On March 25, 2008, Ontario released its budget. Budget
measures relevant to technology companies and their investors
include a limited 10-year corporate tax holiday, the Ontario
Innovation Tax Credit and the Ontario Interactive Digital Media
The budget proposes a 10-year tax exemption for new
corporations that commercialize intellectual property (IP)
developed by qualifying Canadian universities, colleges or
Qualifying corporations established after March 24, 2008 and
before March 25, 2012 would be exempt from Ontario corporate
income tax and corporate minimum tax for their first 10
taxation years. The exemption would apply to corporations
incorporated in Canada that derive all or substantially all of
their income from eligible commercialization activities carried
on in Ontario. Such activities would generally include the
development of prototypes and the marketing and manufacturing
of products related to IP in priority areas such as
bio-economy/clean technologies; advanced health technologies;
and telecommunications, computers and digital technologies.
Ontario Innovation Tax Credit
The Ontario Innovation Tax Credit (OITC) is a 10 per cent
refundable tax credit available to small- and medium-sized
corporations that carry on scientific research and experimental
development (SR&ED). The budget proposes to extend the OITC
by paralleling enhancements to the federal SR&ED tax credit
proposed in the 2008 federal budget.
The budget further proposes to increase the OITC expenditure
limit from $2 million to $3 million and to increase the taxable
income phase-out limit to $700,000 while maintaining the
current taxable capital phase-out limit of $50 million.
Ontario Interactive Digital Media Tax Credit
The budget proposes to increase the Ontario Interactive
Digital Media Tax Credit (OIDMTC) rate for certain corporations
from 20 per cent to 25 per cent for qualifying expenditures
incurred after March 25, 2008 and before January 1, 2012. The
budget also proposes to extend the enhanced 30 per cent OIDMTC
rate for small corporations to January 1, 2012.
For information on the other proposals in the budget, please
read our firm's
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