What Is It?
The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a refundable tax credit for the development and commercialization of interactive multimedia products. If your product’s primary purpose is to educate, inform or entertain, you may qualify for the credit. Both provincial labour expenditures and marketing and distribution expenses can be claimed.
How much is the Tax Credit?
The OIDMTC is calculated as 40% of Ontario labour, marketing and distribution expenses, for corporations which create their own interactive digital media products in Ontario. For corporations that develop products under a fee-for-service arrangement, the OIDMTC tax rate is 35% on qualifying expenditures.
Who is Eligible?
A Canadian corporation (that is Canadian or foreign-owned), that develops an eligible product at a permanent establishment in Ontario and files an Ontario tax return.
What Types of Products Are Eligible for the Tax Credit?
To be eligible for the OIDMTC a product must be an interactive digital media product whose primary purpose is to educate, inform, or entertain, and that achieves its primary purpose by presenting information in at least two of: text, sound and images.
Digital Media Game Corporations
The OIDMTC is available at a 35% tax credit rate to qualifying digital game corporations that incur a minimum $1 million of eligible Ontario labour costs over a 3 year period for fee-for-service work done in Ontario that is directly related to the development of a digital game. Qualifying digital game corporations would not be required to be at arm’s length with the purchaser corporation, or to develop all, or substantially all, of the eligible product.
The OIDMTC is also available at a 35% tax credit rate to specialized digital game corporations that have either 80% of Ontario payroll or 90% of annual revenues attributable to interactive digital media game development with a minimum of $1 million of Ontario labour expenditures in the taxation year directly attributable to the development of eligible digital games. 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, or to develop all, or substantially all, of the products included in the claim.
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