SR&ED Ontario: an 8% OITC and a 3.5% ORDTC on top of federal

What does each Ontario SR&ED credit pay in 2026?

Ontario has three R&D credits, and the CRA administers all of them through the T2, so your client claims them with the federal Form T661 rather than applying to the province canada.ca. The rates below apply to tax years that began after May 31, 2016, and nothing has changed them since, as of October 2026.

The OITC is 8% of qualified Ontario expenditures plus eligible repayments, capped at a $3 million annual limit that associated corporations share canada.ca. The ORDTC is 3.5% of eligible Ontario SR&ED expenditures and can only reduce Ontario corporate tax, with any unused amount carried back three years or forward 20 ontario.ca. The OBRITC pays 20% on cash paid under an eligible contract with a university, college, hospital research institute or other eligible research institute in Ontario ontario.ca.

Worked example: $1 million of Ontario SR&ED earns $422,930, not $465,000

Your client is an Ontario CCPC with $1,000,000 of qualified current SR&ED spending in Ontario in its calendar 2026 year, claimed under the traditional method. Its prior year taxable income was under $500,000 and its taxable capital under $15 million, so both the full OITC limit and the full federal $6 million limit apply.

Adding the rates (35% plus 8% plus 3.5%) suggests $465,000. The order of operations is what cuts it. The OITC is government assistance that reduces the ORDTC base, while the ORDTC base isn't reduced by the ORDTC itself or by the federal credit ontario.ca. Both Ontario credits then reduce the federal pool and federal qualified expenditures canada.ca. The CRA's own illustration computes the OITC first, the ORDTC on the net amount, and the federal credit last canada.ca.

Without any Ontario credit the federal ITC would be $350,000, so the province adds a net $72,930, or 7.3 points on top of federal. The federal rates and the $6 million limit are on the SR&ED tax credit 2026 page.

Ontario did not follow Bill C-15, so the OITC limit is still $3 million

Bill C-15 got Royal Assent on March 26, 2026, and for tax years beginning after December 15, 2024 it doubled the federal expenditure limit to $6 million, moved the taxable capital phase out to $15 million through $75 million, and let eligible Canadian public corporations into the 35% rate canada.ca. Ontario's credits didn't move with it. The 2026 Ontario Budget annex proposes no change to any of the three budget.ontario.ca.

The capital row is the one that trips claims. Equipment that now earns the federal credit earns no OITC, because Ontario stopped counting capital expenditures made after December 31, 2013 ontario.ca. Spending between $3 million and $6 million also earns the federal 35% but no OITC on the excess.

Which corporations lose the OITC but keep the ORDTC?

The OITC limit shrinks once the prior year's federal taxable income passes $500,000 and is gone at $800,000, and it also shrinks once prior year taxable capital passes $25 million and is gone at $50 million ontario.ca. A profitable corporation can therefore lose the OITC entirely while still getting the full federal 35% rate. Associated corporations share one limit, so check the whole associated group.

Neither Ontario nor the CRA sets an income or capital test for the ORDTC. Your client qualifies if it has a permanent establishment in Ontario, carries on SR&ED in Ontario, is eligible for the federal credit under section 127 of the Income Tax Act, isn't exempt from tax, and has filed Form T661 for the year ontario.ca. Neither Ontario page lists CCPC status as a condition, and the CRA describes the OITC as open to all corporations with an Ontario permanent establishment canada.ca. In practice, a large or foreign controlled corporation usually ends up with the ORDTC and the federal 15% rate only.

Spending has to be attributable to the Ontario permanent establishment for both credits, so a corporation that runs SR&ED in two provinces counts only the Ontario share. In a short tax year the OITC limit is prorated by the days in the year over 365 ontario.ca.

When does an Ontario credit reduce the federal claim, and how is it reported?

The CRA treats provincial R&D credits as government assistance under paragraph 37(1)(d) and subsection 127(18) of the Income Tax Act. A credit reduces the year's pool and qualified expenditures if it's received, the client is entitled to it, or it can reasonably be expected by the filing due date, and a credit earned and added to a carryforward pool in a loss year counts as reasonably expected canada.ca. So an ORDTC your client can't use yet still cuts the federal credit, unless it's renounced by the filing due date.

Under the proxy method, the part of an Ontario credit that relates to the PPA doesn't reduce the pool. It's included in income instead, and it still reduces qualified expenditures. For the ORDTC, the PPA portion goes into income in the year it's applied against Ontario tax canada.ca. That policy is dated December 2014 and the CRA says its policies are under review after Bill C-15, so recheck it before an unusual claim.

Report the provincial credits on line 429 of Form T661 for the pool and line 513 for qualified expenditures canada.ca. Line 514 is only for provincial assistance on SR&ED property acquired after December 15, 2024 canada.ca. File Schedule 508 with the T661 and Schedule 31 for the ORDTC; it also computes any recapture, which applies when SR&ED property is sold or converted to commercial use and goes on line 277 of Schedule 5 canada.ca. For the OBRITC, file Schedule 568 plus a Schedule 569 for each eligible contract, with the research institute's code canada.ca. Miss the federal SR&ED filing deadline and the Ontario credits go with it, since both the OITC and the ORDTC require a filed T661.