2020 Ontario Budget: Important Applications to SR&ED

2020 Ontario Budget: Important Applications to SR&ED

On November 5, 2020, Ontario’s 2020 provincial budget was released, Ontario’s Action Plan: Protect, Support, Recover.  This budget includes tax supports for struggling businesses and families due to the COVID-19 pandemic and also includes adjustments to some scientific research and experimental development (SR&ED) filing deadlines.

2020 Ontario Budget Overview

The focus of the 2020 Ontario budget is like most things in 2020, the COVID-19 pandemic and supporting and protecting those in Ontario.  Highlights of the budget include new policy initiatives and commitments such as a seniors home safety tax credit, increased levels of care for long-term care (LTC) residents, and new tax supports for struggling businesses.

From the Ontario Minister of Finance’s page:

 Ontario’s Action Plan now sets out a total of $45 billion in support over three years to make available the necessary health resources to continue protecting people, deliver critical programs and tax measures to support individuals, families and job creators impacted by the virus, and lay the groundwork for a robust long-term economic recovery for the province.1

Ontario’s SR&ED Programs

Ontario R&D Tax Credit (ORDTC)

ORDTC is a 3.5% non-refundable SR&ED investment tax credit available in Ontario.  It can be used to reduce their Ontario corporate income tax payable.2

The 2020 Ontario budget allows for a 6-month extension on this filing which aligns with the federal SR&ED filing extension.  The budget states:

Corporations with tax year-ends from September 13, 2018 to December 31, 2018 would have an additional six months to file an ORDTC claim and those with tax year-ends from January 1, 2019 to June 29, 2019 would have until December 31, 2020 to file a claim.3

Ontario Innovation Tax Credit (OITC)

OITC is an 8% refundable SR&ED investment tax credit available in Ontario.4 A refundable SR&ED ITC can be applied to corporate income tax payable or paid directly to the tax payer/corporation.

The 2020 Ontario budget made no mention of extending the deadlines associated with this tax credit as there is currently no filing deadline for the program.

Ontario Business Research Institute Tax Credit (OBRITC)

OBRITC is a 20% refundable tax credit for qualified expenditures on SR&ED work performed in Ontario under contract with eligible research institutes.5 A refundable SR&ED ITC can be applied to corporate income tax payable or paid directly to the taxpayer/corporation.

The 2020 Ontario budget made no mention of extending the deadlines associated with this tax credit as there is currently no filing deadline for the program.

Conclusion

The 2020 Ontario budget looks to take care of the people during the COVID-19 pandemic. Extending the ORDTC will bring some relief, but only to those companies who are in a cashflow-positive position and can use it to reduce their taxes.

For information on federal SR&ED extensions please see our article SR&ED Time Limit Extension Proposal due to COVID-19.

Share your thoughts by commenting below, or adding to the conversation on our LinkedIn page, Facebook page or via Twitter.
Or even better, sign up for the Comprehensive Guide to SR&ED.

Show 5 footnotes

  1. Ontario Newsroom. (n.d.). Retrieved November 12, 2020, from https://news.ontario.ca/en/release/59065/ontarios-action-plan-protect-support-recover
  2. Ontario Research and Development Tax Credit. (2010). https://www.fin.gov.on.ca/en/credit/ordtc/index.html
  3. Ontario’s Action Plan: Protect, Support, Recover – 2020 Ontario Budget. https://budget.ontario.ca/2020/pdf/2020-ontario-budget-en.pdf

  4. Ontario Innovation Tax Credit. (2009). https://www.fin.gov.on.ca/en/credit/oitc/
  5. Ontario Business Research Institute Tax Credit. (2009). https://www.fin.gov.on.ca/en/credit/obritc/index.html

0 Comments

Leave a Reply

error: This content is Copyright InGenuity Group Solutions Inc. Please contact the site administrator if you wish to use this content.
%d bloggers like this: