28 March 2024

The Ministry of Finance unveiled the new Ontario Economic Plan on March 26, 2024, subsequent to the address delivered by the Finance Minister, Peter Bethlenfalvy. The new budget outlines the Ontario government’s key objectives, which include managing the inflation of living costs, enhancing government services, and promoting economic growth in Ontario through significant investments. Additionally, innovation is a focal point in the 2024-2025 plan, with planned investments in various sectors aligned with the established goals from previous years. FI-group offers a comprehensive overview of the primary components related to research and development (R&D) and innovation in relation to this new economic plan.

1 – No modifications on the attribution methods on SR&ED programs

The new economic plan did not lead to major changes in the methods for allocating tax credits for SR&ED. The rules during the previous year therefore remain in force regarding the obtaining, and monitoring of these tax credits.

The SR&ED tax measures at the provincial level continue to consist of the OITC (8% of eligible R&D expenditures for qualifying corporations), ORDTC (3.5% of eligible R&D expenditures) and OBRITC (20% of qualified expenditures).

2 – Strengthening Manufacturing and Attracting Investment

Ontario’s manufacturing sector is a significant part of the province economy, contributing 11.5% to the total GDP in 2022. The sector showed growth in 2023 after a period of decline. Ontario’s Plan to Build aims to attract investments and support the sector’s development with the following measures:

  • Maintaining the Ontario Made Manufacturing Investment Tax Credit announced in the 2023 Budget, which provides a 10% refundable corporate income tax for eligible investments in buildings, machinery and equipment;
  • Providing additional funds to enhance the Regional Development Program’s Advanced Manufacturing and Innovation Competitiveness (AMIC) Stream which provides funding support to advanced manufacturers provincewide, including those in the automotive, aerospace, chemical, life sciences and steel sectors, with a focus on small and medium‐sized enterprises;
  • Continuing to take meaningful actions to build a world-leading electric vehicle and battery supply chain in Ontario. In 2023, Ontario was responsible for shipping 90.8% of Canada’s international exports of automobiles and parts.
  • Allocating an additional $100 million to the Invest Ontario Fund, bringing the fund total to $600 million.

3 – Strengthening Research and Development with Advanced Research Computing

Ontario is making substantial investments in its advanced research computing (ARC) facilities to ensure the continued operation and maintenance of these vital resources. An additional $18 million will be allocated over the next three years to ensure that the ARC systems can meet the storage and computational requirements for research in cutting-edge technologies such as artificial intelligence (AI). Moreover, the government is committing $47.4 million to refresh the infrastructure of aging ARC systems at the University of Toronto and University of Waterloo. These investments are anticipated to have a widespread impact, benefiting over 6,000 Ontario researchers and 4,000 trainees, while also contributing to the development of patent applications, technology startups, and global collaborations. Furthermore, these investments will further support advancements in critical fields such as life sciences, engineering, clean technologies, nuclear research, electric vehicles, and quantum computing, thereby fostering innovation and discovery in Ontario’s research landscape.

4 – Enhancing the Critical Minerals Innovation Fund

The mining industry has undergone a transformation, emerging as a cutting-edge sector that embraces technological advancements such as the adoption of electric mobile mining equipment and remote mining. In November 2022, Ontario introduced the Critical Minerals Innovation Fund (CMIF), a $5 million initiative aimed at fostering innovation and research projects within the critical minerals sector. To further bolster the CMIF, the government has allocated an investment of $15 million, with an additional annual funding of $5 million from 2024–25 to 2026–27. Notably, the CMIF provided support for 13 pioneering projects last year, offering funding of up to $500,000 each, covering a maximum of 50 per cent of eligible project costs.

5 – Improving Sustainability Through Ontario’s Forestry Sector

The Ontario government has established the Forest Biomass Program, a $19.6 million initiative designed to unlock the economic potential and environmental advantages of underutilized wood and mill by-products. This program aims to investigate new and emerging innovative uses of forest biomass, including applications in medicine, bioplastics, 3D printing, mass timber products, biodiesel, and biofuels. Ontario is also committing $60 million over the next three years to expand the program, with an annual funding level of $20 million. This investment will facilitate the implementation of innovative projects to increase wood harvesting from Crown forests, stimulate job creation in the forest sector, and foster regional economic growth. The program encompasses four key streams: Indigenous Bioeconomy Partnerships, Exploring Biomass Pathways, Innovative Bioproduct Manufacturing, and Modernization in foundational forestry facilities and/or establishment of new complementary businesses to consume large quantities of underutilized wood and biomass.

The FI-group team is available for any further information you may have.

Feel free to contact us!