96 (1) A corporation that is a qualifying corporation for a taxation year and that complies with the requirements of this section may claim an amount for the year in respect of and not exceeding the corporation’s Ontario innovation tax credit for the year.  2007, c. 11, Sched. A, s. 96 (1). Amount of tax credit (2) The amount of a qualifying corporation’s Ontario innovation tax credit for a taxation year that ends on or after June 1, 2016 and that does not include May 31, 2016 is determined as follows: 1. Add the following amounts: i. the amount of the corporation’s SR & ED qualified expenditure pool at the end of the year, ii. the amount of its eligible repayments, if any, for the year made in respect of qualified expenditures incurred by the corporation in a taxation year that ends on or after June 1, 2016 and that does not include May 31, 2016, iii. the amount that is calculated using the formula, A × (B/0.08) in which, “A” is the corporation’s eligible repayments, if any, for the year made in respect of qualified expenditures incurred by the corporation in a taxation year that ends on or after June 1, 2016 and that includes May 31, 2016, and “B” is the percentage calculated by adding, (a)  10 per cent multiplied by the ratio of the number of days in the taxation year referred to in the definition of “A” that are before June 1, 2016 to the total number of days in the year, and (b)  8 per cent multiplied by the ratio of the number of days in that taxation year that are after May 31, 2016 to the total number of days in the year, and iv. the amount that is equal to 1.25 multiplied by the amount of its eligible repayments, if any, for the year made in respect of qualified expenditures incurred by the corporation in a taxation year that ends before June 1, 2016. 2. Determine the amount of the corporation’s expenditure limit for the year. 3. The amount of the qualifying corporation’s tax credit for the taxation year is determined by multiplying 8 per cent by the lesser of the amounts determined under paragraphs 1 and 2. 2016, c. 5, Sched. 28, s. 17. Transition, taxation years ending on or after June 1, 2016 that include May 31, 2016 (2.1) The amount of a qualifying corporation’s Ontario innovation tax credit for a taxation year that ends on or after June 1, 2016 and that includes May 31, 2016 is determined as follows: 1. Determine the percentage that is the sum of, i. 10 per cent multiplied by the ratio of the number of days in the taxation year that are before June 1, 2016 to the total number of days in the year, and ii. 8 per cent multiplied by the ratio of the number of days in the taxation year that are after May 31, 2016 to the total number of days in the year. 2. Add the following amounts: i. the amount of the corporation’s SR & ED qualified expenditure pool at the end of the year, and ii. the amount that is calculated using the formula, C × (0.1/D) in which, “C” is the amount that is equal to the amount of its eligible repayments, if any, for the year made in respect of qualified expenditures incurred by the corporation in a taxation year ending before June 1, 2016, and “D” is the percentage determined under paragraph 1. 3. Determine the amount of the corporation’s expenditure limit for the year. 4. The amount of the qualifying corporation’s tax credit for the taxation year is determined by multiplying the percentage determined under paragraph 1 by the lesser of the amounts determined under paragraphs 2 and 3. 2016, c. 5, Sched. 28, s. 17. Transition, taxation years ending before June 1, 2016 (2.2) The amount of a qualifying corporation’s Ontario innovation tax credit for a taxation year that ends before June 1, 2016 is determined as follows: 1. Add the following amounts: i. the amount of the corporation’s SR & ED qualified expenditure pool at the end of the year, and ii. the amount of its eligible repayments, if any, for the year. 2. Determine the amount of the corporation’s expenditure limit for the year. 3. The amount of the qualifying corporation’s tax credit for the taxation year is determined by multiplying 10 per cent by the lesser of the amounts determined under paragraphs 1 and 2. 2016, c. 5, Sched. 28, s. 17. Expenditure limit (3) Subject to subsection (6) and except as otherwise provided in subsection (4.2), the amount of a corporation’s expenditure limit for the purposes of subsection (2) for a taxation year ending before January 1, 2010 is the amount calculated using the formula, ($7 million – 10A) × (($25 million – B)/$25 million) in which, “A” is the greater of, (a) $400,000, and (b) the amount that is, (i) if the corporation is not associated with any other corporation in the taxation year, the corporation’s taxable income under the Federal Act for its immediately preceding taxation year, determined before taking into consideration the specified future tax consequences for that preceding year, or (ii) if the corporation is associated with one or more corporations in the taxation year, the associated group’s taxable income for the corporation’s immediately preceding taxation year, as determined under subsection (4), and “B” is, (a) nil if, (i) the corporation’s specified capital amount for the immediately preceding  taxation year is not more than $25 million and the corporation is not associated with any other corporation in the taxation year, or (ii) the corporation is associated with one or more corporations in the taxation year and the associated group’s specified capital amount for the preceding taxation year as determined under subsection (4.1) is not more than $25 million, or (b) in any other case, the lesser of $25 million and the amount by which the corporation’s specified capital amount for the immediately preceding taxation year or, if the corporation is associated with one or more corporations in the taxation year, the associated group’s specified capital amount for the immediately preceding taxation year exceeds $25 million. 2008, c. 19, Sched. U, s. 4 (1); 2010, c. 1, Sched. 29, s. 13 (1). Expenditure limit, taxation years ending after 2009 (3.1) Subject to subsection (6) and except as otherwise provided in subsection (4.3), 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) in which, “A” is the greater of, (a) $500,000, and (b) the amount that is, (i) if the corporation is not associated with any other corporation in the taxation year, the corporation’s taxable income under the Federal Act for its immediately preceding taxation year, determined before taking into consideration the specified future tax consequences for that preceding year, or (ii) if the corporation is associated with one or more corporations in the taxation year, the associated group’s taxable income for the corporation’s immediately preceding taxation year, as determined under subsection (4), and “B” is, (a) nil if, (i) the corporation’s specified capital amount for the immediately preceding  taxation year is not more than $25 million and the corporation is not associated with any other corporation in the taxation year, or (ii) the corporation is associated with one or more corporations in the taxation year and the associated group’s specified capital amount for the preceding taxation year as determined under subsection (4.1) is not more than $25 million, or (b) in any other case, the lesser of $25 million and the amount by which the corporation’s specified capital amount for the immediately preceding taxation year or, if the corporation is associated with one or more corporations in the taxation year, the associated group’s specified capital amount for the immediately preceding taxation year exceeds $25 million. 2010, c. 1, Sched. 29, s. 13 (2). Associated group’s taxable income (4) If a corporation is associated with one or more corporations in a particular taxation year, the associated group’s taxable income for the corporation’s immediately preceding taxation year is the sum of, (a) the corporation’s taxable income under the Federal Act for its last taxation year ending in the last calendar year that ended before the end of the particular taxation year, determined before taking into consideration the specified future tax consequences for that preceding year; and (b) the sum of all amounts each of which is the taxable income of an associated corporation under the Federal Act for the associated corporation’s last taxation year ending in the last calendar year that ended before the end of the particular taxation year, determined before taking into consideration the specified future tax consequences for that last taxation year.  2008, c. 19, Sched. U, s. 4 (1). Associated group’s specified capital amount (4.1) If a corporation is associated with one or more corporations in a particular taxation year, the associated group’s taxable capital amount for the immediately preceding taxation year is the sum of, (a) the corporation’s specified capital amount for its last taxation year ending in the last calendar year that ended before the end of the particular taxation year; and (b) the sum of all amounts each of which is the specified capital amount of a corporation with which the corporation is associated in the taxation year, for the associated corporation’s last taxation year ending in the last calendar year that ended before the end of the particular taxation year.  2008, c. 19, Sched. U, s. 4 (1). Transitional, February 26, 2008 (4.2) A corporation’s expenditure limit for a taxation year that straddles February 26, 2008 is equal to the amount determined by the formula, A – [(A – B) × (C/D)] in which, “A” is the amount that would be determined in respect of the corporation for the taxation year under subsection (3) if this section were read without reference to this subsection, “B” is the amount that would have been determined in respect of the corporation for the taxation year under subsection 43.3 (3.2) of the Corporations Tax Act if the taxation year commenced after May 4, 1999 and before February 26, 2008, “C” is the number of days in the taxation year that are before February 26, 2008, and “D” is the number of days in the taxation year. 2008, c. 19, Sched. U, s. 4 (1). Expenditure limit if taxation year begins before 2010 (4.3) A corporation’s expenditure limit for a taxation year that begins before January 1, 2010 and ends on or after that day is the amount calculated using the formula, A – [(A – B) × (C/D)] in which, “A” is the amount that would be determined in respect of the corporation for the taxation year by using the formula in subsection (3.1), “B” is the amount that would be determined in respect of the corporation for the taxation year by using the formula in subsection (3), even though subsection (3) does not apply for the taxation year, “C” is the number of days in the taxation year that are before January 1, 2010, and “D” is the number of days in the taxation year. 2010, c. 1, Sched. 29, s. 13 (2). Application of federal rules (5) Subsections 127 (10.21), (10.22), (10.23), (10.3), (10.4) and (10.6) of the Federal Act apply with necessary modifications for the purposes of subsections (3) and (3.1) and, in the application of those subsections of section 127 of the Federal Act, every reference to a Canadian-controlled private corporation is deemed to be a reference to a qualifying corporation as defined in subsection (7).  2010, c. 1, Sched. 29, s. 13 (3). Calculation of expenditure limit (6) The following rules apply for the purposes of subsections (3) and (3.1): 1. A non-resident corporation that has a permanent establishment in Ontario in a taxation year but is not a financial institution, credit union or insurance corporation in the year shall determine its specified capital amount for the year as if it were resident in Canada for the year. 2. A corporation that would be a financial institution in a taxation year if it carried on business in Canada and if it had been incorporated in Canada shall determine its specified capital amount for the taxation year as if it were a financial institution that had a permanent establishment in Ontario at any time in the year. 3. A corporation that is a financial institution and has a permanent establishment in Canada but not in Ontario in a taxation year shall determine its specified capital amount for the year as if it had a permanent establishment in Ontario at any time in the year. 4. A corporation that is an insurance corporation or credit union that was not resident in Canada at any time in a taxation year shall determine its specified capital amount as if it were resident in Canada in the year. 5. A corporation that has a permanent establishment in Canada at any time in a taxation year but not in Ontario shall, if the corporation is not a financial institution, credit union or insurance corporation, determine its specified capital amount as if the corporation were resident in Canada and had a permanent establishment in Ontario at any time in the year. 6. A corporation that does not have a permanent establishment in Canada in a taxation year shall, if the corporation is not an insurance corporation, credit union or a corporation that would be a financial institution if it carried on business in Canada and had been incorporated in Canada, determine its specified capital amount as if the corporation were resident in Canada and had a permanent establishment in Ontario at any time in the year. 7. The taxable income of a non-resident corporation that does not have a permanent establishment in Canada in a taxation year shall, for the purposes of calculating the expenditure limit of the corporation under subsection (3) or (3.1), be determined in accordance with the Federal Act as if the corporation were subject to tax under that Act.  2007, c. 11, Sched. A, s. 96 (6); 2010, c. 1, Sched. 29, s. 13 (4, 5). Qualifying corporation (7) 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.  2007, c. 11, Sched. A, s. 96 (7). Qualified expenditure (8) An expenditure made by a corporation is a qualified expenditure for a taxation year for the purposes of this section if, (a) the expenditure is incurred by the corporation in respect of scientific research and experimental development carried on in Ontario; (b) the expenditure would be considered to be a qualified expenditure made by the corporation in that year for the purposes of section 127 of the Federal Act; and (c) the expenditure is incurred by the corporation at a time when the corporation has a permanent establishment in Ontario and the expenditure is attributable to that permanent establishment.  2007, c. 11, Sched. A, s. 96 (8). SR & ED qualified expenditure pool (9) The amount of a corporation’s SR & ED qualified expenditure pool at the end of a taxation year for the purposes of this section is the amount that would be determined to be the corporation’s SR & ED qualified expenditure pool at the end of the year under the definition of that expression in subsection 127 (9) of the Federal Act, if the following rules applied in determining that amount: 1. The expression “qualified expenditure” in the definition of “SR & ED qualified expenditure pool” in subsection 127 (9) of the Federal Act means an expenditure that is a qualified expenditure for the purposes of this section. 2. 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. 3. Any tax credit available to the corporation under this section or section 39 or 97 of this Act or section 43.3 or 43.9 of the Corporations Tax Act in respect of qualified expenditures is deemed not to be government assistance for the purposes of section 127 of the Federal Act. 4. No amount is required to be deducted in respect of a specified contract payment received, receivable or reasonably expected to be received by the corporation. 5. In determining the amount that is “C” in the formula in the definition of “SR & ED qualified expenditure pool” in subsection 127 (9) of the Federal Act, no amount needs to be included in respect of an amount transferred by the corporation under subsection 127 (13) of that Act to a person not dealing at arm’s length with the corporation, if that person is not eligible to claim, under this Act or under an Act of another province, a tax credit or incentive, other than a deduction under section 37 of the Federal Act as it applies for income tax purposes under this Act and in other provinces, in respect of the amount transferred by the corporation.  2007, c. 11, Sched. A, s. 96 (9); 2015, c. 20, Sched. 40, s. 15. Interpretation (10) A provision of the Federal Act or Federal regulations, other than a provision in section 127 of the Federal Act, that applies for the purposes of the application of a provision in section 127 of that Act for the purposes of that Act applies for the purposes of this section, unless otherwise provided in this section.  2007, c. 11, Sched. A, s. 96 (10). Specified contract payment (11) For the purposes of this section, a payment is a specified contract payment if, (a) the payment is a contract payment for the performance of scientific research and experimental development carried on in Ontario; and (b) the payment is from a corporation that, (i) does not have a permanent establishment in Ontario, and (ii) is not entitled to receive a payment from a corporation that is eligible to claim a tax credit under this section or section 43.3 of the Corporations Tax Act in respect of the scientific research and experimental development to which the contract payment relates.  2007, c. 11, Sched. A, s. 96 (11). Eligible repayments (12) The amount of a corporation’s eligible repayments for a taxation year for the purposes of this section is the amount calculated using the formula, C + 0.4 (D + E) in which, “C” is the total of the corporation’s designated repayments, if any, for the year in respect of government assistance, non-government assistance or contract payments relating to qualified expenditures of a current nature, “D” is the total of the corporation’s designated repayments, if any, for the year in respect of government assistance, non-government assistance or contract payments relating to qualified expenditures of a capital nature, other than qualified expenditures referred to in paragraph 127 (11.5) (b) of the Federal Act, and “E” is 25 per cent of the total of the designated repayments, if any, considered to be repayments made by the corporation in the year, for the purposes of paragraph (e.2) of the definition of “investment tax credit” in subsection 127 (9) of the Federal Act, in respect of government assistance, non-government assistance or contract payments relating to qualified expenditures referred to in paragraph 127 (11.5) (b) of that Act. 2007, c. 11, Sched. A, s. 96 (12). Designated repayment (13) An amount repaid in a taxation year by a corporation, or deemed under subsection 127 (10.8) of the Federal Act to be repaid in a taxation year by a corporation, is a designated repayment made by the corporation in the year for the purposes of this section to the extent the repayment may reasonably be considered to be a repayment of, (a) government assistance, non-government assistance or a contract payment received, receivable or reasonably expected to be received by the corporation, other than a specified contract payment; (b) an amount that was deducted in determining for the purposes of this section or section 43.3 of the Corporations Tax Act the amount of a qualified expenditure made by the corporation for the taxation year or a previous taxation year; (c) an amount, the deduction of which in determining for the purposes of this section the amount of a qualified expenditure, resulted in a reduction in the amount of a tax credit that would have otherwise been available to the corporation under this section or section 43.3 of the Corporations Tax Act for the taxation year or a previous taxation year; and (d) an amount that under section 127 of the Federal Act reduced the amount of a qualified expenditure made by the corporation for the purposes of the definition of “investment tax credit” in subsection 127 (9) of that Act.  2007, c. 11, Sched. A, s. 96 (13). Waiver of tax credit (14) 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.  2007, c. 11, Sched. A, s. 96 (14). Same (15) 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.  2007, c. 11, Sched. A, s. 96 (15). Anti-avoidance (16) A corporation is not entitled to a tax credit under this section for a taxation year if, as a result of a transaction or event, or a series of transactions or events, it is reasonable for the Ontario Minister to believe that one of the principal purposes of the transaction or event, or series of transactions or events, is to render the corporation eligible to claim a tax credit under this section or section 43.3 of the Corporations Tax Act to which it would not have otherwise been entitled, or a tax credit in an amount in excess of the amount to which it would have otherwise been entitled.  2007, c. 11, Sched. A, s. 96 (16). Interpretation (17) For the purposes of this section, the following rules apply: 1. The terms “contract payment”, “government assistance” and “non-government assistance” each have the meaning given to those terms in section 127 of the Federal Act, except that a tax credit under this section, section 43.3 or 43.9 of the Corporations Tax Act or section 97 of this Act is deemed not to be government assistance. 2. Expenditures in respect of scientific research and experimental development will be considered to be of a current or capital nature if they are considered to be such under the Federal Act.  2007, c. 11, Sched. A, s. 96 (17). Definitions (18) In this section, “associated group” means, in respect of a corporation for a taxation year, the corporation and all corporations associated with the corporation in the taxation year; (“groupe”) “financial institution” means a corporation, other than a credit union, that is a financial institution for the purposes of Division E of Part III; (“institution financière”) “specified capital amount” means, (a) in respect of a corporation that is an insurance corporation or credit union for a taxation year, the amount of the corporation’s taxable capital employed in Canada for the year as determined in accordance with Part I.3 of the Federal Act, (b) in respect of a corporation that is a financial institution for a taxation year, the amount of the corporation’s adjusted taxable paid-up capital for the year, (i) determined in accordance with Division E of Part III if the year ends after December 31, 2008, or (ii) determined in accordance with Division B.1 of Part III of the Corporations Tax Act if the year ends before January 1, 2009, or (c) in respect of a corporation that is not an insurance corporation, credit union or financial institution for a taxation year, (i) the amount of the corporation’s taxable capital for the year as determined in accordance with Division E of Part III, if the year ends after December 31, 2008, or (ii) the amount of the corporation’s taxable paid-up capital for the year as determined in accordance with Division B of Part III of the Corporations Tax Act, if the year ends before January 1, 2009. (“montant de capital déterminé”)  2007, c. 11, Sched. A, s. 96 (18); 2008, c. 19, Sched. U, s. 4 (2). Interpretation re “specified capital amount” (19) Subclauses (b) (i) and (c) (i) of the definition of “specified capital amount” in subsection (18) continue to apply for the purposes of determining a corporation’s specified capital amount for taxation years ending after June 30, 2010 as if Division E of Part III continued to apply for those taxation years.  2007, c. 11, Sched. A, s. 96 (19). Section Amendments with date in force (d/m/y) 2008, c. 7, Sched. S, s. 25 - 01/01/2008 2008, c. 19, Sched. U, s. 4 (1, 2) - 26/02/2008 2010, c. 1, Sched. 29, s. 13 (1-5) - 01/01/2010 2015, c. 20, Sched. 40, s. 15 - 04/06/2015 2016, c. 5, Sched. 28, s. 17 - 19/04/2016