The OIDMTC is one of the biggest tax credit incentives in Canada – here are some frequently asked questions about the program.
What is Interactive Digital Media?
For the purposes of the OIDMTC, an Interactive Digital Media product has the primary purpose to educate, inform, or entertain, and achieves its primary purpose by presenting information in at least two of: (i) text, (ii) sound and (iii) images. Types of interactive digital media products that may be eligible for the tax credit include but are not restricted to games, educational and informational products. Operating system software is not eligible for the tax credit. In addition, the product is not used primarily for interpersonal communication, to present or promote the qualifying corporation or to present, promote or sell the products or services of the qualifying corporation.
What are some examples of eligible products?
Common eligible products include digital games, e-learning products or entertainment websites; however, any product that meets the criteria is eligible.
How much is the OIDMTC?
The OIDMTC is a 40% refundable credit for Non-specified products and Qualifying Small Corporations; 35% refundable credit for Specified products, Qualified Digital Game Corporations and Specialized Digital Game Corporations.
The OIDMTC can recover up to 40% of your product development labour – without limit. That spans 100% of salaries, wages and remuneration. For Non-specified products, the OIDMTC can also recover 40% of marketing and distribution costs up to $100,000, which can be critical in pushing your product into the market. For Qualifying and Specialized Digital Game Corporations, the OIDMTC can recover 35% of your product development labour for all eligible digital game development projects.
What costs/expenditures are eligible for OIDMTC?
The OIDMTC is based on labour expenditures with no limit, as well as marketing and distribution costs up to $100,000 for Non-specified products.
Who is eligible for the OIDMTC?
Any Canadian corporation (Canadian or foreign-owned) which produces an eligible product at a permanent Ontario establishment and files an Ontario tax return is eligible.
Who administers the OIDMTC?
The OIDMTC is administered by the Ontario Media Development Corporation (OMDC), an agency of the Ministry of Tourism and Culture, and the Canadian Revenue Agency (CRA).
What is a Non-specified product versus a Specified product?
A Non-specified product was developed for sale or licensing by the qualifying corporation to one or more arm’s length parties who have not previously entered into an arrangement with the qualifying corporation or a qualifying predecessor corporation for the development of the product. Specified products are interactive digital media products that are developed under a fee-for-service arrangement (contract), under the terms of an agreement between the qualifying corporation and an arm’s length purchaser corporation for the purpose of sale or license by the purchaser to one or more persons who deal at arm’s length with the purchaser. Both require all or substantially all of the product to be developed by the applicant corporation in Ontario.
What is a Qualifying Digital Game Corporation?
Eligible digital games developed by qualifying digital game corporations are interactive digital media products that are developed under a fee-for-service arrangement under the terms of an agreement between the qualifying digital game corporation and a purchaser corporation for the purpose of sale or license by the purchaser.
What is a Specialized Digital Game Corporation?
Eligible digital games developed by specialized digital game corporations are interactive digital media products developed for the purpose of sale or license by the specialized digital game corporation or, if applicable, a purchaser, to one or more persons who deal at arm’s length with the specialized digital game corporation or the purchaser.
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