What is the Ontario Innovation Tax Credit and how does it work alongside federal SR&ED?

The Ontario Innovation Tax Credit is a separate, Ontario-specific refundable tax credit that operates alongside the federal SR&ED program for Ontario-based corporations carrying out eligible research and development, rather than being an alternative you have to choose instead of SR&ED. An eligible corporation can generally claim both credits on the same qualifying Ontario expenditures, since the Ontario credit is designed to supplement the federal incentive, not replace it.

Because the two programs are administered separately and can have somewhat different eligibility details and calculation mechanics, qualifying for federal SR&ED doesn't automatically guarantee the Ontario credit applies in exactly the same way, or vice versa, each claim generally needs to be prepared and supported on its own terms, even though they're often filed together and draw on much of the same underlying technical documentation.

For an eligible Ontario technology or research-intensive company, claiming only the federal SR&ED credit and overlooking the Ontario Innovation Tax Credit means leaving real money on the table, since the two together can meaningfully increase the overall cash benefit compared to claiming SR&ED alone. Checking eligibility for both programs together, rather than treating them as separate, unrelated decisions, is the sensible approach.