UPDATE: For the most up to date information on this program, please visit the Ontario Scientific Research and Experimental Development (SR&ED) Tax Credit Programs page.
The majority of research and development projects some degree of risk and moderate expense for the organizations conducting them. Nevertheless, R&D activities have become increasingly necessary, as global market competition increases and businesses are encouraged to innovate and improve their operations. The Ontario Research and Development Tax Credit (ORDTC) is a 4.5% non-refundable tax credit applicable to research and development activities preformed by Canadian Corporations.
Details for Ontario Research and Development Tax Incentives for Business
The Ontario Research and Development Tax Credit provides research and development incentives for business through a 4.5% tax credit based on eligible Scientific Research and Experimental Development (SR&ED) expenses. ORDTC is a non-refundable tax credit; however, unused credits can be carried back 3 years or forward 20 years on a company’s corporate income tax payments.
Eligibility for Ontario Research and Development Tax Credits
In order to qualify for the ORDTC, organizations must have a permanent establishment in Ontario and pay Ontario corporate income tax. The tax credit is only applicable to expenditures incurred in Ontario as they relate to R&D activities. Eligible expenses may include, but are not limited to:
- Experimental development to develop new or improve existing products, services, and processes;
- Basic research to progress the scientific understanding of a theory or model without a specific practical application in mind;
- Applied research to progress scientific understanding of a theory or model with a specific practical application in mind;
- Support work involving engineering, design, research and analysis to support the findings of preliminary research and development.
Canadian Government Funding for Research and Development
To further leverage your business’s R&D expenses, Canadian SMEs may want to consider the following Canadian small business grants for research and development activities:
- IRAP -Mid-sized Projects: IRAP Medium Sized projects, are $50K and greater in size. The actual project size will be negotiated between an IRAP-ITA and the SME based on the project’s business case and the amount of available IRAP funding available at the given time. To be eligible businesses must have at least one person on payroll.
- NSERC Engage: Up to $25K in non-repayable government funding grants for a 6-month collaborative R&D project involving an eligible Canadian Post-Secondary Intuition.
- NSERC Collaborative Research and Development (CRD): Research and development funding grants for larger projects, usually applied for by SMEs following an NSERC Engage project. Provides 25-75% of the project expenses for a collaborative R&D project lasting up to 5 years.
Small Business Funding Advice & Support via Mentor Works
Businesses looking to receive additional advice and support regarding applications for Research and Development Funding Grants can start by contacting our team of Canadian Government Funding Experts. Those interested can also receive regular updates regarding Canadian Government grants for small business through our channels on LinkedIn, Google+, and Twitter or sign up for our Weekly Small Business Funding E-Newsletter.