If you are filing your T2 corporate taxes and are looking to get the most out of each tax credit available to you, the Ontario business-research institute tax credit (OBRITC) is one program you might want to claim. This tax credit invites a corporation to partner with a designated Ontario research institution to conduct a scientific research and development program during a taxable year.
How much is the business research institute tax credit in Ontario?
The OBRITC is a tax attribute with a 20% refundable tax credit for incorporated businesses that incur their income (whether in whole or in part) with an eligible research institution (ERI) or contract research organization (CRO) during a taxable year. This 20% tax credit can range upwards of $20 million dollars for a taxable year.
Who is eligible for the business research institute tax credit?
To qualify for the OBRITC, you must contractually partner with one ERI or CRO within the province of Ontario. These applicable research groups range from designated universities, colleges, hospital research centres, Ontario Centres of Excellence, or even CROs within the private sector. Some research groups may be affiliated with the non-for-profit sector while others may be federally funded.
To become eligible for the OBRITC during a taxable year, you must ensure that your company meets these 3 conditions:
- Your business has operated at a permanent address in Ontario during the same taxable year.
- You received income from one of the listed qualified research organizations with a formal contractual agreement during the same taxable year in respect of scientific research and development.
- Your company may deduct the eligible expenditures from that of the company’s total accrued tax payable income during the same taxable year where:
- The amount deducted would be the OBRITC at the end of the taxable year; and/or
- The amount of the company’s tax payable for a taxable year exceeds the company’s eligible future balance at the end of the same year.
The eligibility of the OBRITC and respective parties must ensure that the scientific research is conducted with a fixed address in Ontario and who share a contractual partnership with one of the eligible ERI or CROs Ontario recognizes. It is important to note that the sum of the OBRITC claim itself cannot equal more than the maximum claim of $20 million or exceed the company’s total taxable income of its following fiscal year.
How to claim the business research institute tax credit
To claim the Ontario business research institute tax credit, you must prepare your corporate T2 tax return in addition to Schedule 568 and Schedule 569.
It is necessary to include the contracts between your company and the research institution as evidence while submitting your claim. Each separate contract must have its own Schedule 569 accompanied with it.
If you are claiming the OBRITC, you must file Schedule 568 and it is mandatory to include the following Schedule 569 as support.
It is important to note that with a contractual agreement, if your company is or enters an association with another entity during the taxable year, the maximum qualified expenditure of $20 million must be allocated in equal parts equivalent to the contractual agreement of each party involved.
The Schedule 569 is a supplementary form to Schedule 568 which claims the basis for an eligible contract between two parties: between the company whose tax assessment is being filed and the applicable research institution. This form summarizes the contractual obligation and highlights the incurred expenditures during the taxable year.
Schedule 5 is an additional form that you claim your business’s supplementary tax calculation using line 470. Schedule 5 is an important tax form that indicates whether your business has multiple operational addresses across different jurisdictions, or if your Ontario business is required to pay provincial income taxes.
Count on T2inc to help you file your corporate T2 taxes
If your company would like to conduct a scientific and research development program, the business research institute tax credit welcomes you to partner with an eligible ERI or CRO. During your fiscal year, you may be eligible to claim upwards of $20 million dollars as a tax credit.
If your corporation is pursuing any research or scientific development program, the tax experts at T2inc are here to help you assess your corporate tax attributes. Contact us today for ease of mind with your T2 tax return.