Waterloo Region & Guelph

Tax creditOntario program

Ontario Innovation Tax Credit and Ontario Research and Development Tax Credit

These two Ontario tax credits sit on top of the federal SR&ED program. Corporations that do SR&ED in Ontario and claim the federal credit can claim them on their T2 return. One is refundable for smaller companies; the other only reduces Ontario tax owing.

Amount
Innovation Tax Credit: 8% refundable, on up to $3 million of spending (max $240,000 a year). R&D Tax Credit: 3.5% non-refundable, no maximum stated.
Status
Year-roundClaimed each year on the corporate tax return (T2). There's no application window.
Type
Tax credits on R&D (SR&ED) spending
Run by
Government of Ontario (administered by the Canada Revenue Agency)
Where
All of Ontario
Checked on
Nov 13, 2026

Who it's for

  • Corporations with a permanent establishment in Ontario
  • Doing scientific research and experimental development (SR&ED) in Ontario that year
  • Eligible for the federal SR&ED investment tax credit and filing form T661
  • Not exempt from corporate income tax

Not for

  • Businesses that aren't corporations (the official pages cover corporations only)
  • Spending that doesn't qualify for the federal SR&ED credit
  • Capital spending from January 1, 2014 to December 15, 2024

What it covers

  • SR&ED spending in Ontario that qualifies federally
  • Current spending at 100%, and capital spending from December 16, 2024 on

How to apply

  1. Claim the federal SR&ED credit with form T661.
  2. Claim the Innovation Tax Credit on Schedule 566 with your T2 return.
  3. Claim the R&D Tax Credit on Schedule 508 with your T2 return.
  4. Confirm your claim with your accountant.

Good to know

  • The Innovation Tax Credit's $3 million limit shrinks when last year's taxable income is over $500,000 (gone at $800,000) or taxable capital is over $25 million (gone at $50 million).
  • Associated corporations share the $3 million limit.
  • The R&D Tax Credit is non-refundable: it only reduces Ontario corporate tax. Unused amounts can be carried back 3 years or forward 20 years.
  • Grants and other assistance for the same work reduce the spending you can claim.

Questions

Do I get a cheque?

The Innovation Tax Credit is refundable, so it can be paid out even if you owe no tax. The R&D Tax Credit is not: it only reduces Ontario corporate tax payable.

Do I apply separately?

No. Both are claimed on schedules filed with your T2 corporate return, alongside your federal SR&ED claim. Your accountant can confirm what applies to you.

Related programs

Open nowGrant

OCI Digital Competence Centre grants

Digital Modernization and Adoption Plan: up to $15,000. Retail Modernization Project Grant: up to $5,000. Technology Demonstration Program: up to $50,000 (closed).

Ontario Centre of Innovation (OCI)All of Ontario

Year-roundTax credit

Co-operative Education Tax Credit

25% to 30% of the student's wages and agency fees, up to $3,000 per work placement.

Government of Ontario (administered by the Canada Revenue Agency)All of Ontario