OIDMTC - Funding available to Ontario digital content developers

The economy is slowly emerging from the doldrums, and investors are once again looking to drop money in digital content development across Canada. But until they find the right investment deal Ontario developers can avail of the tax credits and funds being made available to them. Tax credits, funding available to Ontario digital content developers Digital content developers, who've survived the economic turmoil of past 18 months, may sense the storm is calming, and a ray of sunlight peeking through the clouds. And maybe even a rainbow leading to a proverbial pot of gold – or at the very least some loose change to tide them over a tough time. Investors in the digital content space are becoming more active again, say experts. If developers still fail to win money from venture funds and angel investors, they can always turn to the government — especially in Ontario.

The Ontario Media Development Corporation (OMDC) is offering both a tax credit and a fund to developers, says Jennifer Blitz, director of tax credits and financing with OMDC. "There's still plenty money left." An agency of the Ontario Ministry of Culture, OMDC promotes and enhances investment, jobs and original content creation in the province's book publishing, film and television, interactive digital media, magazine publishing and music industries. Although Toronto is no Silicon Valley, where money flows freely to developers, there are still investors out there, and tax breaks to stay alive until those capital sources are found, they say.

The OMDC tax credit can be claimed for all developer expenses incurred between April 1, 2009 and March 31, 2010. To qualify, a company's revenue must be more than 50 per cent attributable to developing screen-based content and at least $30,000 of development expenses must have been paid. That could include marketing expenses. If you're trying to develop better marketing plans, you can increase your marketing budget and enhance advertising campaigns and be compensated of up to $100,000 in marketing and distribution expenses of anywhere in the world. Positioning your company to make use of tax credits could help attract investors.

Investors consider OIDMTC for funding projects

Developers can receive a better investment deal if they lay out all the historical metrics clearly. Private venture capital and angel investors search for smaller and stealthier developers. A few years ago, the tech start-up strategy would have been to raise a few million dollars and bulk up on staff really quick. That's not the case anymore, now you have investors who are looking for two guys in a room to stay that way. Developers can better win funds by planning multi-platform projects, he adds. Social games and casual games, of the variety found on Facebook, are also a hot sector right now. For video game developers currently going through the tax season crunch, some may be able to take advantage of OMDC's tax credit even if their project isn't completed yet. Some developers can now file for a tax credit on an annual basis. We need a few more details about this before I can be effusive in my happiness about annual filing. This will only apply in specific situations. To qualify for yearly filing, developers must show that 90 per cent of revenue resulted from development of games, and that 80 per cent of employee salaries went towards game development.

How to Apply

Contact our tax practitioners to find out how we can help with the complex rules and requirements of the OIDMTC program.

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