There’s still a lot of talk about what tax harmonization means for those conducting businesses in Ontario. (As a refresher – GST and PST will be combined into a new HST, which will result in businesses being charged slightly more for some purchases.) To compensate, the CRA has created the 4.5% Ontario Research and Development Tax Credit. The ORDTC is creditable against Ontario tax for fiscal year ends of December 31, 2008 and later, and is applied to SR&ED claims. It can only be applied for companies that have to pay Ontario corporate income tax.
Some interesting points about the ORDTC:
- The ORDTC was created to compensate for the fact that Ontario taxable income will include the federal ITC from the prior year. Without the ORDTC, Ontario tax would have been higher than in previous situations
- The ORDTC is a non-refundable tax credit, meaning that you can ONLY get tax credits for it
- The ORDTC can be waived if you do not want to receive it, and would not be removed from the expenditure pool
- The ORDTC is applied after the OITC and before the federal ITC, meaning that the pool of expenditures that the federal ITC can be applied to would be reduced.
If you have any questions about the ORDTC, please feel free to contact us!