What are the issues involved with payments to universities or other research institutes in Ontario?
In 1997 Ontario introduced the Ontario Business Research Institute Tax Credit (OBRITC). From the Ontario Ministry of Finance Website:
"The OBRITC provides a qualifying corporation with a 20% refundable tax credit for scientific research and experimental development (SR&ED) expenditures incurred in Ontario under an eligible contract with an eligible research institute (ERI). With an annual $20 million cap on qualifying expenditures, the maximum tax credit a corporation or an associated group of corporations can claim is $4 million. Small businesses may claim the 20% OBRITC in addition to the 10% Ontario Innovation Tax Credit for a combined tax credit of 30% of qualifying expenditures."
"A corporation making a claim for the OBRITC must apply to the minister for an advance ruling before the corporation or partnership incurs an expenditure under an eligible research institute contract." This advanced ruling must be applied for within 90 days of the day on which the contract was entered into. Unfortunately qualifying taxpayers often miss out on this tax credit because they do not realize that they must apply for pre-approval.
Further discussion of this issue can be found in MEUK Newsletter 2002-1.