Tax Credits Significantly Lower R&D Costs
When combined with federal R&D programs, Ontario's Research & Development tax incentive program is one of the most generous in the world. The after-tax cost of $100 in R&D spending can be reduced to between $55 and $37.
July 1, 2015
Public, Private or Foreign-owned
at Eligible Ontario
|Ontario - 20% OBRI Tax Credit2||(20.00)|
|Ontario - 4.5% ORDTC3||(4.50)||(3.6)|
|Federal Investment Tax Credit - 20%||(19.10)||(15.28)|
|Tax Deduction4 76.40 x 26.0%, 61.12 x 26.0%||(19.86)||(15.89)|
|After-tax Cost of $100 Expenditure||$56.54||$45.23|
1 Eligible Ontario research institutes include universities, colleges of applied arts and technology, research hospitals and other entities in Ontario.
2 The 20% refundable Ontario Business-Research Institute Tax Credit
3 The 4.5% Ontario Research and Development Tax Credit
4 Tax rates for large manufacturers: Federal 15.0% plus Ontario 11.0% = 26.0%
Canada's R&D Cost Advantage versus Other G7 Countries
|United States||0% (baseline)|
Canada's R&D cost advantage is 15.8% over the United States and is the most attractive among major industrialized countries according to KPMG's Competitive Advantage 2014.
More Costs Qualify for R&D Tax Credits in Ontario
|Qualifying Costs||Ontario||United States|
|Wages and salaries||Yes||Yes|
|Contract expenses||Yes||65 - 75%|