Ontario Interactive Digital Media Tax Credit (OIDMTC)

Who is eligible?

A qualifying corporation is a Canadian corporation, either Canadian or foreign-owned, which develops an eligible product at a permanent establishment in Ontario operated by it. These corporations must file an Ontario tax return to be eligible. However, corporations that are prescribed labour-sponsored venture capital corporations under the Income Tax Act (Canada) regulations and corporations that are exempt from tax or controlled directly or indirectly by a corporation exempt from tax are not eligible for the OIDMTC.

Who is not eligible

This tax credit excludes specific types of corporations based on their tax status and the primary purpose of their products. Restrictions ensure eligibility aligns with the program's objectives to support interactive digital media development.

• Corporations that are prescribed labour-sponsored venture capital corporations.
• Corporations that are exempt from tax or controlled directly or indirectly by a tax-exempt corporation.
• Products that serve primarily industrial, corporate, or institutional purposes.
• Products that are primarily a reference material or designed for information retrieval.
• Products focused on news, current events, public affairs, or weather and market reports.
• Social networking sites primarily used for interpersonal communication.
• Products that offer opinion, commentary, or advice as their main function.
• Sites aggregating internet content or functioning as a search engine.
• Content primarily promotional or for advertising purposes.
• Websites embedded in third-party sites that don't qualify as complete independent products.

Eligible expenses

The Ontario Interactive Digital Media Tax Credit (OIDMTC) encourages the development of interactive digital media products in Ontario. Eligible activities focus on creating and marketing digital media products for educational and entertainment purposes.

• Development of non-specified digital products intended for sale or licensing.
• Creation of specified digital products under fee-for-service agreements.
• Development of eligible digital games by qualifying or specialized digital game corporations.
• Production of mobile applications aimed at children under 12.
• Design and distribution of e-learning products for educational purposes.
• Marketing and distribution expenses associated with non-specified products.

Eligible geographic areas

This tax credit is available to qualifying corporations that operate from a permanent establishment in Ontario. The program targets Ontario-based digital media companies to support local economic development.

• Business operations must be located in Ontario.

Here are additional relevant details for this grant:

• The Ontario Interactive Digital Media Tax Credit (OIDMTC) can be combined with other tax credits, such as the Scientific Research & Experimental Development (SR&ED), provided the activities are distinct and properly documented.
• The application must include full disclosure of all developmental labor expenditures, even if not included in the OIDMTC claim, except for claims under specialized digital game corporations or qualifying digital game corporations.
• Upon filing, corporations are not required to wait for the Certificate of Eligibility to submit their corporate tax return but must provide an estimate of the OIDMTC amount.
• No preliminary assessments on product eligibility are offered by Ontario Creates, but applicants can consult them before submission.
• The administrative fee for processing the tax credit application is 0.15% of eligible expenditures, with a minimum fee of $1,000 and a maximum of $10,000.
• The CRA applies a "look-through approach" to remuneration, limiting qualifying labour expenditures to amounts it would pay directly to employees.