WHAT IS ELIGIBILE FOR OIDMTC (ONTARIO INTERACTIVE DIGITAL MEDIA)
What is eligible for Ontario Interactive Digital Media Tax Credit?
The credit may be claimed with respect to qualifying Ontario expenditures which include eligible labour expenditures and marketing and distribution expenditures (for non-specified products only). Eligible labour expenditures are 100% of salaries and wages for employees and 100% of remuneration incurred after March 26, 2009 and paid to arm's length persons who are not employees. For specified and non-specified products, "persons" may include individuals, partnerships and corporations. For eligible remuneration expenditures incurred prior to March 26, 2009 see chart below. Please note: for eligible digital games developed by qualifying digital game corporations and specialized digital game corporations, remuneration does not include amounts paid to another taxable Canadian corporation for the services of its employees.
What type of expenditures are eligible OIDMTC ?
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. For those products completed after March 25, 2008, eligible labour expenditures incurred in the three-year period prior to the completion of the product can be included in the OIDMTC claim. For products completed prior to March 26, 2008, eligible labour expenditures incurred in the two-year period prior to completion can be claimed
Up to $100,000 of eligible marketing and distribution expenditures related to a non-specified product can be included. Eligible marketing and distribution expenses are those incurred in the 24-month period prior to the completion of the eligible interactive digital media product, and those incurred in the twelve months following the completion of the product. Expenditures that have already been claimed as eligible Ontario labour expenditures cannot be claimed as marketing and distribution expenditures.
For specified products and eligible digital games developed by qualifying digital game corporations or specialized digital game corporations, qualifying expenditures are restricted to eligible labour expenditures and do not include marketing and distribution expenditures.
Does your product qualify for the OIDMTC Tax Credit?
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. Our team offers advisory and claim preparation services to companies in Canada who may be eligible for this credit. Our Tax professionals can help you identify OIDMTC eligibility – whether prior to or upon completion of product development – through our insight and understanding of the relevant legislation and program rules.
We can assist by:
You may not consider yourself in the digital media sector, but your products may qualify. Preparation of an OIDMTC application with us may be done on a contingent fee arrangement, meaning that payment for services is not required until credit is approved and acquired.
How is the tax credit administered?
The OIDMTC is jointly administered by the Ontario Media Development Corporation (OMDC) - an agency of the Ministry of Tourism, Culture and Sport - and the Canada Revenue Agency. Application is made to the OMDC for a certificate of eligibility, which the production company files with the Canada Revenue Agency together with its tax return in order to claim the OIDMTC. The amount of the credit, net of any Ontario taxes owing, will be paid to the qualifying corporation. If the qualifying corporation does not owe any taxes, the full amount will be paid out.
What is the rate of the OIDMTC tax credit?
- 40% of eligible expenses incurred after March 26, 2009 for corporations that develop their own products
- 35% of eligible expenses incurred after March 26, 2009 for corporations that develop products under a fee-for-service arrangement
- 35% of eligible expenses incurred after March 26, 2009 for certified game developers
For corporations that develop their own products, eligible expenses include eligible labour, marketing and distribution expenses used to develop and promote eligible products. For corporations that develop products under a fee-for-service arrangement, eligible expenses include labour expenses used to develop eligible products. Eligible expenses include 100% of contractor payments related to the contractor employees' salaries and wages. For a certified game developer, eligible expenses include Ontario salaries and wages. The developer must incur at least $1 million of Ontario labour expenses per year developing eligible interactive digital media games to qualify. For expenses incurred after March 26, 2009, digital media game developers with at least $1 million in eligible labour expenses over 36 months can claim the OIDMTC under a fee-for-service arrangement. Qualifying corporations must meet the 80/25 Test. The 80/25 test has replaced the previous 90% development requirement. The new OIDMTC rule requires that 80% of total development labour costs to create the digital media product be for labour conducted in Ontario and paid to your company’s Ontario resident employees, and eligible remuneration paid to arm’s length personal services corporations, and individuals providing services as part of a sole proprietorship with no employees. In addition, 25% of total development labour costs to develop the product must be paid to your Ontario based employees for work completed in Ontario.
Eligibility
To qualify, an eligible corporation:
To qualify as a small corporation:
OIDMTC Eligible Activities
How to Apply
To begin the application process and start compensating your company's operations, please contact a Media Funds professional today.
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