Ontario and other provinces remain committed to the development of interactive digital media in Canada. The IDMTC is a refundable tax credit for corporations developing interactive digital media products. Following criteria should be fulfilled to be qualified:
- Primary purpose is to educate, inform or entertain the user (i.e. video games, e-learning programs, informational products)
- Product must include two of text, sound or images
- Product is used by individuals
- User can select which information is presented and the sequence
- All or substantially all development work was performed in Ontario by Ontario tax payers
- Canadian or foreign owned that develops product at a permanent establishment in Ontario
- Files an Ontario corporate tax return
Common eligible Interactive Digital Media project examples include:
- On-line interactive accompaniments to products – movies, books, games, etc.
- On-line training and education
- Games or any app that entertains console / web / mobile / social media
- Software / apps that inform – expert systems
- On-line newspapers / broadcasters
The benefit is equal to:
Self owned (“non-specified products”) Intellectual Property Interactive Digital Media (IDM) products made by qualifying small corporations get a tax credit of 40% of eligible expenditures (basically production salaries plus marketing and distribution costs up to $100,000).
IDM Products made on a fee-for-service basis (“specified products”) by a qualifying small corporation get a tax credit of 35% of labour expenses. This is applicable when you are building an IDM project for someone else.
If the specified product is a video game made by a Qualified Digital Game Corporation or a Specialized Digital Game corporation, then you may alternatively file for a 35% tax credit on qualifying expenses – however this is calculated on expenses made during the year, not on a project completion basis like the first two credits. This credit was specifically constructed for video game developers with payrolls over $1 million, who have long multi-year projects which would otherwise wait for multiple years to receive their credits from the time they start their projects*
Qualifying for the IDMTC can mean big money. The IDMTC is largely unnoticed by Ontario entrepreneurs, which is surprising, given the potential impact it could have on a business. Business owners should take a look at the credit to either recover investments in digital media, or to green light a digital media project for 2014. If you are an established small to medium size business with at least 5 employees that has been incorporated for at least 2 years and engaged in manufacturing and or R&D in Canada, KelidTM will assist you to identify eligible funds according to the status of your business and lead you to make the right decision. We invite you to join our monthly news letter and follow us on Twitter, Linked-in, Facebook, or Google+.