2022 Ontario Budget: Important Applications to Ontario’s Economy
On April 28, 2022, Ontario’s 2022 provincial budget was released, 2022 Ontario Budget: Ontario’s Plan to Build. This budget focuses on key priorities around transit, infrastructure, healthcare and highways. We have detailed the main themes within the budget and their possible impacts on the SR&ED program.
2022 Ontario Budget Overview
After two years of pandemic-focused budgeting, the 2022 Ontario budget is focused on putting COVID-19 in the rear-view mirror and focusing attention on Ontario’s economic recovery while looking out for the ordinary people. From the Ontario Minister of Finance’s page:
The government’s plan will seize the opportunities in critical minerals, batteries and electric and hybrid vehicle manufacturing, help deliver better jobs and bigger paycheques for workers, help keep costs down for families, and get shovels in the ground for highways, transit, hospitals and other key infrastructure. Supported by a plan to stay open, the government is building Ontario.1
The plan focuses on five key themes: Keeping Costs Down, Working for Workers, Building Highways and Key Infrastructure, Rebuilding Ontario’s Economy, and a Plan to Stay Open.2 Each theme explains the main policies:
- Keeping Costs Down: The 2022 budget aims at keeping costs down and putting money back into the pockets of the people of Ontario, especially lower‐income families and workers, which the pandemic affected the most.
- Working for Workers: This section of the 2022 budget proposes a plan to deliver better protections, bigger paycheques and greater opportunities for workers and their families. As of early April 2022, Ontario has attracted nearly $11 billion in new investments in transformative hybrid and electric vehicle production and battery manufacturing in an effort to drive innovation and create jobs.
- Building Highways and Key Infrastructure: This section of the 2022 budget aims to connect the province and get people and goods moving faster, saving the people of Ontario time and money, boosting our economy, and creating jobs.
- Rebuilding Ontario’s Economy: This section of the 2022 budget focuses on bringing better jobs and higher wages for the people of Ontario. The government is investing $2 million in 2022–23 and $3 million in 2023–24 to create a Critical Minerals Innovation Fund. This initiative will help the mining industry, academia, startups, and research and development firms collaborate to develop new, innovative ways to extract and process critical minerals.
- Plan to Stay Open: With the cautious lifting of most public health restrictions in Ontario, the 2022 budget proposes a plan to ensure the Ontario economy stays open through any future outbreaks. Within this section of the budget, the minister of finance discussed the importance of building a robust life sciences sector within Ontario which may influence an uptick in health and life sciences SR&ED projects within the province. The budget states:
Innovations from the sector also have incredible therapeutic and commercial potential. This includes the development and manufacturing of health care solutions like vaccines, regenerative medicines, as well as advanced therapies. To support the new strategy, the government will invest $15 million over three years in a new Life Sciences Innovation Program. This program will help Ontario’s small and medium‐sized enterprises in the life sciences sector develop and scale up the commercial potential of therapeutics and medical and digital technologies, such as cell therapies, mRNA vaccines and applications of artificial intelligence to improve diagnosis and treatment of disease.3
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.4
The 2022 Ontario budget made no mention of this tax credit program.
Ontario Innovation Tax Credit (OITC)
OITC is an 8% refundable SR&ED investment tax credit available in Ontario.5 A refundable SR&ED ITC can be applied to corporate income tax payable or paid directly to the taxpayer/corporation.
The 2022 Ontario budget made no mention of this tax credit 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.6 A refundable SR&ED ITC can be applied to corporate income tax payable or paid directly to the taxpayer/corporation.
The 2022 Ontario budget made no mention of this tax credit program.
Conclusion
The 2022 Ontario budget aims to recover and improve Ontario’s economy while improving the quality of life for the working class. We may see an uptick of SR&ED claims pertaining to electric vehicle production and battery manufacturing, and also within the health and life sciences field due to the additional funding being allocated to those areas within the 2022 Ontario budget. If additional funding is received, please review our article Defining Government Assistance in SR&ED Projects to learn how government assistance amounts may impact your SR&ED claim.
For information on how SR&ED may take place during the manufacturing process see SR&ED During a Production Run. For information on SR&ED within the health sector relating to medical applications see the SR&ED claim process for physicians & medical professionals.