Date: February 20, 2009
Dear Premier McGuinty:
We are writing to you at this critical juncture for
We believe that it is critical for your Government’s next Budget to address the issue faced by the sector as you re-establish the framework for long-term growth in
As an introduction, I am providing you with a copy of a recent white paper issued by CATAAlliance that outlines the crisis that has occurred in
The Ontario Innovation Tax Credit (OITC) coupled with the Federal Government’s Scientific Research and Experimental Development (SR&ED) Tax Credits are the key sources of government support for business innovation in
· the OITC expenditure limit be increased from $2 million to $3 million of qualifying SR&ED expenditures; and
· the taxable income phase-out range of between $400,000 and $600,000 under the OITC be extended to a new upper limit of $700,000 of taxable income.
We recommend that:
· Ontario should also parallel the federal improvement to the refundable SR&ED Tax Credits provided in the 2009 Federal Budget, January 27, 2009, by extending the taxable income phase-out range to between $500,000 and $800,000 for the Ontario Investment Tax Credit. 
While this may seem like a small change, it is important and will be helpful.
· We also propose a new, additional 5% Ontario SR&ED tax credit. It would be non-refundable but could be used to offset any provincial government remittances if a company did not have sufficient
The proposed, new 5% Ontario SR&ED tax credit should be made available for all SR&ED expenditures not currently eligible for the OITC (either because a company is not eligible to access the OITC or because a company’s SR&ED expenditures exceed the new $3 million limit).
· Finally, we urge the Ontario Government to work closely with stakeholders to understand their concerns with issues arising from the current administrative practices of the Canada Revenue Agency (CRA), the administrators of the SR&ED program for the
In respect to these concerns, we note that the Federal Government committed to improvements in their 2008 Budget. However, many
We would ask that you and/or the appropriate Ministers who need to better understand these issues meet with Allen Berg, Chairman of Computer Methods International Corp. (CMiC), who is also the CATAAlliance board member responsible for this file in
c.c.: Michael Bryant, Minister of Economic Development
Dwight Duncan, Minister of Finance, Minister of Revenue
Allen Berg, Chairman, Computer Methods International Corp. (CMiC), and member of Board of Directors, CATAAlliance
Karen Wensley, Ernst &Young
Russ Roberts, CATAAlliance
 2009 Federal Budget, Annex 5, “Business Income Tax Measures”, “Small Business Limit”.