Ontario Interactive Digital Media Tax Credit
At a glance
- No Condition
- Open Date : November 14, 2019
- Information and cultural industries
- Government of Ontario
- Ontario Creates
Overview
Eligibility criteria
The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a refundable tax credit available to qualifying corporations for eligible Ontario labour expenditures and marketing and distribution expenses related to interactive digital media products. Eligible corporations must be Canadian-owned, develop eligible products in Ontario, and file an Ontario tax return.
- Qualifying corporation must be Canadian-owned and have a permanent establishment in Ontario
- Products must be interactive digital media products primarily for entertainment or education of children under 12
- Labour expenditures must meet the 80/25 rule with 25% attributable to eligible wages of employees and 80% to eligible wages and remuneration paid to others
- Eligible products include non-specified products, specified products, and digital games developed by qualifying or specialized digital game corporations
- Ineligible products include certain types of websites, talk shows, and products primarily for corporate or industrial purposes
Who is eligible
Eligible types of companies for the Ontario Interactive Digital Media Tax Credit (OIDMTC) include qualifying corporations that develop eligible interactive digital media products at a permanent establishment in Ontario. Specifically, qualifying digital game corporations and specialized digital game corporations are eligible for this tax credit.
- Qualifying corporations that develop eligible interactive digital media products
- Qualifying digital game corporations
- Specialized digital game corporations
Eligible expenses
Eligible expenses for the Ontario Interactive Digital Media Tax Credit (OIDMTC) include eligible Ontario labour expenditures and eligible marketing and distribution expenses related to the creation of interactive digital media products. Eligible expenses must meet specific criteria outlined in the OIDMTC guidelines.
- Salaries and wages for employees
- Remuneration paid to arm's length persons
- Marketing and distribution expenses for non-specified products
- Eligible digital games developed by qualifying digital game corporations
- Eligible digital games developed by specialized digital game corporations
Eligible projects & activities
Projects or activities eligible for the Ontario Interactive Digital Media Tax Credit (OIDMTC) include interactive digital media products such as digital games, mobile applications, and e-learning products for children. To qualify for the tax credit, products must entertain users or educate children under 12 through text, sound, and images.
- Digital games
- Mobile applications
- E-learning products for children
- Interactive digital media products
Evaluation & selection criteria
There are evaluation and selection criteria for this grant. The evaluation and selection criteria include:
- Qualifying as a Canadian corporation with a permanent establishment in Ontario
- Developing eligible interactive digital media products
- Meeting the 80/25 rule based on labour costs
- Possessing eligible marketing and distribution expenses for non-specified products
How to apply
- Step 1: Determine Eligibility
- Review the eligibility criteria outlined by the Ontario Interactive Digital Media Tax Credit (OIDMTC) to ensure your corporation meets the requirements.
- Confirm that your corporation is a Canadian corporation that develops eligible products at a permanent establishment in Ontario. Ensure that your corporation files an Ontario tax return.
- Step 2: Prepare Documentation
- Gather all necessary documentation such as financial records, labor expenditure details, marketing and distribution expenses, and any other relevant information required for the application process.
- Ensure that the documentation supports the eligible expenditures claimed for the interactive digital media products.
- Step 3: Apply for Certification
- Submit an application to Ontario Creates for a certificate of eligibility under the OIDMTC program.
- Include the gathered documentation and any additional supporting materials as required by the application guidelines.
- Step 4: Coordinate with Canada Revenue Agency
- Upon receiving the certificate of eligibility, file the OIDMTC claim along with your tax return to the Canada Revenue Agency (CRA).
- Collaborate with the CRA for the processing and evaluation of your tax credit claim based on the eligible expenditures.
- Step 5: Receive and Utilize Tax Credit
- Upon approval, receive the OIDMTC tax credit amount which can be used to offset taxes owed or claimed as a refund.
- Utilize the tax credit funding for further development, marketing, or distribution of interactive digital media products.
Summary of Ontario Interactive Digital Media Tax Credit (OIDMTC)
The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a refundable tax credit offered to qualifying corporations in Ontario for eligible expenditures related to the creation of interactive digital media products. The tax credit rates vary based on the type of product and can be as high as 40% for eligible Ontario labour expenditures and marketing and distribution expenses.
Understanding the Ontario Interactive Digital Media Tax Credit (OIDMTC)
The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a valuable incentive program aimed at supporting interactive digital media product development in Ontario. Qualifying corporations engaging in the creation of eligible interactive digital media products can benefit from a refundable tax credit based on their eligible Ontario labour expenditures and marketing and distribution expenses.
The OIDMTC provides a 40% tax credit rate for eligible Ontario labour expenditures and marketing expenses related to non-specified products created and marketed by qualifying corporations. For products developed under a fee-for-service arrangement (specified products), the tax credit rate is 35%. Additionally, qualifying digital game corporations and specialized digital game corporations are eligible for a 35% credit on eligible labour expenditures, with specific criteria for each category.
To be eligible for the tax credit, products must meet specific criteria, including having a primary purpose of entertaining users or educating children under 12 and presenting information through text, sound, and images. The regulations exclude certain types of products such as websites that do not meet the defined criteria.
The administration of the OIDMTC involves applying for a certificate of eligibility from Ontario Creates, filing the certificate with the Canada Revenue Agency along with the tax return, and receiving the credit amount, net of any applicable taxes owed. The program is jointly administered by Ontario Creates and the Canada Revenue Agency.
Overall, the OIDMTC serves as a valuable financial incentive for companies in Ontario engaged in the development of interactive digital media products, encouraging innovation and growth in the digital media industry.