Ontario Supports Innovative Businesses In Commercializing Research By Post-Secondary Schools And Research Institutes
To foster innovation in the Ontario economy, the provincial government intends to introduce legislation today, the first of its kind in Canada, to enact a 2008 Budget proposal that would support business start-ups that commercialize new technology by public research institutions. If approved, new businesses in Ontario that commercialize eligible intellectual property developed by qualifying Canadian universities, colleges or research institutes would be eligible to claim a 10-year corporate income tax refund.
The Ideas for the Future Act, 2008, would allow a qualifying new corporation to receive a refund from the Minister of Revenue equal to the amount of Ontario Corporate Income Tax and Corporate Minimum Tax paid in the taxation year, for up to the corporation's first 10 taxation years.
To qualify for the proposed incentive, a new corporation must be incorporated in Canada after March 24, 2008 and before March 25, 2012 and derive all, or substantially all, of its revenue from an eligible commercialization business.
An eligible commercialization business would:
- commercialize intellectual property in one or more of the following priority areas for economic growth: advanced health, bioeconomy (which includes clean energy technologies), telecommunications, computer or digital media technologies and other new technologies that may be prescribed; and
- sell a product where the key component is based on eligible intellectual property or license a computer program based on eligible intellectual property.
Eligible intellectual property would include patented property and copyrighted computer programs that constitute a technological advancement. Eligible intellectual property must be developed by an employee or a student of a qualifying Canadian research institution.
The Minister of Research and Innovation would be responsible for certifying an eligible commercialization business and would issue a Certificate of Eligibility to the qualifying corporation for the purpose of applying to the Minister of Revenue for a refund.
The 2008 Ontario Budget promotes a culture of innovation and builds on the government's innovation agenda through nearly $300 million in new investments and proposed tax initiatives that support the start-up and growth of innovative firms.
Programs and tax incentives designed to encourage innovation in Ontario include:
Ontario Innovation Tax Credit (OITC)
- Small and medium-sized Ontario corporations are able to claim a 10 per cent refundable tax credit on qualifying research and development (R&D) expenditures in Ontario.
Ontario Research and Development Tax Credit
- For taxation years ending after 2008, Ontario corporations are able to claim a 4.5 per cent non-refundable tax credit on qualifying R&D expenditures in Ontario.
Ontario Business-Research Institute (OBRI) Tax Credit
- Ontario corporations are able to claim a 20 per cent refundable tax credit for qualifying R&D expenditures incurred in Ontario as part of an eligible research contract with an eligible Ontario research institute. Ontario corporations are able to claim the OITC in addition the OBRI Tax Credit for potential combined Ontario tax credits of 30% on qualifying R&D expenditures in Ontario.
Innovation Demonstration Fund
- Provides financial support of up to 50% of eligible costs to help Ontario companies with the commercialization and initial demonstration of their innovative technologies.
Next Generation of Jobs Fund with three streams of funding:
- Jobs and Investment Program to help companies in a range of sectors to expand in Ontario and develop innovative products for global markets - up to 15 per cent of eligible project costs.
- Biopharmaceutical Investment Program to support the expansion of research and advanced manufacturing by pharmaceutical and biotechnology firms - up to 20 per cent of eligible project costs.
- Strategic Opportunities Program to support industry-led, public-private collaborations focused on increasing Ontario's innovation expertise in the bio-economy and clean technologies, advanced health technologies and creative industries - up to 25 per cent of eligible project/program costs.
Ontario Research Commercialization Program
- Provides grants ranging from $100,000 to $750,000 a year for up to three years, to help publicly funded Ontario research institutions and not-for-profit organizations transfer their research to the marketplace.