Ontario Creates provides a tax incentive to companies in Ontario for developing and marketing interactive digital media products. Types of interactive digital media products include, but are not restricted to, digital games, mobile applications, and e-learning products for children.
Two funding streams are available under the OIDMTC tax credit program:
- Non-specified product – A 40% refundable tax credit for products developed in-house
- All Other – The credit is 35% refundable tax credit for companies that develop under a fee-for-service arrangement or large digital game corporations that develop digital games.
Eligible Activities & Expenditures:
Labor expenditures and marketing and distribution expenditures (for non-specified products only; capped at $100,000 per product). Eligible labor expenditures include salaries and wages for employees and contract fees.
Definition of Interactive Digital Media for OIDMTC purposes:
A product must be an interactive digital media product whose primary purpose is to entertain users or educate children under 12 and presents information in at least two of:
(i) text, (ii) sound and (iii) images.
Who can apply?
Any Canadian corporation, which develops an eligible product at a permanent establishment in Ontario operated by it, and files an Ontario tax return.
Within 18 months after the company’s year-end in which the development of the product was completed.
What Is It?
The refundable tax credit based on eligible Ontario labour expenditures and eligible marketing and distribution expenses for interactive digital media products.
How much is the Tax Credit?
A 40% tax credit is available for eligible Ontario labour expenditures and eligible marketing and distribution expenses for companies that develop and market their own products.
The credit is 35% on eligible Ontario labour expenditures for products developed under a fee-for-service arrangement.
A 35% credit on eligible labour expenditures is also available to digital game corporations and specialized digital game. Eligible marketing and distribution expenses are capped at $100,000 per non-specified product.
What Types of Products Are Eligible for the Tax Credit?
There are four types of products that can be claimed: non-specified products, specified products, eligible digital games developed by a qualifying digital game corporation, and eligible digital games developed by a specialized digital game corporation. Types of interactive digital media products that may be eligible include: digital games, mobile applications, and e-learning products for children.
What Expenditures Are Eligible?
Labour expenditures and marketing and distribution expenditures (for non-specified products only). Eligible labour expenditures include salaries and wages for employees and contract fees.
Eligible Labour expenditures must also be paid to individuals resident in Ontario, directly attributable to the development of the eligible product, and paid for services rendered at a permanent establishment in Ontario. Eligible labour expenditures incurred up to 3 years before the completion of the product can be included in the OIDMTC claim.
Up to $100,000 of eligible marketing and distribution expenditures related to a non-specified (developed in-house) product can be included. Eligible marketing and distribution expenses up to 24 months prior to the completion of the eligible interactive digital media product, and those incurred 12 months after the completion of the product can be claimed.
Marketing and distribution costs cannot be claimed for specified products or for games developed by qualifying digital game corporations or specialized digital game corporations.
Other Interactive Digital Media Tax Credits in various provinces in Canada:
|Ontario Interactive Digital Media Tax Credit
40% of eligible labour costs and a maximum of $100,000 in marketing/distribution expenditures
|For the purposes of OIDMTC, the IDM product will feature the primary purpose to educate, inform or entertain through the use of at least two of i) text, ii) image and iii) sound. The IDM product must be user-controlled and not be developed primarily for interpersonal communication. Eligible products include mobile applications, video games, and educational software, among many others.|
|Ontario Computer Animation and Special Effects Tax Credit
18% of total labour costs
|OCASE is a refundable tax credit administered by Ontario Creates based on eligible expenses incurred with respect to computer animation and special effects activities. Eligible companies may include animation or visual effects houses, post-production houses and film and television production companies.|
|Quebec Computer Animation and Special Effects Tax Credit
16% of eligible labour and production costs
|Must be eligible for Quebec Film and Television Production Tax Credit or Quebec Production Services Tax Credit. Must perform computer animation and special effects or shoot in front of a chromatic screen.|
|Quebec Multimedia Production Tax Credit
Up to 37.5% of eligible labour costs.
|The company must be established in Quebec. Titles must be published electronically, using software that supports interactivity, and substantially contains three of the four types of information: text, sound, still images and animated images. (Video images are considered as only one media component.)
Digital animation films associated with an eligible multimedia title are also eligible. However, the labour expenditure related to the main multimedia title with which the related title is associated must be at least $1M.
|BC Interactive Digital Media Tax Credit
17.5% of eligible labour costs
|The company must be established in British Columbia.
Wages/salaries for the year must exceed $100,000. Interactive digital media must educate, inform or entertain through at least two of the three types of information: text, sound, or images.
|BC Digital Animation or Visual Effects Tax Credit
16% of eligible labour costs
|The company must be established in British Columbia. Part of the British Columbia Film and Television Tax Credit and can only be claimed in conjunction with the “basic tax credit” of the Film and Television credit.|
|Manitoba Interactive Digital Media Tax Credit
40% of eligible labour costs up to a maximum of $500,000
|The Manitoba IDMTC is a refundable tax credit offered to companies developing and producing interactive digital media products in Manitoba. The product must be approved by the Department of Growth Enterprise and Trade.|
|New Brunswick Digital Media Development Program
30% of eligible labour costs up to a maximum of $500,000
|The company must be established in New Brunswick. Must develop game engines or games with entertainment/serious gaming applications. Annual gross revenues cannot exceed $20M and total assets cannot exceed $10M during the preceding taxation year. Cannot just be in the research stage, must be in advanced development.|
|Nova Scotia Digital Media Tax Credit
50% of eligible labour costs or 25% of total expenditures with the additional regional bonus of 10% of eligible labour expenditures or 5% of total expenditures.
|Nova Scotia’s DMTC is a refundable tax credit for the development of an interactive digital media product. Like the OIDMTC, the interactive digital media product must have the primary purpose to educate, inform or entertain, and presents information in at least two of the forms text, sound, and image.|
|PEI Innovation and Development Labour Rebate
25% of eligible labour costs
|PEI’s Video Game Labour Rebate provides a rebate to game studios producing video game titles based on eligible labour costs. The PEI Game Plan program offers quarterly payments of the rebate based on actual payroll records to enable cash-flow during the game development cycle.|