Ontario SR&ED Tax Credits Up to 40%
Combine the federal SR&ED credit with the Ontario Innovation Tax Credit (OITC) to maximize your R&D tax recovery in Ontario.
Ontario Innovation Tax Credit (OITC)
Ontario offers the Ontario Innovation Tax Credit (OITC), a refundable 8% tax credit on eligible SR&ED expenditures for CCPCs. Because the CRA treats provincial credits as government assistance that reduces the federal expenditure base, the effective combined rate with the federal enhanced 35% is roughly 40% (not the additive 43%) on the first $3M of eligible expenditures. Ontario is home to Canada's largest concentration of tech companies, particularly in the Toronto-Waterloo corridor. The separate ORDTC (3.5% non-refundable) is available to all corporations.
Provincial Credit Rate (OITC)
8%
Refundable
Yes (for CCPCs)
Expenditure Limit
$3M (provincial)
Effective Combined Rate (CCPC)
≈40% (after federal grind)
ORDTC Rate (Non-refundable)
3.5%
Carry Forward (ORDTC)
20 years
Federal + ON Credit Stacking
Here's how the credits combine for a CCPC with $500,000 in eligible R&D salaries.
Enhanced rate for CCPCs, applied to the base net of the provincial credit
Refundable
Effective rate: ≈40%
This example uses salaries only. Including contractor costs (at 80%) and materials would increase the total. Overhead (55% proxy) is added automatically. Use our calculator for a detailed estimate.
Ontario Eligibility Requirements
- Must have a permanent establishment in Ontario
- Eligible expenditures mirror federal SR&ED definitions
- The OITC has its own expenditure limit of $3M for the refundable provincial credit
- Taxable income and taxable capital phase-out thresholds apply to the OITC
- Must file Ontario CT23 corporate tax return
Important: Provincial credits are claimed on your Ontario corporate tax return, separate from your federal T661 filing with the CRA. Ensure you file both to capture the full combined benefit.
Other Ontario R&D Incentives
Beyond SR&ED, Ontario offers additional programs that can be stacked with your tax credits.
Ontario Research and Development Tax Credit (ORDTC)
A non-refundable 3.5% tax credit available to all corporations (including non-CCPCs) on eligible Ontario SR&ED expenditures. Can be carried forward 20 years or back 3 years.
Maximize Your Ontario SR&ED Credits
Glauq automates your federal and Ontario provincial SR&ED claims — ensuring you capture every eligible dollar across both programs.
Ontario SR&ED FAQ
What is the Ontario Innovation Tax Credit (OITC)?
The OITC is a refundable tax credit equal to 8% of eligible SR&ED expenditures incurred in Ontario. It is available to CCPCs and is claimed on your Ontario corporate tax return alongside your federal SR&ED claim.
Can I claim both the OITC and the federal SR&ED credit?
Yes, with one interaction to know: the CRA treats the OITC as government assistance, so it reduces the expenditure base your federal credit is calculated on. A CCPC claiming $500K in eligible salaries would receive $40K provincial (8%) plus $161K federal (35% of the remaining $460K) for a combined $201,000 — an effective rate of roughly 40%, not the additive 43%.
What is the difference between the OITC and ORDTC?
The OITC is refundable (8%) but has an expenditure limit and is only for CCPCs. The ORDTC is non-refundable (3.5%, reduces tax payable) but is available to all corporations with no expenditure limit. Large companies typically use the ORDTC.
Is there an expenditure limit for the Ontario credit?
Yes. The OITC applies to the first $3M of eligible Ontario SR&ED expenditures. The credit phases out based on taxable income and taxable capital thresholds.