Actions to improve the province
Ontario’s Minister of Finance Peter Bethlenfalvy presented the 2025 Budget on May 15, 2025. In the current economic landscape – marked by trade conflicts, new or increased U.S. tariffs and threats against the Canadian economy – Ontario is focusing on a plan to protect workers, businesses and communities from economic uncertainty.
For that, this plan aims to ensure the creation of jobs and support business growth. Investments in manufacturing, the expansion of interprovincial trade, the increase of the province’s electricity capacity, the encouragement of innovation and support for small businesses are among the key strategies the government is implementing to safeguard Ontario’s economy and its citizens.
One example is the expansion of the Ontario Made Manufacturing Investment Tax Credit, which will provide an additional $1.3 billion over three years to enhance the competitiveness and resilience of the manufacturing sector.
In addition, the government has introduced other measures focused on research, development, and innovation, which we outline below:
I. Ontario research and development tax credit (ORDTC)
The ORDTC remains unchanged in the 2025 Budget. Its key features continue as before, including a non-refundable tax credit of 3.5% on eligible R&D expenditures incurred in Ontario by Canadian-controlled private corporations (CCPCs) with a permanent establishment in the province.
Similarly, the carryback and carryforward provisions remain intact, allowing unused portions of the tax credit to be carried back up to three years or forward for 20 years.
II. Ontario innovation tax credit (OITC)
Same as the ORDTC, no changes on the OITC. Qualifying corporations can claim a refundable tax credit of 8% for qualified expenditures on Scientific Research and Experimental Development performed in Ontario. To qualify for this tax credit, the corporation needs to have a permanent establishment in Ontario, conduct scientific research and development during the year in Ontario and file a Federal SRED tax schedule T661 for the tax year.
III. Ontario Made Manufacturing Investment Tax Credit (OMMITC)
This program announced in the 2023 Budget, was expanded to include non-Canadian Controlled Private Corporations (non CCPCs) and private companies (CCPCs). Furthermore, the rate was improved from 10% to 15%. For credit purposes, capital investments for buildings (acquisition, construction, or renovation), machinery and equipment that are used for manufacturing or processing of goods in Ontario are eligible.
IV. Life Sciences Innovation Fund (LSIF)
This fund will receive a reinvestment of $ 15 million over 3 years, to continue supporting innovative startups for the commercialization of innovations in health and biotechnology.
V. Ontario Vehicle Innovation Network (OVIN)
Additional funding to continuethis program will be provided through an investment of $73 million over the next four years, supporting regional technology development sites, research and development (R&D) partnerships, and incubator projects for automotive and mobility small and medium-size enterprises (SMEs).
VI. Advanced Manufacturing and Innovation Competitiveness (AMIC)
As announced in the 2024 Ontario Economic Outlook and Fiscal Review, the government is providing an additional $40 million to extend the AMIC Stream starting in 2025–26 as part of the government’s Advancing Ontario Made Manufacturing Plan.
VII. Critical Minerals Innovation Fund (CMIF)
Ontario has invested so far $20 million to support projects through this fund. In the Budget 2025, the government announces an additional $5 million over two years in the CMIF to encourage innovation in the critical mineral sector and reduce reliance on foreign sources of critical minerals and their processing.
VIII. Hydrogen Innovation Fund
To boost the Electricity Grid with Hydrogen, the Ontario government is launching a new round of the Hydrogen Innovation Fund, investing $30 million to unlock hydrogen’s potential to drive economic growth, create jobs and support the province’s position as a leader in the clean energy.
The updates related to innovation, R&D, commercialization announced represent improvements for taxpayers engaged in these activities, as well as protection mechanisms from the rates imposed by the U.S.
For more information, contact our team!