Ontario SR&ED Tax Credits Up to 38.5%
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 3.5% tax credit on eligible SR&ED expenditures. While the provincial rate is modest compared to other provinces, Ontario's large tech ecosystem and access to the enhanced 35% federal rate for CCPCs means companies can still recover up to 38.5% of their R&D costs. Ontario is home to Canada's largest concentration of tech companies, particularly in the Toronto-Waterloo corridor.
Provincial Credit Rate
3.5%
Refundable
Yes (for CCPCs)
Expenditure Limit
$3M (provincial)
Combined Max Rate (CCPC)
38.5%
Combined Max Rate (Non-CCPC)
18.5%
Carry Forward
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
Refundable
Effective rate: 38.5%
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 enhanced provincial credit
- Taxable income and taxable capital phase-out thresholds apply
- 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 used in addition to the OITC for companies that exceed the OITC expenditure limit.
Ontario Centres of Excellence (OCE)
Provides funding for collaborative R&D projects between industry and academic institutions. Grants range from $50K to $500K.
Ontario Together Fund
Supports innovative manufacturers and tech companies scaling operations in Ontario.
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 3.5% 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. The OITC stacks on top of the federal ITC. A CCPC claiming $500K in eligible salaries would receive $175K federal (35%) plus $17,500 provincial (3.5%) for a combined $192,500 — an effective rate of 38.5%.
What is the difference between the OITC and ORDTC?
The OITC is refundable but has an expenditure limit and is only for CCPCs. The ORDTC is non-refundable (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 (over $500K) and taxable capital (over $25M).