Regional Opportunities Investment Tax Credit
The Regional Opportunities Investment Tax Credit supports business investment, economic growth and job creation in designated regions across the province that lagged in employment growth between 2009 and 2019.
It is a 10% refundable Corporate Income Tax credit for corporations that invest more than $50,000 to construct, renovate or acquire eligible commercial and industrial buildings in these regions.
Offered by Ministry of Finance
Amount
10% refundable Corporate Income Tax credit on eligible expenditures over $50,000 up to $500,000, to a maximum of $45,000 per corporation per year (enhanced 20% credit, maximum $90,000 per year, for property available for use from March 24, 2021 to before January 1, 2024)
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Who can apply
To qualify, a corporation must:
- be a Canadian-controlled private corporation throughout the tax year
- have a permanent establishment in Ontario at the time an eligible investment is made
- make an eligible investment in a designated region of the province
The corporation can be located anywhere in Ontario, but the investment must be made in a designated region to be eligible for the tax credit.
To be eligible for the tax credit, investments must:
- be used to acquire, construct or renovate an eligible property in a designated region
- become available for use on or after March 25, 2020, and in the taxation year in which the tax credit is being claimed
If the property is a building, or an addition or alteration to a building, at least 90 per cent of the floor space of the building must be used at the end of the taxation year for a non-residential purpose to make the property eligible for the ROITC.
The corporation is not exempt from tax for the taxation year under Part III of the Taxation Act, 2007 (Ontario).
A qualifying corporation that has a permanent establishment in Ontario that is outside of the qualifying region is eligible to claim the ROITC provided that the property in respect of which the corporation has incurred eligible expenditures is wholly located in the qualifying region and the corporation otherwise meets the criteria for claiming the credit. The location of the corporation’s head office is not relevant for the purposes of the ROITC.
A qualifying corporation that is associated with one or more other corporations during a particular tax year may claim this credit if each of the other corporations has agreed in writing to waive, under subsection 97.1(7) of the Taxation Act, 2007 (Ontario), its right to claim this credit for any tax year of the other corporation that overlaps with the particular tax year.
About the funding
It is a 10% refundable Corporate Income Tax credit for corporations that invest more than $50,000 to construct, renovate or acquire eligible commercial and industrial buildings in these regions.
A temporary enhancement to the credit provides an additional 10 per cent credit for eligible expenditures more than $50,000 and up to $500,000 for eligible property that becomes available for use during a qualifying corporation’s taxation year, and in the period beginning on March 24, 2021, and ending before January 1, 2024. The maximum credit in respect of eligible expenditures that meet all of the conditions for the enhanced credit would be $90,000 in a year.
Corporations must invest more than $50,000 to qualify and may receive a tax credit of up to $45,000 in respect of its eligible investments in a year. The tax credit amount applies to expenditures more than $50,000 up to a maximum of $500,000.
For the periods March 25, 2020 to March 23, 2021 and January 1, 2024 to December 31, 2026, the 10% refundable Corporate Income Tax credit is available for expenditures that exceed $50,000, with a limit of $500,000 for eligible property that becomes available for use in the taxation year.
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The maximum tax credit a corporation may receive in a year is $45,000 in respect of all eligible investments.
It is calculated on the total expenditures incurred by the corporation across all designated regions.
For example, a corporation with eligible expenditures of $200,000 would receive $15,000:
10% of ($200,000 - $50,000)
= 10% of $150,000
= $15,000
How the enhanced credit is calculated
For the period beginning on March 24, 2021, and ending before January 1, 2024, the 20% refundable Corporate Income Tax credit is available for expenditures that exceed $50,000, with a limit of $500,000 for eligible property that becomes available for use in the taxation year.
The maximum tax credit a corporation may receive in a year is $90,000 in respect of all eligible investments.
It is calculated on the total expenditures incurred by the corporation across all designated regions. For example, a corporation with eligible expenditures of $200,000 would receive $30,000, calculated as follows:
20% of ($200,000 - $50,000)
= 20% of $150,000
= $30,000.
The credit is prorated for short taxation years. The unused balance of the ROITC can be carried forward to the following taxation year.
The ROITC is a refundable tax credit such that, if the corporation’s tax liability for the year is reduced to nil, the amount of the ROITC to which the corporation is entitled, if any, will become a refund to the corporation.
Eligible properties are:
- commercial or industrial buildings (or other structures) that are included in capital cost allowance classes 1 or 6 for income tax purposes
- located in a designated region
Eligible expenditures are costs of a capital nature incurred by a qualifying corporation to acquire, renovate or make additions to eligible property. The corporation must be a qualifying corporation with a permanent establishment in Ontario at the time the expenditures are incurred.
Eligible expenditures are the amounts that are part of the capital cost of the eligible property to the qualifying corporation for CCA purposes. The rules in the Income Tax Act (Canada) apply to determine the capital cost of eligible property to a qualifying corporation for the purposes of the ROITC.
Eligible expenditures may be incurred in one or more taxation years, up to and including the year in which the eligible property becomes available for use. Expenditures are not eligible if incurred in a taxation year following the year in which the property is considered to have become available for use.
Claimed through the Canada Revenue Agency on your corporate tax return.
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