Ontario Innovation Tax Credit
Compared with the 242 other application forms we have read
- The heaviest thing to produce is technical documentation. 14 ask for that.
- Scored mainly on who you are, not what you propose. 29 lead with that.
- Only 1 written answer, against a median of 5.
Can you claim this credit?
Get your instant eligibility verdict plus a head start on the application. Free, no account needed.
We use this program’s real eligibility rules. 4 short questions follow.
Want your full match picture across 850+ programs? Take the 2-minute quiz →
Eligibility & Details
What this program funds and who can apply
Program Description
Refundable tax credit for eligible R&D expenditures incurred in Ontario by qualifying corporations.
Eligibility Requirements
- Must be a corporation with a permanent establishment in Ontario (sole proprietors, partnerships, and trusts are ineligible) — Canadian incorporation is not required; a foreign-parented corporation with an Ontario R&D subsidiary can still qualify
- Has a permanent establishment in Ontario during the tax year
- Conducting eligible SR&ED activities that qualify for the federal SR&ED ITC under ITA s.127
- Prior-year taxable capital (associated group) does not exceed $50 million (phase-out eliminates credit above $50M)
- Ontario-attributable R&D expenditures are present (costs must be allocated to Ontario operations)
- T661 and Schedule 31 filed within 18 months of fiscal year-end (absolute deadline)
- Prior-year taxable income of the corporation and its associated group over $800,000 eliminates the expenditure limit entirely; the reduction begins at $500,000 (independent of the $25M-$50M taxable-capital grind above)
Quick Assessment
Funding Details
- Amount
- Up to 8% tax credit
- Type
- Tax Credit
- Level
- Provincial
- Credit rate
- Up to 8% of eligible costs
- Deadline
- Ongoing
Program Scorecard
Competition, effort, and approval at a glance
Moderate — standard application process
Below average competition
Moderate — standard requirements
How to claim
Insider tips, common pitfalls, and what successful applicants look like
Insider TipFile Form T661 within the 18-month deadline even if your SR&ED eligibility is uncertain — you can refine the claim through the CRA review process, but you cannot file late.
Rejection Pitfalls 10
- Underlying SR&ED claim disallowed by CRA technical reviewer — insufficient evidence of technological uncertainty or advancement beyond routine engineering
Success Profile
Evaluation Criteria
How the Government of Ontario judges your application
What the reviewer scores, what gets applications rejected, and what to write.
Distilled from 6+ source documents, condensed into one brief. Sources as of 2026-09-03.
6 of the sources
- Ontario innovation tax credit — Ontario Ministry of Finance ontario.ca
- Ontario innovation tax credit — Canada Revenue Agency canada.ca
- T2SCH566 Ontario Innovation Tax Credit — form landing page canada.ca
- Schedule 566, Ontario Innovation Tax Credit canada.ca
- Taxation Act, 2007, S.O. 2007, c. 11, Sched. A — section 96,… ontario.ca
- Ontario research and development tax credit ontario.ca
Sign up free to save this programme and track your application in your workspace.
What the Government of Ontario favours
Refundable tax credit for Ontario SR&ED expenditures◦
“Qualifying corporations can claim a refundable tax credit for qualified expenditures on scientific research and experimental development performed in Ontario.”
The form
There is no application and no portal: the credit is claimed on Schedule 566, filed by the corporation with its annual T2 return.◦
Judged against
- 1
Does the corporation pass the five-box entity test?
Show them Answer all five Part 1 boxes against the real facts, because a federal SR&ED claim that was never filed disqualifies the whole schedule.◦
In the funder’s words · 2
- If you answered yes to question 2 or no to question 1, 3, 4, or 5, you are not eligible for the Ontario innovation tax credit.
- It is eligible to claim an investment tax credit for the year under section 127 of the Federal Act with respect to a qualified expenditure made by the corporation in the year and it files a prescribed form under that section in respect of the investment tax credit.
- 2
Is each expenditure Ontario-attributable SR&ED?
What to show, and the funder’s 1 criterion behind it in Premium
- 3
What expenditure limit does your group get?
What to show them in Premium
- 4
What does claiming the credit cost federally?
What to show, and the funder’s 2 criteria behind it in Premium
Where applicants fail
“Claimants should carefully review the R&D program that applies in their province or territory to determine the effect that claiming provincial or territorial R&D tax credits may have on their SR&ED claim under the federal program.”
“If a corporation files a waiver under subsection (14) in respect of a taxation year, the corporation is deemed never to have been a qualifying corporation under this section for that year in respect of the tax credit or the portion of the tax credit that is waived.”
Premium · the rest of this brief
See all 6 rules that can reject you and every criterion you are judged on. Premium opens every programme you match.
2 more rules that can reject you · 3 more criteria
Do you pass?
Each one can rule you out. Tick the ones you meet.
Your business
Qualifying corporation statutory test
A corporation is a qualifying corporation for a taxation year for the purposes of this section if, (a) it has a permanent establishment in Ontario at any time during the year; (b) it carries on scientific research and experimental development in Ontario during the year; and (c) it is eligible to claim an investment tax credit for the year under section 127 of the Federal Act with respect to a qualified expenditure made by the corporation in the year and it files a prescribed form under that section in respect of the investment tax credit.
Not exempt from Ontario tax
You are not exempt from tax under Part III of the Taxation Act, 2007 (Ontario)
Filed Form T661 and Schedule 31
Have filed Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim, and Schedule 31, Investment Tax Credit – Corporations, within 18 months of the tax year-end.
The project
40% of pre-2014 capital
For expenditures made before 2014, only 40 per cent of qualified expenditures of a capital nature for the taxation year may be included in determining the amount of qualified expenditures in the year.
Documents to attach
Ticks are kept on this device.
The money
Credit rate8%
For taxation years that commence after May 31, 2016, the tax credit rate is 8%
Maximum credit$240,000
Based on an expenditure limit of $3 million: for taxation years that commence after May 31, 2016, the maximum tax credit amount is $240,000
Expenditure limitFormula using $8 million, $25 million
the amount of a corporation's expenditure limit for the purposes of subsection (2) for a taxation year ending after December 31, 2009 is the amount calculated using the formula, ($8 million – 10A) × (($25 million – B)/$25 million)
Refundable credit8% refundable tax credit
The credit is an 8% refundable tax credit based on the sum of the corporation's qualified expenditures incurred in Ontario and any eligible repayments.
StackingQualified expenditures reduced by assistance; listed credits excluded
Qualified expenditures are reduced by government assistance, non-government assistance and contract payments. The Ontario Research and Development Tax Credit, Ontario Business Research Institute Tax Credit, Ontario Innovation Tax Credit and federal Scientific Research and Experimental Development investment tax credit are not government assistance for purposes of determining the Ontario Innovation Tax Credit qualified expenditures.
Costs before approvalCan waive eligibility via written waiver
A corporation may waive its eligibility for a tax credit, or a portion of a tax credit, under this section for a taxation year by delivering a written waiver with its return required to be delivered under this Act for the year or in an amended return for that year.
What it pays for · 3
- Qualified expenditures include 100% of current expenditures.
- For expenditures made before 2014, only 40 per cent of qualified expenditures of a capital nature for the taxation year may be included in determining the amount of qualified expenditures in the year.
- If you made a repayment of any government or non-government assistance, or contract payments that reduced your SR&ED qualified expenditure pool for OITC purposes, the amount of the repayment is eligible for a credit to the extent that your SR&ED qualified expenditure pool for OITC purposes was reduced because of the government or non-government assistance, or contract payments.
What it does not pay for · 2
- Capital expenditures incurred after 2013 no longer qualify
- A corporation cannot claim SR&ED credits for contract payments received from another corporation that are not specified contract payments.
From application to money
- Do SR&ED in OntarioCredit covers Ontario SR&ED
- File T661 and Schedule 31File T661, Schedule 31 within 18 months
- File Schedule 566 with T2File Schedule 566 with T2
- CRA assesses the returnCRA assesses credit with return
- Excess refundedExcess refunded with assessment
In the funder’s words · 5
- Do SR&ED in Ontario
- The credit covers scientific research and experimental development carried on in Ontario and attributable to an Ontario permanent establishment.
- File T661 and Schedule 31
- The federal SR&ED claim and the investment tax credit schedule go in with the same return as the OITC schedule.
- File Schedule 566 with T2
- Schedule 566 is filed with the annual T2 return for the year in which the qualified expenditures were incurred.
- CRA assesses the return
- The Canada Revenue Agency assesses the credit with the return on Ontario's behalf; nothing is sent to Ontario.
- Excess refunded
- Any part of the credit above the tax payable is refunded with the assessment.
Quoted lines are word for word from the source documents; lines marked ◦ are our reading of them.
Everything you need to claim Ontario Innovation Tax Credit
Not a marketing summary. The actual checklist, intel, and stack strategy reviewers look for.
- 10 rejection pitfalls reviewers flag — so you catch them first
- 11-document checklist with what each reviewer is actually checking
- Your Application Game Plan — the print-ready PDF the preview below describes
- 5-step application timeline with prep hours per step
- Insider tip from program officers on what separates winners
- 5-program stacking strategy to combine with compatible funding
- Success profile + evaluation criteria — exactly what the program administrators check
Application Playbook
Step-by-step process, required documents, and expenses
Application Steps
Required Documents 11
Eligible Expenses 7
Ineligible Expenses 6
Claim timing
Deadline Notes
Ineligible Organizations
Funding Stack Strategy
Compatible programs, clawback risk, and combined funding potential
Compatible Programs
Clawback Risk
Low RiskHow Ontario Innovation Tax Credit Compares
Side-by-side with similar programs
| Program | Amount | Difficulty | Payment | Deadline |
|---|---|---|---|---|
| Ontario Innovation Tax Credit | Up to 8% tax credit | Moderate | Tax Credit Offset | Ongoing |
| Ontario Research and Development Tax ... | 3.5% of eligible Ontario SR&ED expenditures | Moderate | Tax Credit Offset | Ongoing — claim via... |
| NRC IRAP Clean Technology Program | $100,000–$500,000 | Hard | Mixed (Advance + Reimb.) | Ongoing |
| FedDev Ontario Funding | Varies | Hard | Reimbursement | Ongoing |
| Strategic Response Fund (formerly Str... | Minimum $10 million contribution | Hard | Mixed (Advance + Reimb.) | Ongoing — continuous... |
Related Programs
Other programs you might be eligible for
Frequently Asked Questions
Quick answers to the questions founders most often ask about Ontario Innovation Tax Credit