Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Ontario Proposes 10 Year Provincial Income Tax Exemption for Qualifying Businesses that Commercialize Intellectual Property

In the 2008 Ontario Budget delivered by Minister of Finance, Dwight Duncan on March 25, 2008, Ontario proposed a new 10-year income tax exemption for new corporations that commercialize intellectual property in Ontario developed by qualifying Canadian universities, colleges or research institutes.

In particular, Minister Duncan proposed a 10 year exemption from (1) Ontario Corporate Income Tax and (2) Corporate Minimum Tax for any qualifying corporation established after March 24, 2008 and before March 25, 2012.  In other words, Ontario is a welcome destination for innovators and entrepreneurs.  A qualifying corporation would have to be incorporated in Canada and derive all or substantially all of its income from eligible commercialization activities carried on in Ontario.

The Budget documents give the following information on what would be an eligible commercialization activity:

"The exemption would generally apply to corporations that commercialize intellectual property in priority areas such as, but not limited to, bio-economy/clean technologies, advanced health technologies, and
telecommunications, computer and digital technologies.  Eligible commercialization activities would include the development of prototypes and the marketing and manufacturing of products related to the intellectual property."

The details of this proposed measure will be in a Budget Bill that will be tabled in the legislature and the parameters of the exemption may develop between now and the passage of the legislation.

Ontario has called on the federal government to support innovation by matching this income tax exemption.

Please contact Canadian Legal counsel to determine whether the exemption may be available to your business.  Cyndee Todgham Cherniak is an Ontario lawyer and can be reached at 416-307-4168.

 

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