Momentum: BDO’s Manufacturing and Distribution Leadership Report
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The Ontario Made Manufacturing Investment Tax Credit can be an important financial instrument for manufacturers as they face an increasingly complex and volatile operating environment. With rising costs and the ongoing impact of tariffs on supply chains and inputs, this credit offers much-needed support to help manufacturers invest in productivity, innovation, and competitiveness.
What is the Ontario Made Manufacturing Investment Tax Credit?
The Ontario Made Manufacturing Investment Tax Credit is a refundable corporate income tax credit for eligible Ontario-based manufacturers who make qualifying investments of up to $20 million in a taxation year. Qualifying investments include expenditures in buildings, machinery, and equipment for use in manufacturing or processing in Ontario.
What are the proposed enhancements to the OMMITC?
The 2025 Ontario budget proposed two key changes to the OMMITC.
The 2025 Ontario budget is proposing to temporarily increase the OMMITC tax credit rate on eligible expenditures to 15%, up from 10%, for Canadian-controlled private corporations (CCPCs) resulting in an increase to the maximum credit of $3 million per year (up from $2 million), based on the $20 million expenditure limit.
Eligibility remains unchanged for Canadian-controlled private corporations, which must meet the following requirements:
- are not exempt from Ontario corporate income tax for the taxation year; and
- carry on business in Ontario in the taxation year through a physical permanent establishment in Ontario (such as an office, a factory or a workplace).
For the first time, non-CCPCs (i.e. foreign-owned corporations and publicly traded companies) that make eligible investments in Ontario and have a permanent establishment in Ontario may now be eligible to receive the OMMITC. These entities would receive a 15% non-refundable corporate income tax credit on qualifying capital investments.
Both proposed changes would apply to expenditures made on or after May 15, 2025, and before 2030.
What are qualifying investments under the OMMITC?
The credit applies to capital purchases supporting manufacturing and processing operations in Ontario, including:
- Expenditures for constructing, renovating, or acquiring buildings used for manufacturing or processing goods in Ontario (Class 1 properties).
- Expenditures for machinery and equipment used in the manufacturing or processing of goods in Ontario (Class 53 properties, or Class 43(a) after 2025).
Qualifying investments for CCPCs must be available for use on or after March 23, 2023, or on or after May 15, 2025, for non-CCPCs.
How can I claim the Ontario Made Manufacturing Investment Tax Credit?
The Canada Revenue Agency (CRA) administers the OMMITC on behalf of the Ontario government.
Detailed documentation of capital expenditures and their relation to manufacturing or processing activities in Ontario is essential for compliance. Reach out to our Credits & Incentives team to ensure you have proper documentation in place and you are not subject to repayment of the credit due to non-compliance.
How the OMMITC can help improve manufacturing processes
The enhanced OMMITC can help address common challenges we see in the sector—for example, outdated equipment and innovation gaps—that put market share and competitiveness at risk.
Facilitates capital investment
The increased 15% tax credit reduces the cost of capital-intensive purchases, such as advanced machinery and modernized facilities, enabling manufacturers to upgrade critical infrastructure. This financial relief frees up capital for reinvestment, allowing businesses to scale operations and meet growing demand for capacity.
Boosts productivity and innovation
Offsetting the cost of new machinery and equipment, the credit supports advanced technologies like robotic process automation, smart manufacturing systems, and energy-efficient infrastructure, driving innovation and competitiveness in Ontario’s manufacturing sector. Modernized equipment can enhance operational efficiency, reduce downtime, and improve output quality, positioning manufacturing businesses to compete globally.
Helps retain skilled workers
Manufacturers leveraging the OMMITC are better positioned to retain skilled jobs by maintaining competitiveness. The credit can help prevent unnecessary layoffs caused by inefficiencies, and it also supports workforce development by freeing up capital for upskilling efforts.
We can help you leverage manufacturing incentives
We help manufacturing businesses modernize operations, improve productivity, and drive long-term financial growth through strategic use of government incentives like the OMMITC.
Our firm brings deep industry knowledge and experience navigating tax credits and government incentives while ensuring full compliance with complex regulations. Using technology and data-driven insights, we enhance claims and identify overlooked opportunities. From claim preparation and documentation strategy to audit defence and ongoing support, our end-to-end approach helps reduce risk and deliver stronger results.
Enhance your Ontario manufacturing tax credit opportunities
To further discuss manufacturing and distribution solutions as well as available tax credit opportunities, please contact our leaders.
The information in this publication is current as of Sept. 10, 2025.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.