Research and Development Incentives for Canadian SMEs
Research and Development is a costly process that will not always yield the intended returns. However, it is a necessary process to promote growth and innovation within Canadian Industries. This is why the Canada Revenue Agency (CRA) is offering the Ontario Business Research Institute Tax Credit (OBRITC). Businesses who are considered eligible will receive a 20% tax credit towards the eligible expenditures regarding their scientific research and experimental development processes. Businesses may also receive government funding for research and development alongside this tax credit to further reduce the financial burden on Canadian SMEs.
Research and Development Funding for Businesses
The OBRI tax credit will apply to businesses that are looking to perform scientific research and experimental development into a new and innovative solution or product. The research and development must be conducted in Ontario alongside with an eligible research institute (ERI) that is not directly affiliated with the SME. The preferred choice of research institute for the OBRI program would be one of Ontario’s post-secondary institutions. There are many different Canadian Business Funding Grants that cover some of the research and development expenses and promote post-secondary collaboration. Some of these Canadian Business Grants would include:
- NSERC Engage R&D
- OCE – Technical Problem Solving Fund
- College Ontario Network for Industry Innovation (CONII)
- Connect Canada
- OCE – Connections Program
These government funded collaboration programs could be compiled with the OBRI tax credits to reduce the financial investment of the company and provide Canadian Post-Secondary Institutions with the funding and workplace experience. Small Businesses who are conducting R&D can also claim other Ontario Tax Incentive Programs on top of the OMBI including the Ontario Innovation Tax Credit.
Eligibility for Ontario Business Grants and Tax Credits
The general determinant of eligibility for the OBRI program is the location of the research and development must be in Ontario and under a contract with a non-affiliated eligible research institute. The maximum credit issued will be $4 million which would apply to an annual budget expenditure of $20 million or more. A detailed overview of the other eligibility factors is provided by our previous blog on the OBRI Tax Credit.
For those who are interested in conducting scientific research and experimental development project, please contact one of our Government Funding Experts for more information on the applicable Canadian Government Grants and Funding Mechanisms. Interested parties can also subscribe to our blog and join us on Linkedin.