As an Ontario business, if you are conducting investments or have expenses related to scientific research and experimental development (SRED) in a tax year, you may be eligible for the Ontario innovation tax credit.
The Ontario innovation tax credit invites corporations to claim expenditures for SRED programing during a taxable year on their T2 corporate tax return.
The innovation tax claim is a calculation of 10% of associated expenses taken from the total amount of the tax year’s current expenditures and 40% of the corporation’s capital expenditures. This tax credit is given to eligible SRED programming of up to $2 million wherein all subsidiaries must share this amount.
Who is eligible for the Ontario innovation tax credit?
To be eligible to claim the Ontario innovation tax credit, your business must:
- Be in operation at a permanent address in Ontario
- Be a business that has conducted SRED within the tax year
- Be a business which is eligible for a federal investment tax credit claim for qualified expenditures
- Complete form T661
- Not be exempt from any corporate income tax during the tax year
How to claim the Ontario innovation tax credit
To claim the Ontario innovation tax credit, you must complete Schedule 566.
Schedule 566
This Schedule 566 is used for qualifying Ontario business’ to claim the sum of your incurred income related to its SRED expenditures and any respective repayments during the tax year. This expenditure pool is the sum of all incurred payments received from SRED programing during the year where all necessary repayments are deducted from its total.
Let T2inc assist your corporate T2 tax return
If your Ontario corporation has facilitated any SRED programming during your taxable year, the Ontario innovation tax credit may be a tax attribute you can claim with your T2 corporate taxes.
The tax experts at T2inc are experienced tax professionals who can help you assess and claim a variety of tax attributes for your Ontario business. Contact us today for ease of mind.
Frédéric Roy-Gobeil
CPA, M. TAX
As President of T2inc.ca and an entrepreneur at heart, I have founded many start-ups such as delve Labs and T2inc.ca. A former tax specialist at Ernst & Young, I am also a member of the Ordre des comptables professionnels agréés CPA and have a master's degree in taxation from the Université de Sherbrooke. With a passion for the world of entrepreneurship and the growth mindset, I have authored numerous articles and videos on the industry and the business world, as well as on accounting, taxation, financial statements and financial independence.
