Ontario Interactive Digital Media Tax Credit (OIDMTC) is a refundable tax credit provided by Federal Canadian government to eligible digital media production corporations. The Digital Media Tax Credit could refund up to 40% of your labor and marketing expenditures of corporations, regardless of their sizes and amount of eligible Ontario labor expenditures. Ontario Interactive Digital Media Tax Credit (OIDMTC) is the part of Digital Media Tax Credits program and it focuses on offering tax credit to digital game corporations in particular.
Canadian game development industry has been growing rapidly and it added $1.7 billion in economic activity in 2011. Canada has third largest number of game development employees around the world. With increased growth in console game development, social media and online gaming also showed great exposure lately. These gaming and digital media productions attract OIDMTC as they consume larger portion of production budget into Intellectual Property (IP) and new technologies. OIDMTC is solely designed for such digital media productions.
Eligibility for Interactive Digital Media Tax Credit (OIDMTC):
- The corporation that qualifies for Interactive Digital Media Tax Credit (OIDMTC) should be Canadian corporation.
- The corporation may be Canadian or foreign owned.
- It must develop product during permanent establishment in Canada under its operation and it must file an Ontario tax return.
Example types of products eligible for OIDMTC:
There are four types of products that can claim OIDMTC.
- Specified products
- Non-specified products
- Eligible digital games developed by a specialized digital game corporation
- Eligible digital games developed by a qualifying digital game corporation
A key requirement for a product to be eligible for OIDMTC is that it must be interactive digital media product. Either it is a gaming product or other, its purpose should be to inform, educate or entertain people. The product should be presenting information through at least two of (i) text, (ii) sound and (iii) images.
There are some specific eligibility requirements for a non-specified product of a qualifying corporation.
- All of the product should be developed in Ontario.
- The product must not be developed under a fee-for-service arrangement.
- The product is not used primarily for interpersonal communication.
- The product is not used primarily to present or promote the qualifying corporation.
- The product is not used primarily to present, promote or sell the products or services of the qualifying corporation.
While specified-product of OIDMTC qualifying corporation are those gaming or interactive media product that are developed under a fee-for-service arrangement.
The Digital Media Tax Credit may also be claimed with respect to qualifying Ontario expenditures. These expenditures include labor and marketing expenses, but this eligibility criterion is restricted to those of non-specified products.
If you have any further questions about eligibility and your specific situation, feel free to contact Kelid™ for helpful advice. If you have a question that you feel can help other people in similar situations, leave a comment below.