Does your business qualify? - By Doane Grant Thornton
Ontario Budget 2025 (ON Budget 2025) proposes temporary enhancements to the Ontario Made Manufacturing Investment Tax Credit (OMMITC), intended to further encourage investments and protect jobs in the manufacturing sector in Ontario. Eligible manufacturers in Ontario could receive up to $3 million (up from $2 million) per year for an associated group on certain purchases of manufacturing and processing property (M&P), if these changes are enacted. It’s important to note that a corporation must meet several criteria to claim the OMMITC and determining whether an expenditure qualifies can be complex. If you need assistance navigating these rules, we can help.
Proposed amendents
ON Budget 2025 proses to enhance the OMMITC by:
- increasing the rate to 15 (from 10%), and
- expanding the eligibility to include certain non-Canadian controlled private corporations (non-CCPCs), but only on a non-refundable basis (with a carry forward period of up to 10 taxation years for any unused non-refundable credits).
If enacted, the changes will be effective for qualifying M&P buildings, machinery, and equipment purchased and made available for use on or after May 15, 2025 and before January 1, 2030.
The Ontario government also purposes that all or a portion of the OMMITC must be repaid if the property is sold, no longer used for M&P use, or is removed from Ontario within five years of being acquired. This measure will apply to eligible M&P property affected by such actions on or after May 15, 2025. Lastly, ON Budget 2025 proposes that the OMMITC expire effective January 1, 2030. The Ontario government is required to review the effectiveness of the OMMITC every three years.
The Current OMMITC Rules
What corporations qualify?
Only qualifying corporations that make eligible expenditures in eligible property qualifying for the OMMITC. Specifically, the corporation making the eligible purchase must:
- Be a CCPC throughout the tax year
- Barry on business through a permanent establishment in Ontario (i.e., a fixed place of business, such as an office, factory, or workshop)
- Tot be exempt from tax
What expenditures are eligible and when?
Qualifying corporations that purchase eligible M&P property from third parties are generally eligible for the OMMITC, provided they’re not “excluded property”. Specifically. the following M&P purchases are generally eligible:
- M&P machinery and equipment under Class 53 (or Class 43 after 2025) for capital cost allowance (CCA) purposes purchased on or after March 23, 2023, and available for use in the taxation year, provided the qualifying corporation is:
- using the property in Ontario primarily in the manufacturing or processing of goods for sale; or
- leasing the property in the ordinary course of carrying on business in Ontario to a lessee who can reasonably be expected to use it primarily for manufacturing or processing of goods for sale or lease.
- M&P buildings (or building additions under Class 1 for CCA purposes, that are located in Ontario, provided:
- the building is available for use by the qualifying corporation on or after March 23, 2023; and
- a valid election to claim additional CCA on an eligible M&P building has been filed on time with the CRA for the property (under regulation 1101(5b.1) of the federal Income Tax Act.)
- M&P machinery and equipment under Class 53 (or Class 43 after 2025) for capital cost allowance (CCA) purposes purchased on or after March 23, 2023, and available for use in the taxation year, provided the qualifying corporation is: