Ontario Manufacturing Investment Tax Credit 2026: 15% refund on plant and equipment investments, up to $3 million annually

Ontario boosts manufacturing: tax credit rate rises to 15%, annual refund cap raised to $3 million

Starting May 15, 2025, the Ontario Made Manufacturing Investment Tax Credit (OMMITC) underwent a significant policy upgrade: the refund rate increased fromIncreased from 10% to 15%Annual maximum tax rebate increased from $2M to3 million CADwith the validity extended to December 31, 2029. A new Expanded OMMITC version for non-CCPC businesses has also been added, allowing larger manufacturing companies to benefit.

What expenses can be claimed?

OMMITC covers two main categories of manufacturing/processing asset investments:

• Class 1 Buildings: Manufacturing/processing facilities purchased, built, or renovated in Ontario after March 23, 2023. Must meet the conditions for the additional 6% CCA on manufacturing and processing buildings under the federal Income Tax Act.
• Class 53/43 Machinery and Equipment: Machinery and equipment purchased and put into manufacturing or processing use in Ontario during the same period. New investments after 2025 are subject to Class 43, paragraph (a) provisions.

Simply Put:As long as you have a physical factory or processing facility in Ontario, investments in equipment, building construction, and production line upgrades qualify for a 15% tax rebate.A $1 million equipment investment yields a $150,000 refund; a $20 million cap investment yields up to $3 million.

CCPC vs. Non-CCPC: Two Paths

OMMITC is most favourable for CCPCs (Canadian-Controlled Private Corporations) — it's a refundable credit, with cash returned directly to the business account. Non-CCPCs (public companies, foreign-controlled enterprises, etc.) can access a 15% non-refundable credit through Expanded OMMITC, with unused amountsCarry forward up to 10 tax years。

Common requirements for both paths: have a permanent establishment in Ontario, engage in manufacturing or processing activities, and not be exempt from Ontario corporate income tax.

Disposal within five years requires repayment

OMMITC includes anti-abuse clauses: if after filingwithin five yearsIf you dispose of assets, convert them to non-manufacturing/processing use, or move them out of Ontario, you must repay a proportional amount of the credit received. The repayment is the lower of: the original credit claimed, or an amount calculated based on (disposal fair market value ÷ original capital cost). This rule applies to dispositions after May 15, 2025.

Claims are made through CRA's T2 corporate income tax return using Schedule 572. The program is administered by CRA on behalf of the Ontario government.

Frequently Asked Questions

Q: Can a small factory apply? Is there a minimum size?

No minimum size requirement. As long as you are a CCPC engaged in manufacturing or processing in Ontario and made qualifying asset investments, you can claim. The $20M annual spending cap mainly constrains large projects.

Q: How do I use the non-refundable credit under Expanded OMMITC?

Non-refundable credits cannot be cashed out directly, but can offset Ontario corporate income tax payable for the current year and the next 10 tax years. For consistently profitable non-CCPC manufacturing businesses, the real value is equivalent to a refund.

Q: Can used equipment be claimed?

OMMITC requires assets to be newly acquired or constructed after March 23, 2023. Whether used equipment qualifies depends on whether it meets the 'become available for use' condition; consult a tax advisor.

Q: Can OMMITC be stacked with other grants?

When calculating OMMITC, provincial ROITC and the OMMITC amount itself are not considered government assistance (they don't reduce capital costs), but other government grants may affect the calculation base. Specific stacking scenarios require case-by-case analysis.