Ontario AI Grants & Funding Programs

Ontario's Tech Ecosystem Advantage

Ontario is the beating heart of Canada's technology economy. With the Toronto–Waterloo corridor recognized as one of North America's top tech clusters, the province is home to over 60% of Canada's tech companies and some of the world's leading AI research institutions, including the Vector Institute, the University of Toronto's machine learning group, and the Perimeter Institute.

This concentration of talent and innovation has attracted billions in venture capital and led both provincial and federal governments to create a rich tapestry of funding programs designed to keep Ontario competitive on the global stage. For AI and technology companies, this translates into multiple overlapping grants and tax credits that can significantly reduce the cost of building, scaling, and commercializing products in the province.

Whether you are a pre-revenue startup developing a novel AI application or an established company investing in digital transformation, Ontario offers funding programs at every stage. The key is understanding which programs apply to your situation and how to stack them for maximum benefit.

OIDMTC — Ontario Interactive Digital Media Tax Credit

The Ontario Interactive Digital Media Tax Credit (OIDMTC) is one of the most valuable and under-claimed incentives for Ontario tech companies. It provides a 40% refundable tax credit on eligible Ontario labour expenditures for companies developing interactive digital media products.

Unlike SR&ED, OIDMTC does not require technological uncertainty. If your company is building a SaaS platform, an AI-powered application, a mobile app, an e-learning tool, or any other interactive software product, you likely qualify. The credit is fully refundable, meaning you receive the cash back even if your company has no Ontario tax payable.

Administered by Ontario Creates, the program requires a Certificate of Eligibility and that at least 25% of total labour costs be paid to Ontario-based individuals. For a company with $1 million in eligible Ontario development labour, the OIDMTC alone returns $400,000 in refundable credits.

Read our full OIDMTC guide →

FedDev Ontario — Federal Economic Development

FedDev Ontario is the federal government's regional development agency for southern Ontario. It provides direct funding to businesses, not-for-profits, and innovation ecosystems to strengthen the regional economy. For tech and AI companies, FedDev Ontario offers contributions of up to $10 million for innovation projects that support economic development and growth in southern Ontario.

FedDev Ontario programs have supported companies across a range of activities, including commercializing new technologies, scaling operations, expanding into new markets, and adopting advanced manufacturing and AI capabilities. The agency also funds innovation ecosystem organizations, incubators, and accelerators that support Ontario's tech sector.

Key FedDev Ontario programs include the Regional Innovation Ecosystem program, the Business Scale-up and Productivity program, and targeted calls for proposals in priority sectors including advanced manufacturing, clean technology, and digital innovation. Funding is typically provided as non-repayable contributions, though some programs involve repayable contributions or interest-free loans.

For more information, visit the FedDev Ontario website.

Ontario Centres of Excellence (OCE) / Ontario Vehicle Innovation Network

The Ontario Centres of Excellence (OCE), now integrated into the Ontario Vehicle Innovation Network (OVIN) and broader provincial innovation programs, has historically been a cornerstone of Ontario's collaborative R&D funding landscape. OCE programs connect industry with academic institutions to drive collaborative research and development, technology commercialization, and talent development.

For AI companies, OCE-style programs offer funding for collaborative projects with Ontario universities and research institutions. These programs typically require a matching contribution from the industry partner and involve joint research with academic researchers. The focus is on moving technologies from the lab to the market, with particular emphasis on AI, advanced computing, autonomous systems, and data-driven innovation.

Ontario's innovation funding landscape continues to evolve, and new programs regularly emerge through Ontario's Ministry of Economic Development, Job Creation, and Trade. Companies interested in collaborative R&D with academic partners should monitor provincial announcements and explore current program offerings.

SR&ED Ontario Top-Up Credit

Ontario adds a 3.5% provincial refundable tax credit on top of the federal SR&ED program through the Ontario Innovation Tax Credit (OITC). This means Ontario companies performing qualifying research and development receive both the federal SR&ED credit and an additional Ontario-specific credit.

For Canadian-controlled private corporations (CCPCs), the combined federal and Ontario SR&ED credits can reach approximately 38.5% on the first $3 million of eligible R&D expenditures. This makes Ontario one of the most tax-advantaged provinces in Canada for R&D-intensive activities, particularly for AI companies whose work often involves significant technological uncertainty and experimentation.

The OITC is claimed as part of your Ontario corporate tax return, and the eligible expenditures mirror those of the federal SR&ED program. If you are already claiming federal SR&ED, the Ontario top-up is straightforward to claim with minimal additional paperwork.

Read our full SR&ED guide →

Ontario Together Fund & Ontario Made Initiatives

The Ontario Together Fund was launched to support Ontario businesses in retooling, innovating, and building domestic supply chain capacity. While initially focused on pandemic response, the program has evolved to support broader innovation and domestic manufacturing initiatives. Ontario Made is a complementary initiative that promotes products and services developed and produced in Ontario.

For tech companies, these initiatives can support the development of Ontario-built technology solutions, particularly in areas aligned with provincial priorities such as healthcare technology, clean energy, advanced manufacturing, and critical supply chain infrastructure. Funding availability and program terms vary, and companies should check the Ontario government's economic development portal for current offerings.

How to Stack Ontario Programs for Maximum Funding

The real power of Ontario's funding ecosystem lies in the ability to stack multiple programs on different eligible expenditures. Here is how a typical Ontario AI company can combine OIDMTC, SR&ED, IRAP, and CDAP (closed)/BDC Data to AI for maximum benefit:

Example: Ontario AI Startup Stacking Scenario

Consider an Ontario-based AI startup with $1.5 million in total annual development costs:

This stacking strategy requires careful planning and documentation to ensure no expenditures are double-counted across programs. The key is allocating different activities and expenditures to the most appropriate program. An experienced grants advisor can help structure this allocation to comply with all program requirements while maximizing your total recovery.