Ontario Interactive Digital Media Tax Credit (OIDMTC)
no fixed amount
Tax Credit
Description:
The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a refundable tax credit based on eligible Ontario labor expenditures and eligible marketing and distribution expenses claimed by a qualifying corporation with respect to interactive digital media products.
Comments on Funding:
Funding on eligible Ontario labor expenditures and eligible marketing and distribution expenses incurred by qualifying corporations that develop and market their own products (known as “non-specified products”) is 40% tax credit . Funding on eligible Ontario labor expenditures for products developed under a fee-for-service arrangement (known as “specified products”) is 35% tax credit.
Funding on eligible labour expenditures for qualifying digital game corporations and specialized digital game corporations is 35% tax credit.
Eligible marketing and distribution expenses are capped at $100,000 per non-specified product.
There is no limit on the amount of eligible Ontario labour expenditures which may qualify and there is no per-project or annual corporate limits on the amount of the OIDMTC which may be claimed.
Rolling deadline
Eligibility:
The applicant must:
1. be a Canadian corporation (Canadian or foreign-owned), 2. develop an eligible product at a permanent establishment in Ontario operated by it, and 3. file an Ontario tax return
Corporations that are prescribed labour-sponsored venture capital corporations under the regulations made under the Income Tax Act (Canada) and corporations that are exempt from tax or are controlled directly or indirectly by a corporation exempt from tax are not eligible for the OIDMTC.
Additional eligibility criteria for qualifying digital game corporations:
1. have either 80% of Ontario payroll or 90% of annual revenues attributable to interactive digital media game development; 2. must incur a minimum $1 million of eligible Ontario labour costs over a three- year period for fee-for-service work done in Ontario that is directly related to the development of a digital game;
3. not be a corporation the primary activity of which is to provide the services of a single individual and all the issued and outstanding shares of the capital stock of which are owned by that individual.
Specialized digital game corporations are entitled to file an annual OIDMTC application and would not be required to contract with an arm’s length purchaser and do not have to meet the new 80/25 rule.
Corporations that are prescribed labour-sponsored venture capital corporations under the regulations made under the Income Tax Act (Canada) and corporations that are exempt from tax or are controlled directly or indirectly by a corporation exempt from tax are not eligible for the OIDMTC.
Application Steps:
The applicant must:
1. register on Ontario Creates Online Application Portal to access the Application Form,
2. apply to Ontario Creates for a certificate of eligibility within 18 months of the end of the tax year in which development of the eligible product was completed. Specialized digital game corporations are entitled to file an annual application, rather than having to apply separately for each product they complete,
3. pay the administration fee to Ontario Creates at the time of submission of the application,
4. file the certificate of eligibility and a completed Schedule T2SCH560, Ontario Interactive Digital Media Tax Credit, for each eligible product or each eligible digital game together with the tax return to Canada Revenue Agency in order to claim the Ontario Interactive Digital Media Tax Credit.
Fees:
1. The Administration Fee is calculated as 0.15% of the total final Eligible Expenditures. The minimum Administration Fee is $1,000 and the maximum is $10,000 per application.
2. There is an additional filing fee of $100 for non-specified products that are only making a marketing and distribution claim for an eligible product that was previously certified, if the application for the marketing and distribution claim is received more than 18 months from the subsequent year-end following the year in which the eligible product was completed.
3. There is a fee of $100 for amended Certificates.
Documentation Needed:
To claim the credit, the following documentation is needed: 1. the T2 Corporation Income Tax Return form for the year,
2. a certificate of eligibility (or copy) issued Ontario Creates,
3. a completed Schedule 560, Ontario Interactive Digital Media Tax Credit, for each eligible product or each eligible digital game.
4. a completed OIDMTC Application Form, including:
a) Administration Fee and other fees if applicable;
b) Incorporation documents for your company, including amendments;
c) Corporate chart for Qualifying Corporation. Please complete and sign the Corporate Schedule for the applicant company for the fiscal year of the application with all the information requested on the form. If applying for an OIDMTC for non-specified and specified products, please provide a corporate chart for all associated companies (e.g. chart or schedule indicating the relationship between the applicant corporation and all associated corporations, including percentage of share ownership);
d) Consolidated annual financial statements of applicant’s company for the current tax year;
e) Description of product development: Design and technical specification documentation, where applicable, including a flow chart, functional design, a description of the user experience, storyboard, a list of technical requirements and specifications or script;
f. Complete, detailed production schedule and timeline showing who did what and when (e.g. Gantt chart).
g. Financing plan/sources of financing for the interactive digital media product (required for each interactive digital media product included in the application).
h. Financing contracts, if available (for all sources of financing for each interactive digital media product included in the application). Include financing documents for government assistance/grants;
10. A description of the product is required.
and so on…
Other Things to Note:
FAQs are available as of January 2023. There is an application deadline that requires your company to apply to Ontario Creates for an OIDMTC Certificate of Eligibility for specified and/or non-specified products by the day that is 18 months after the end of your company’s taxation year in which development of the eligible product(s) was completed.
Date modified: 2022-06-17 – Source2
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Maurice
