Canada Revenue Agency

The Ontario government provides a refundable tax credit to corporations for scientific research and experimental development expenditures (SR & ED) incurred in Ontario under an eligible contract with an eligible research institute (ERI).

In order for a corporation to qualify for the OBRITC, three main requirements must be met:

• a corporation must be a qualifying corporation
• the qualifying corporation or a partnership of which it is a member must enter into an eligible contract with an ERI to perform SR & ED on behalf of the corporation or partnership, and
• the corporation's qualified expenditures must be made under an eligible contract.

Specific criteria as to what is "qualifying", "qualified" and "eligible" are set out in legislation.

The OBRITC provides a qualifying corporation with a refundable tax credit equal to 20% of the qualified expenditures incurred in Ontario under an eligible contract with an ERI. With an annual $20 million cap on qualifying expenditures, the maximum tax credit a corporation or an associated group of corporations can claim is $4 million.

For taxation years ending before January 1, 2009:
In making an OBRITC claim, Schedule 198 is to be completed and the total tax credit amount entered on line 198 of the CT23 Corporations Tax and Annual Return. Schedule 198 is available on the Ministry's website at:

http://www.rev.gov.on.ca/english/forms/ct/incomeschedules_index.html

For taxation years ending after December 31, 2008:
In making an OBRITC claim, federal Schedule 568 Ontario Business Research Institute Tax Credit is to be completed. Schedule 568 is available on the Canada Revenue Agency's website at:

http://www.cra-arc.gc.ca/E/pbg/tf/t2sch568/t2sch568-09e.pdf

The amount of any OBRITC earned is claimed as a deduction from income tax otherwise payable. Any OBRITC in excess of tax otherwise payable will be refunded.

Tax Legislation Bulletin 00-2, January 2000 and Information Notice 6024, October 2007 "Ontario Business-Research Institute Tax Credit" which provide further information with respect to this credit are available on the Ontario Ministry of Revenue's website at:

http://www.rev.gov.on.ca/english/bulletins/ct/obitc_frost_0002.html#s8.0
and
http://www.rev.gov.on.ca/english/notices/ct/6024.html

Research and Development, Tax Credits

Canada Revenue Agency
Telephone: 1-800-959-5525
Website: http://www.cra-arc.gc.ca/cntct/menu-eng.html

January 2010/AW