currently operate in Ontario have access to a number of Federal and Provincial Tax Credits that will help support expenditures related to research and development activities.
Research and Development Tax Credits for Business in Ontario
The following business tax credits may be applicable to your company’s upcoming corporate tax return:
Scientific Research and Experimental Development (SR&ED) Tax Incentive Program
Type: Federal Tax Credit, Refundable/Non-refundable.
Coverage: Up to $3 Million or 20-35% of qualifying expenses.
Eligible Applicants: Canadian Corporations, Private Proprietorships.
Eligible Projects: Experimental Development, Applied Research, Basic Research, Support Work; Activities must be carried out in Canada.
Eligible Expenses: Incremental expenditures as they directly relate to the R&D project (Labour, Supplies & Materials, Leasehold Improvements, and more)
Ontario Innovation Tax Credit (OITC)
Type: Provincial Tax Credit, Refundable.
Coverage: Up to $3 Million or 10% of qualifying expenses.
Eligible Applicants: Canadian Corporations, Private Proprietorships, and Small Businesses.
Eligible Projects: Scientific Research, Experimental Development, Support Work; Activities must be carried out in Ontario.
Eligible Expenses: 100% of current expenses and 40% of capital expenses incurred within the past year.
Ontario Business-Research Institute Tax Credit (OBRI)
Type: Provincial Tax Credit, Refundable.
Coverage: Up to $4 Million or 20% of the qualifying research and development expenses.
Eligible Applicants: Canadian Corporations, Private Proprietorships, and Small Businesses.
Eligible Projects: Experimental Development, Applied Research, Basic Research, Support Work; All Activities must be carried out in tandem with an Eligible Research Institute (ERI) in Ontario (a University, College, Hospital, etc.).
Eligible Expenses: Contract payments and costs incurred for SR&ED preformed by ERI Partner. Project expenses for OBRI can be stacked with the OITC for a 30% tax credit.
Ontario Research and Development Tax Credit
Type: Provincial Tax Credit, Non-Refundable.
Coverage: 4.5% of the qualifying SR&ED expenses.
Eligible Applicants: Canadian Corporations.
Eligible Projects: Experimental Development, Applied Research, Basic Research, Support Work; All Activities must be carried out in Ontario.
Eligible Expenses: Incremental expenditures as they directly relate to the R&D Project (Labour, Supplies & Materials, Leasehold Improvements, and more). Unused tax credits can be carried back 3 years or forward 20 years to reduce income tax owed for that period.
Ontario Tax Exemption for Commercialization (OTEC)
Type: Provincial Tax Exemption.
Eligible Applicants: Canadian Corporations, Incorporated within the past 4 years.
Eligible Projects: Commercialization of intellectual property that is developed by Canadian Post-Secondary Institutions. Priority Areas include: CleanTech, HealthTech, IT and ICT.
Eligible Expenses: Canadian Corporations that have been incorporated within the last 4 years are exempt from Ontario Corporate Income Tax and Corporate Minimum Tax for its first 10 taxation years.
Additional Government Funding for Research and Development
Mentor Works Ltd. is an Ontario-based company that specializes in providing consultation services to Canadian SMEs in search of business funding grants to solve their innovation challenges. Those interested in receiving additional advice and support in locating and receiving Canadian Government Funding for Research and Development can begin by contacting our team of Canadian Government Funding Experts or signing up for our Ontario Grant Funding for Small Business Workshop. Businesses can also receive daily government funding updates through our channels on Twitter, LinkedIn, and Google+; or receive weekly summaries of the latest news in Canadian Government funding for small business through our Ontario Grant Funding for Business Newsletter.