Ontario Ministry of Revenue

The OITC is a 10% refundable tax credit for corporations that make expenditures on scientific research & experimental development (SR&ED) carried on in Ontario. The government has extended the OITC to more small and medium-sized corporations and expanded the tax credit to more qualifying SR&ED expenditures.

For tax years that end after February 25, 2008 the OITC expenditure limit has been increased from $2 million to $3 million of qualifying SR&ED expenditures. The $3 million expenditure limit has to be prorated based on the number of days in the tax year that are after February 25, 2008

For tax years that begin after 2009 the OITC taxable income phase-out range has been extended from between $400,000 and $700,000 to a new phase-out range of between $500,000 and $800,000. The $400,000 to $700,000 range remains applicable to taxation years ending before February 25 2008.

The specified capital phase-out range for the OITC is between $25 million and $50 million.

The credit is available to all public and private corporations with permanent establishments in Ontario. Only expenditures for scientific research & experimental development carried on in Ontario, for which the taxpayer is eligible for federal (SR & ED) investment tax credit, qualify for the OITC.

• The OITC is calculated at 10% of qualifying expenditures
• Maximum claim is $300,000 per taxation year
• Qualifying expenditures are 100% of current expenses such as salaries and wages, and 40% of capital expenditures; OITC is available on qualifying SR&ED expenditures to a maximum of $3 million annually

Tax Credit Administration:
To claim the OITC for tax years prior to 2009, corporations must complete the OITC claim form, file the Ontario corporate tax return (CT23 or CT8) and enter the amount on line 191. To ensure quick identification of the claim, provide a copy of the related federal schedules (T2 SCH 31 and T661). The OITC claim form is available at the Ministry's website at: http://www.rev.gov.on.ca/english/forms/ct/pdf/0329f.pdf

For 2009 and subsequent taxation years, corporations should complete and submit Schedule 566 with their T2 Corporation Income Tax Return. Schedule 566 is available on the Canada Revenue Agency's website at: http://www.cra-arc.gc.ca/E/pbg/tf/t2sch566/t2sch566-09e.pdf

Research and Development, Tax Credits

Canada Revenue Agency
Telephone: 1-800-959-5525

January 2010/AW