Tax Measures Relating to
Commercialization
More to be Done
Paul Carenza, Ogilvy Renault LLP
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Federal and Provincial SR&ED Credit
Regimes
 Not directly related to commercialization but effect can be
beneficial to shelter income
 Refundable and non-refundable tax credits in respect of
eligible expenditures
 Carried forward for 20 years to apply to income
 Are they benefits of the regimes fully utilized?
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Ontario’s OTEC
 Introduced in 2008 Budget
 10 year corporate tax exemption
 New corporation
 Earning 90% of its income from an eligible
commercialization business
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Eligible Commercialization Business
 an advanced health technology business
 a bioeconomy business
 certain telecommunications, computer or digital technologies
production businesses, or
 any business that satisfies conditions to be prescribed by future
regulations
that has as its sole purpose:
 the sale of property that derives more than 50 % of its value
from eligible intellectual property,
 the sale of property an essential element of which is eligible
intellectual property,
 the licensing of computer programs that are eligible intellectual
property, or
 any other purpose as may be prescribed by future regulations.,
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Eligible Intellectual Property

Property that was developed in the course of employment or academic study at a
qualifying institute, by one or more individuals each of whom is an inventor for the
purposes of the Patent Act (Canada), an author for the purposes of the Copyright
Act (Canada), or certain individuals prescribed by the Ontario Minister of Finance,

that has never been owned by anyone other than one or more of (i) the qualifying
institute (ii) one or more individuals who created the property as an employee or a
student of the qualifying institute, or (iii) the qualifying corporation,

that was disclosed to the qualifying institute where the research was conducted in a
timely manner under the institute’s official intellectual property disclosure policy, and

that is (i) a patent issued under the Patent Act, (ii) intellectual property in respect of
which an application for a patent was filed under the Patent Act and in respect of
which a patent is issued no later than 10 year after the incorporation of the
qualifying corporation, (iii) the copyright in a computer program that constitutes a
technological advancement at the time the computer program is completed or (iv)
certain intellectual property prescribed by the Ontario Minister of Finance.
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OTEC Restrictions
 New corporation cannot be related to another
corporation
 Cannot sell the IP to an existing corporation
 Restrictions on VC investment
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OTEC Restrictions
Inventor’s Relative
Inventor
New Corporation
IP
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are related
Unrelated Business
OTEC Restrictions
Inventor
New Corporation
IP
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Investors
may be
Associated
Other Investees
Owner
Flow Through Shares?
 Adapt FTS mechanisms for IP/IT use
 Incentivize investors
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Contact
If you have questions or would like further information,
please contact:
Paul Carenza
T: 416.216.1885
E: [email protected]
W: www.ogilvyrenault.com
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