The Ontario budget tabled on May 1st didn’t bring any changes to R&D tax credits and the Interactive Digital Media Tax Credit. It does, however, mention that business spending on R&D in the province is lagging behind the U.S. As such, the government is studying ways to restructure tax support for R&D, including the possibility for an incremental incentive. Under such a system, companies that increase their R&D expenditures would benefit from enhanced credits while those that decrease them would see their benefits reduced. Ontario would join other jurisdictions such as the U.S. and Japan in offering incremental tax credits.
This system could provide long-term benefits to the economy by encouraging R&D and innovation, and by boosting productivity. The government will consult with businesses and research organizations on this approach.