Close Button
Official Ontario Creates Logo

Tax Credit

What Is It?

The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a refundable tax credit based on eligible Ontario labour expenditures and eligible marketing and distribution expenses claimed by a qualifying corporation with respect to interactive digital media products.

How much is the Tax Credit?

The OIDMTC is a refundable tax credit available to qualifying corporations for expenditures related to the creation of eligible interactive digital media products. A 40% tax credit is available for eligible Ontario labour expenditures and eligible marketing and distribution expenses incurred by qualifying corporations that develop and market their own products (known as “non-specified products”). The credit is 35% on eligible Ontario labour expenditures for products developed under a fee-for-service arrangement (known as “specified products”). A 35% credit on eligible labour expenditures is also available to qualifying digital game corporations and specialized digital game corporations (see large digital game corporations below). There is no limit on the amount of eligible Ontario labour expenditures which may qualify and there is no per-project or annual corporate limits on the amount of the OIDMTC which may be claimed. Eligible marketing and distribution expenses are capped at $100,000 per non-specified product.

Who is Eligible?

A qualifying corporation is a Canadian corporation (Canadian or foreign-owned), which develops an eligible product at a permanent establishment in Ontario operated by it, and files an Ontario tax return.

Corporations that are prescribed labour-sponsored venture capital corporations under the regulations made under the Income Tax Act (Canada) and corporations that are exempt from tax or are controlled directly or indirectly by a corporation exempt from tax are not eligible for the OIDMTC.

There are four types of products that can be claimed under the OIDMTC: non-specified products, specified products, eligible digital games developed by a qualifying digital game corporation, and eligible digital games developed by a specialized digital game corporation. Types of interactive digital media products that may be eligible for the tax credit include, but are not restricted to, digital games, mobile applications and e-learning products for children. Operating system software is not eligible for the tax credit.

A product must be an interactive digital media product whose primary purpose is to entertain users or educate children under 12, and that achieves its primary purpose by presenting information in at least two of: (i) text, (ii) sound and (iii) images. The OIDMTC regulations exclude certain types of products, including most websites. Please note that where products were commenced before April 24, 2015 that are not eligible under the new regulatory requirements of April 23, 2015, qualifying corporations may claim a tax credit but are limited to eligible expenditures incurred on or before April 23, 2015 when calculating their OIDMTC claim.

An eligible product must meet a quantitative rule known as the 80/25 rule which is based on labour costs of the company developing the product. The 80/25 rule is based on two concurrent labour tests and both must be met. 25% of the total development labour to create the product must be attributable to eligible wages of employees of the qualifying corporation. Also 80% of the total development labour to create the product must be attributable to eligible wages and eligible remuneration paid to individuals, personal corporations, or sole proprietorships that do not have employees.

Qualifying digital game corporations are those that incur a minimum $1 million of eligible Ontario labour costs over a three- year period for fee-for-service work done in Ontario that is directly related to the development of a digital game. Qualifying digital game corporations would not be required to be at arm’s length with the purchaser corporation and do not have to meet the new 80/25 rule.

Specialized digital game corporations are those that have either 80% of Ontario payroll or 90% of annual revenues attributable to interactive digital media game development with a minimum of $1 million of Ontario labour expenditures in the taxation year directly attributable to the development of eligible digital games. Specialized digital game corporations are entitled to file an annual OIDMTC application and would not be required to contract with an arm's length purchaser and do not have to meet the new 80/25 rule.

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 include salaries and wages for employees and remuneration paid to arm’s length persons who are not employees. For specified and non-specified products, “persons” may include individuals, partnerships and corporations. 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.

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. Eligible labour expenditures incurred in the three-year period prior to the completion of the product can be included in the OIDMTC claim.

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 12 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.

How is the Tax Credit Administered?

The OIDMTC is jointly administered by Ontario Creates - an agency of the Ministry of the Provincial Government of Ontario - and the Canada Revenue Agency. Application is made to the Ontario Creates for a certificate of eligibility, which the qualifying corporation 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.

OIDMTC Guidelines

Downloads & Templates

* PLEASE NOTE: CANADA REVENUE AGENCY (CRA) ADMINISTERS BOTH FEDERAL AND ONTARIO CORPORATE TAXES. THE CRA IS THE FIRST POINT OF CONTACT FOR ALL CORPORATE TAX ENQUIRIES (1 833 446-0934).

Note: This sheet is a general guide and may not be relied upon in order to determine eligibility or the amount of an anticipated credit. Please consult the OIDMTC legislation and regulation for further details.

As of November 2021

OIDMTC COVID FAQs


Please see information on CRA’s website.

1. Are costs for medical and/or health and safety personnel required due to COVID-19 eligible costs for tax credits? What about expenses related to testing for COVID-19 and extra cleaning and sanitation costs?

2. Are costs for personal protective equipment (PPE) required due to COVID-19 eligible costs for tax credits?

3. Are suspension, severance or relief payments eligible expenditures for tax credits? What about retention payments to induce an individual to remain with the product while it is stalled?

4. Will deposits or advances paid to vendors be eligible costs for tax credits where those amounts have been forfeited due to COVID-19?

5. Are employees and contractors who work remotely eligible labour for purposes of the OIDMTC tax credit?

6. Is CEWS considered assistance for purposes of the Ontario tax credits?

7a. Specified and non-specified products s.93: My interactive digital media product has stalled and will never be completed because of COVID-19. Can I still claim the OIDMTC on the expenditures my company incurred before we were shut down?

7b. Qualifying digital game corporation s.93.1: My digital game has stalled because of COVID-19 and will never reach the minimum labour thresholds required for a qualifying digital game corporation. Can I still claim the OIDMTC on the expenditures my company incurred before we were shut down?

7c. Specialized digital game corporation s.93.2: My digital game has stalled because of COVID-19 and will never reach the minimum labour thresholds required for a specialized digital game corporation. Can I still claim the OIDMTC on the expenditures my company incurred before we were shut down?

8. My product has been completed but my company had to make changes due to COVID-19 so we weren’t able to meet all of the tax credit eligibility requirements. Have any eligibility requirements been waived due to COVID-19?

FAQs as of January 2023

This version of the FAQs has been updated to provide information regarding appeals (see # 3 and # 4 in the OTHER QUESTIONS section).

Numbering may have changed.

Frequently Asked Questions

OIDMTC Applicants

  • No. Only a qualifying corporation may apply - that is, it must be a corporation incorporated in Canada (though it may be Canadian or foreign controlled) and it must have a permanent establishment in Ontario. There are other restrictions; please see the OIDMTC Information/Application Package.

  • Generally, when applying for specified and non-specified products under section 93 of the Taxation Act, 2007, to be considered a qualifying corporation, the type of business activities is not restricted to interactive digital media product development.

    However, if your company is applying as a digital game corporation under section 93.1 or 93.2 then the nature of your company’s business does matter. Under section 93.1 a qualifying digital game corporation carries on a business that includes the development of digital games in Ontario. Under section 93.2 a specialized digital game corporation carries on a business that includes the development of digital games in Ontario where the corporation has incurred a minimum of $1 million in eligible labour expenditures in the year on one or more digital games and either a) at least 80% of the total salaries and wages incurred by the corporation in the year for services rendered in Ontario are directly attributable to the development of digital games, or b) at least 90% of the corporation’s gross revenues for the year are directly attributable to the development of digital games.

  • As outlined in the OIDMTC regulations, in order for a product to be eligible for the OIDMTC the product must meet a quantitative rule based on the total development labour to create the product incurred during the 37-month claim period. If you are applying for the OIDMTC your company must demonstrate that 80% of the total development labour to create the product is attributable to eligible wages of your employees, and eligible remuneration paid by you to arm’s length individuals or their personal corporations or sole proprietorships. Also, 25% of the total development labour to create the product must be attributable to eligible wages paid to your employees. Please note: eligible wages and eligible remuneration for the 80/25 rule must be paid for work performed in Ontario by Ontario residents.

    It is possible for some co-development to take place on a product. The 80/25 rule allows for up to 20% of the total development labour costs to be incurred and paid by another corporation. In such a co-development scenario there will still only be one applicant who will be able to demonstrate that they’ve met the 80/25 rule for OIDMTC eligibility.

    The only exceptions to the 80/25 rule are for qualifying digital game corporations under section 93.1 or specialized digital game corporations under section 93.2:

    Under section 93.1 applicants do not have to meet the 80/25 rule. Instead, to be eligible under section 93.1 you must be a qualifying digital game corporation meaning that you carried on a business that includes the development of digital games in Ontario AND incurred a minimum of $1 million in eligible labour expenditures on a digital game under an agreement with a purchaser corporation during a 36-month period that ends in the tax year.

    Under section 93.2 applicants do not have to meet the 80/25 rule. Instead, to be eligible under section 93.2 you must be a specialized digital game corporation meaning that you carried on a business that includes the development of digital games in Ontario, where your company incurred a minimum of $1 million in eligible labour expenditures in the year on a digital game(s) and either a) at least 80% of the total salaries and wages incurred by your company in the year for services rendered in Ontario are directly attributable to the development of digital games, or b) at least 90% of your company’s gross revenues for the year are directly attributable to the development of digital games.

OIDMTC Products

  • There are four types of products that can be claimed for the OIDMTC: non-specified products, specified products (meaning products developed under a fee-for-service arrangement), digital games developed by qualifying digital game corporations and digital games developed by specialized digital game corporations.

  • Non-specified products are developed by your company for sale or licence to one or more arm’s length parties who have not previously entered into an arrangement with your company for development of the product.

    Specified products are developed by your company under the terms of an agreement between your company and an arm’s length purchaser corporation for sale or licence by that purchaser to one or more arm’s length parties. Specified products are essentially developed under a fee-for-service arrangement.

    Non-specified products receive a higher OIDMTC rate of 40% on eligible expenditures, while specified products receive an OIDMTC rate of 35% on eligible expenditures.

    PLEASE NOTE: whether it’s a non-specified or specified product, your company must demonstrate that they meet the 80/25 rule for the product.

  • A qualifying digital game corporation carries on a business that includes the development of digital games AND incurs $1 million in eligible labour expenditures in a 36 month period on a digital game under an agreement with a purchaser corporation. Unlike non-specified and specified products, a digital game developed by a qualifying digital game corporation can qualify for the OIDMTC even if a) the corporation did not meet the 80/25 rule for the digital game, b) the digital game is not completed, and c) the corporation is related to the purchaser corporation for whom the digital game is being developed. Qualifying digital game corporations receive a 35% OIDMTC on eligible expenditures incurred after March 26, 2009.

    A specialized digital game corporation carries on a business that includes the development of digital games, where the company has incurred $1 million in eligible labour expenditures in the year on a digital game(s) and either a) at least 80% of the total salaries and wages incurred by the corporation in the year for services rendered in Ontario are directly attributable to the development of digital games, or b) at least 90% of the corporation’s gross revenues for the year are directly attributable to the development of digital games. Unlike non-specified and specified products, a digital game developed by a specialized digital game corporation can qualify for the OIDMTC even if a) the corporation did not meet the 80/25 rule for the digital game, b) the digital game is not completed, and c) the corporation is related to the purchaser corporation. Specialized digital game corporations can file annually and receive a 35% OIDMTC on eligible expenditures incurred after March 26, 2009.

  • Products that may be eligible for the OIDMTC include, but are not restricted to, digital games, mobile applications, certain websites, and e-learning products for children.

    The OIDMTC regulations have narrowed the primary purpose requirement for eligible specified and non-specified products. Previously a product’s primary purpose could be to inform, educate or entertain users. Under the OIDMTC regulations of April 23, 2015, a product’s primary purpose must be to entertain users or educate children under the age of 12.

    The OIDMTC regulations exclude most websites. Websites would only be eligible if more than 50% of the site hosts any of the following:

    • one or more digital games;
    • content related to a film, television or internet production (see OIDMTC regulation 34(6)) ;
    • one or more virtual or augmented reality experiences; and/or
    • content that is designed to educate users who are under 12 years of age.

    The former 90% developed-by rule (which required the applicant company to have developed all or substantially all of the product themselves) has been replaced with a new 80/25 rule. The 80% test requires that 80% of total development labour costs to create the product be for work performed in Ontario and paid as eligible salaries or wages to applicant’s employees and eligible remuneration to personal corporations and individuals providing services as part of sole proprietorships with no employees. This 80% test applies to all products certified as eligible on or after April 24, 2015. The 25% test requires that 25% of the total development labour costs must be paid as eligible salaries or wages to employees of your company for work performed in Ontario. This 25% test applies to all products that apply for certification on or after April 24, 2015.

    The OIDMTC regulations of April 23, 2015 state that specified and non-specified products must now have a revenue generating stream. Revenue generating streams include: the sale of the product, fees for the use of the product, including licence and subscription fees, in-product purchases, arm’s length third party advertising, and the sale or license of another product developed by the applicant that can reasonably be considered an extension or upgrade of the product being claimed.

    Please note: There is no specific amount of revenue that needs to be generated in order to be considered eligible. Also for specified products the agreement between your company and the Purchaser corporation to develop the product cannot be used to satisfy the requirement of having a revenue generating stream. The product must be used by the Purchaser corporation to generate revenue.

    Products that only have development labour costs incurred after April 23, 2015 must meet all of the new eligibility requirements stated in the OIDMTC regulations.

  • The OIDMTC regulations of April 23, 2015 exclude certain types of products that provide any content that is: news, current events or public affairs programming; opinion, commentary or advice; or weather or market reports.

    Other types of ineligible products are:

    • products produced primarily for industrial, corporate or institutional purposes including vocational training products or products that educate or inform employees;
    • products that are primarily a reference material or otherwise designed to be used as a resource for finding information, such as a guide for equipment or software, a dictionary or a map;
    • products that aggregate content from various internet sources;
    • products that are a search engine;
    • products that are a blog; and
    • products that are primarily a database, including a real estate or recipe database.

    Primarily means more than 50%.

    Products that fail the 80% or 25% tests will not be eligible for the OIDMTC. See P4 above.

    Products where the majority of the content on the product is also hosted on a website that is not eligible under the new rules would be considered ineligible. See description of eligible websites in P4 above.

    Specified and non-specified products will not be able to claim eligible expenditures incurred after April 23, 2015 due to any of the following:

    • the product primarily informs the user,
    • the product does not have a revenue generating stream (see P4 above);
    • the website is not one described in OIDMTC regulation 34 (5) 9ii (see P4 above)

    Products that are primarily promotional are not eligible for the OIDMTC. Products that primarily promote the applicant’s products or services, the Purchaser corporation’s products or services, or any third party’s products or services will be considered promotional. Ontario Creates reviews all the content on a product, development and marketing documentation, and examines how the product is used by individuals to determine if a product is primarily promotional.

    Products used primarily for interpersonal communication are not eligible for the OIDMTC.

  • No. Talk shows have always been ineligible for OCASE, OFTTC and OPSTC and this continues to be the case despite recent Federal changes to the Canadian Film or Video Production Tax Credit. Websites based on talk shows are also excluded for purposes of the OIDMTC.

  • Should your product not be eligible under the new requirements of the OIDTMC regulations of April 23, 2015, but your product has development labour costs incurred prior to April 24, 2015, your product may be reviewed under the pre-Budget rules. In that case, you will be limited to claim eligible expenditures incurred on or before April 23, 2015 to calculate your OIDMTC. (However, please note that the 80% test will apply to all products regardless of the date the activities and costs were incurred. The 25% test will also apply for products for which the application for certification was received by Ontario Creates on or after April 24, 2015.)

  • Ontario Creates’ administration of OIDMTC reflected the Ministry of Finance’s general policy interpretation that a website embedded in a third party’s website is not a complete interactive digital media (IDM) product and is therefore ineligible for OIDMTC support under s.93 of the Taxation Act, 2007. However, it has come to the attention of the Province that business models in the film and television industry often require that websites purchased or licensed by a broadcaster be integrated within the broadcaster’s website for a seamless user experience. In recognition of this industry-specific business model, the Ontario Ministry of Finance proposes to make a policy change to the eligibility of certain embedded websites based on film, television and internet productions.

    This policy change, subject to the approval of Cabinet, would be implemented by way of regulatory amendment, effective November 1, 2017.

    Websites that:

    • Primarily host content related to film, television or internet production;
    • Meet the eligibility requirements of section 34 (5) 9ii of O.Reg. 37/09 General under the Taxation Act 2007;
    • Have been purchased or licensed by a broadcaster;
    • Are embedded in the broadcaster’s website; and
    • Have not received a certificate of eligibility or a letter of ineligibility before November 1, 2017

    would be considered eligible for the OIDMTC provided Ontario Creates is reasonably assured that the product would meet all of the tax credit eligibility requirements if the purchaser or licensor permitted the product to be distributed as a separate product.

    Please note: Not all embedded websites based on film, television or internet productions will be considered eligible as they must meet all the eligibility requirements for website products with costs after April 23, 2015. See OIDMTC regulation section 34 (5) 9ii.

    For all other types of website products (other than those described in OIDMTC regulation 34 (5) 9ii):
    In order for product development work to be eligible for the OIDMTC, an applicant must develop a completed interactive digital media product. A component of an interactive digital media product is not eligible for the OIDMTC because it is not a completed product. “Wrapped, “embedded”, “nested, or “framed” website content is not eligible for the OIDMTC.

    Mini-sites and microsites are not eligible for the OIDMTC as they are not complete products. Mini-sites and microsites are a separate page of a website that has a different URL than its home page and is used to provide information about, or to promote, something that is related to the home page. For example, a large software corporation may create a microsite with its own URL to feature a tech blog. When the user goes to that URL address it takes them to a tech blog page that is integrated into the software corporation’s main website. The microsite is one of many pages that make up the corporation’s website.

    If a web product can demonstrate it functions independently and is not integrated into another website, can be licensed to arm’s length users, has its own URL, and operates using its own content management system (“CMS”) platform or software, then that web product may be considered a completed interactive digital media product for the purposes of the OIDMTC. From the standpoint of a product review, Ontario Creates looks at the technical structure and development, the business model, how users (i.e. members of the public) access the product, and user experience of a product to help determine if something is a complete interactive digital media product or a component of another product.

  • Webisodes or mobisodes are not eligible interactive digital media products for the OIDMTC. Webisodes or mobisodes are considered content that could be featured on, or part of an interactive digital media product such as a website or mobile app, but they are not complete interactive digital media products in their own right.

  • No. As stated in the OIDMTC regulations, eligible products must meet the primary purpose test to entertain users or educate children under 12. Also, most website products will be excluded with the exception of those that primarily host: digital games; content related to film, television or internet productions; virtual or augmented reality experiences; and/or educational products directed at children under the age of 12.

    Pre-Budget 2015 rules stated that to be eligible, a product’s primary purpose must be to inform, educate, or entertain. Therefore interactive digital media products that primarily present, promote or sell products or services are not considered eligible even prior to Budget 2015. Ontario Creates will interpret “primarily” to mean “more than 50%”.

    Note that informing by presenting products and/or services for sale is considered promotional.

  • No. The OIDMTC regulations exclude certain types of products, including most websites. Websites would only be eligible if the site primarily hosted: digital games; content related to film, television or internet productions; virtual or augmented reality experiences; and/or educational products directed at children under the age of 12. As well, the OIDTMC regulations restrict eligibility to those products whose primary purpose was to entertain users or educate children under 12.

    It should be noted that often social networking websites are made up of user generated content. If the website was primarily (more than 50%) used for interpersonal communication it would not be eligible. For example, a product like Facebook would not be eligible for the OIDMTC. Some products that apply for the OIDMTC and have a social networking component may still be eligible if those products also feature a significant amount of other content created by the applicant corporation that meets the primary purpose. Ontario Creates reviews all the content presented, including any user generated content to determine the primary purpose of the product.

  • The product completion date is the date when the product is shelf-ready, accessible, online, and/or available for exploitation. This date must be consistent with the product development documentation.

    Ontario Creates reviews the product as of this date to determine eligibility. Note that maintenance expenditures or bug fixes are not eligible for OIDMTC as they are not considered part of product development.

  • Yes. As of the product completion date, the product must contain content that presents information in at least two of text, sound, and images, and the content must meet the primary purpose test.

  • OIDMTC is a content based credit, so a version of the product with different content can also be eligible, as long as the new version is significantly different. The difference can be the content, the underlying technology, or a combination of the two.

    New versions of website products are restricted to being claimed only every two years.

  • Yes. Each version of a product that is developed for a specific platform should be submitted as a separate product in an OIDMTC application, i.e. Product A (Android), Product A (iOS), Product A (Blackberry). Each version of a product should have separate cost allocations and may also have different start and completion dates.

  • No. If the only change between product versions is the language of the text, video, and/or audio, this is not considered a significant enough difference for Ontario Creates to consider them to be separate or new versions of products.

  • There are different ways to demonstrate a product was developed for sale or licensing, such as a distribution or financing agreement, customer invoice, or by determination that the product is available to the public, i.e. available online.

    Ontario Creates considers a website product to be available for public license or use.

    Please note that the OIDMTC regulations state that to claim the OIDMTC on eligible expenditures incurred after April 23, 2015, specified and non-specified products must have a revenue generating stream. Proof of sales, in-product purchases, licence for use, third party advertising within the product, subscription-based access, or fee-for-use of the product would demonstrate a revenue generating stream.

    For specified products the agreement to develop the product between your company and the Purchaser corporation does not satisfy the requirement of having a revenue generating stream. For specified products the product must be used by the Purchaser to generate revenue.

    • Trademark or copyright registration approval,
    • Product development, licensing, or sales agreement, fully signed and dated,
    • Employee or contractor agreement, fully signed and dated,
    • Product Terms of Use documentation, or
    • Domain name registration for a website product.

    Please note that a letter from an Officer of the applicant corporation stating ownership is not sufficient chain of title evidence for Ontario Creates.

OIDMTC Expenditures

  • Government assistance includes government grants, subsidies, forgivable loans, deductions from tax other than OIDMTC and investment allowances. These will reduce (‘grind’) the OIDMTC.

    The following are not considered government assistance:

    • Other tax credits such as Scientific Research & Experimental Development (SR&ED),
    • Bona fide loans with a set repayment date, (See Canada Revenue Agency’s (CRA) Application Policy on Bona Fide Loan – FAS 2008-01 for more information), and
    • Equity investments.

    Note that labour deferrals (amounts not paid within 60 days of the tax year end) cannot be claimed for the OIDMTC for that tax year. However if it is paid within 60 days after the end of the subsequent tax year, the labour expenditures can be claimed in the subsequent tax year as part of qualifying expenditures.

    Ontario Creates requires documentation of all financial contributions to the development of a product, including loans, deferrals, and sponsorship amounts.

  • No. Your company cannot include costs claimed for SR&ED activities, whether allowed by CRA or not, in the OIDMTC claim. Labour included in the OIDMTC claim must be for different activities than those claimed under SR&ED.

  • Up to $100,000 in eligible marketing and distribution expenditures (which can include salaries and wages specific to marketing and distribution of a non-specified product), can be claimed once for a non-specified product. Marketing and distribution expenditures cannot be claimed for specified products, nor included in claims made by digital game corporations under sections 93.1 or 93.2.

  • Yes. Applicants must disclose all development labour expenditures incurred to create the product, even if the labour expenditures for that work was not included in the OIDMTC claim. The only exception to this requirement would be for those making an OIDMTC claim under section 93.1 as a Qualifying Digital Game Corporation or under section 93.2 as a Specialized Digital Game Corporation.

    Applicants must use the OIDMTC Expenditure template available on Ontario Creates website entitled Specified and Non-Specified Expenditures Breakdown and complete the section “Declaration of Other Development Labour Expenditures (Unclaimed/Ineligible)” as well as the section “Development Labour Claimed under SR&ED”.

  • The CRA’s look-through approach limits the amount of remuneration that may qualify as a labour expenditure to the amount that would have been incurred by the qualified corporation had it directly employed the individuals. This approach is used when remuneration is paid to a self-employed individual, a taxable Canadian Ontario based corporation, or a partnership carrying on a business in Ontario for the services of its employee(s). In applying this approach, the qualifying corporation must get from the service provider the amount of salary or wages paid to the employee. This amount should qualify as a qualifying remuneration amount for the development of eligible products claimed under the OIDMTC.

  • When the qualifying corporation engages a third party service provider with whom it deals at arm’s length (that is, with whom it is not related), the amount of salary or wages paid to the employee may not be available. Under such circumstances, the CRA will accept, as an administrative practice, 65% of the labour portion of an invoice amount as a reasonable estimate of the salary or wages paid to the employees that is directly attributable to the development of the product. The remaining 35% represents overhead and the service provider’s profit.

    To read more about the CRA’s 65% administrative position, please see CRA Publication RC4164 (page 15), www.canada.ca/en/revenue-agency/services/forms-publications/publications/rc4164.html.

  • Under film and media tax credits, eligible labour expenditures are based on residency in Ontario for purposes of the provincial credits, and residency in Canada for purposes of the federal credits. CRA provides guidelines to assist companies in determining whether individuals are resident in Canada. An individual may be a “factual resident” or a “deemed resident” of Canada. Factual residents of Canada are those who have established significant residential, economic and social ties to Canada. They are subject to Canadian and provincial/territorial income tax on worldwide income throughout the year. Labour expenditures paid to factual residents may qualify for both federal and provincial film and media tax credits. CRA’s guidelines have a list of documents that are evidence of strong ties to Canada for purposes of establishing if someone is a factual resident of Canada. For more information see Residency status determination. The same principles can be applied in determining if an individual is Ontario-based individual or a resident of another Canadian province.

    This is distinguished from “deemed residents” who have not established significant ties in Canada but were in Canada for 183 days or more in a calendar year. They are subject to Canadian income tax on worldwide income throughout the year and are subject to federal surtax instead of provincial tax. For more information see Residency status determination. Labour expenditures paid to “deemed residents” may qualify for federal film and media tax credits but do not qualify for provincial film and media tax credits.

OIDMTC Documentation

  • For specified and non-specified products we will often request to see payroll reports, T4s, invoices and contractor agreements to help determine if the labour included in the claim is directly attributable to the development of the product and to verify that the applicant corporation has met the 80/25 rule for the product. To expedite review of the 80/25 rule applicants should submit copies of T4s for the top five highest paid individuals claimed under wages and salaries to develop each product, as well as contractor agreements for the top five highest paid individuals, personal corporations or sole proprietorships claimed under remuneration for the development of each product. If no agreement exists, copies of invoices can be provided. Use the OIDMTC Expenditure template available on Ontario Creates website entitled Specified and Non-Specified Expenditures Breakdown and include job descriptions where indicated.
    Contractor agreements that relate to marketing and distribution expenditures are generally not necessary, however, in certain circumstances they may be requested by a Business Officer.

OIDMTC Filing

  • Due to the large volume of applications, Ontario Creates does not provide OIDMTC Preliminary Assessments. You can contact us by email at taxcredits@ontariocreates.ca and indicate that you wish to speak to a Business Officer about OIDMTC eligibility for a particular product in advance of making an application. It is best if you set out a few details about your fact scenario in the email and include your name, company and telephone number. There is a different Business Officer on phone duty every day and he/she will respond to your email within one business day.

  • Only 1 application per tax year can be filed, which must contain all products completed in that tax year. For example, for a July 31, 2015tax year end, an interactive digital media product completed on February 1, 2015 would be submitted in a 2015 tax year OIDMTC application, while a product completed on July 1, 2016 would be submitted in a 2016 tax year OIDMTC application.

    Under section 93.1 qualifying digital game corporations can apply to Ontario Creates in the tax year that falls after the end of the 36 month period in which the applicant has incurred the minimum $1 million in eligible labour expenditures in respect of an eligible digital game.

    Under section 93.2 specialized digital game corporations can apply to Ontario Creates at the end of the tax year in which the applicant has incurred - the minimum $1 million in eligible labour expenditures in respect of an eligible digital game or games.

  • There is an application deadline that requires your company to apply to Ontario Creates for an OIDMTC Certificate of Eligibility for specified and/or non-specified products by the day that is 18 months after the end of your company’s taxation year in which development of the eligible product(s) was completed. Products submitted to Ontario Creates for an OIDMTC after May 15, 2017 are subject to the application deadline.

    Prior to this application deadline taking effect, applications can be made for prior tax years, however the applicant may have to make a request to the Canada Revenue Agency (CRA) to amend a previously filed tax return. It is the applicants’ responsibility to ensure that they are within the time limits for requesting an amendment to the tax return for a previous tax year and are not statute-barred.

    Please note that effective January 1, 2017, in addition to the administration fees calculated against your eligible expenditures, is an additional filing fee of $100:

    • For applications made for specified and non-specified products under section 93 submitted to Ontario Creates on or before May 15, 2017 the additional filing fee is in effect for applications received more than 18 months from the year-end in which the product was completed. (Specified and non-specified products submitted after May 15, 2017 are subject to the application deadline and therefore are not eligible for the OIDMTC if the application exceeds this 18 month mark.)
    • For non-specified products that are only making a marketing and distribution claim for an eligible product that was previously certified, the additional filing fee is in effect for applications received more than 18 months from the subsequent year-end following the year in which the eligible product was completed.
    • For applications made by specialized digital game corporations under section 93.2 the additional filing fee is in effect for applications received more than 18 months from the year-end in which the applicant is claiming as a specialized digital game corporation.
    • For applications made by qualifying digital game corporations under section 93.1 the additional filing fee is in effect for applications received more than 18 months from the year-end of that claim.

    Please note: effective January 1, 2017, there is a fee of $100 for amended Certificates that are requested.

  • For non-specified products, your company can claim up to $100,000 in eligible marketing and distribution (M&D) costs per product. M&D costs can be claimed for the period 24 months prior to the completion date and 12 months after the completion date. If there are some eligible M&D costs that fall in a subsequent taxation year that relate to a non-specified product, your company should include those M&D costs in a separate OIDMTC claim for that subsequent taxation year.

    For example, a non-specified product is claimed in your 2016 taxation year and there are eligible M&D costs that are directly related to this product that fall in your 2017 taxation year. You should prepare a separate 2017 OIDMTC application and include those M&D costs in a 2017 claim along with any other completed products eligible for the OIDMTC. Please note that when using the Online Application Portal there is an option to choose “Non-Specified (93) M&D Only” as a product type in these cases where you are claiming M&D costs only, for a non-specified product claimed in a previous OIDMTC application.

  • Applicants are encouraged to upload their certificates via the “T2 attach-a-doc” feature of their CRA-approved tax software. This is a feature that allows taxpayers to electronically file supporting documentation with the CRA directly at the time of filing their T2 tax return (note that documents can also be filed via this feature within 24 hours after filing the T2 tax return electronically). If the document is filed later (i.e., after 24 hours from the time of filing the T2 tax return electronically), you can register for My Business Account (MyBA) and then submit it electronically via the MyBA portal. A new feature is now available on MyBA that allows registrants to submit their certificates and other documents without a case or reference number. Please see What’s new – Film and media tax credits on CRA’s website for further details.

    If you choose to submit the certificate by mail, it should be sent to the appropriate CRA tax centre. You can also submit the certificate by fax and it will be converted to electronic format when received at the CRA. Please see Film services units - Canada.ca for the mailing addresses and fax numbers.

  • No. File your tax return with the estimated OIDMTC amount as follows:

    For tax years that end on or after January 1, 2009, file the T2 Corporation Income Tax Return along with schedule T2SCH560 “Ontario Interactive Digital Media Tax Credit (2009 and later tax years)” with the Canada Revenue Agency (CRA) along with the estimated OIDMTC amount. Once the Certificate of Eligibility is received from Ontario Creates, submit the Certificate of Eligibility (or copy) to the CRA. CRA will process the claim once they have received the OIDMTC Certificate of Eligibility as well as the T2 Corporation Income Tax Return and applicable schedules. You will receive your assessments and reassessments from the CRA.

  • No. In the past, Ontario Creates had such a form available as a tool on our website but generally did not request the Ontario Declaration of Residency/Consent Form as part of our review. CRA does not review these forms either so they are no longer available on our website.

    However, Ontario Creates does require the list of names of all individuals working on the product, and the list of names and addresses of individuals and companies for which remuneration is being claimed.

  • Under subsection 220(6) of the Income Tax Act a corporation may assign any amount payable under this Act. However, according to Subsection 220(7) the minister of National Revenue “is not required to pay to the assignee, the assigned amount.” As an alternative, the CRA will allow a qualifying corporation to redirect its tax refund, net of any taxes owing, to the mailing address of its choice, for example, a financial institution. However, a refund issued in this manner will still be issued in the name of the corporation.

  • Effective April 1, 2017 the new administration fee structure for tax credits which will offset the costs of administering the program is calculated as 0.15% of eligible expenditures for the application. There is a minimum fee of $1,000 per application and a maximum fee of $10,000 per application.

    Please note: Effective January 1, 2017 there is a fee of $100 for amended Certificates of Eligibility requested.

    Please note: Effective January 1, 2017 there is an additional filing fee of $100:

    • For applications made for specified and non-specified products under section 93 submitted to Ontario Creates on or before May 15, 2017 the additional filing fee is in effect for applications received more than 18 months from the year-end in which the product was completed. (Specified and non-specified products submitted after May 15, 2017 are subject to the application deadline and therefore are not eligible for the OIDMTC if the applications exceed this 18 month mark.)
    • For non-specified products that are only making a marketing and distribution claim for an eligible product that was previously certified, the additional fee is in effect for applications received more than 18 months from subsequent year-end following the year in which the eligible product was completed.
    • For claims made by Specialized Digital Game Corporations under 93.2 the additional fee is in effect for applications received more than 18 months from the year-end in which the applicant is claiming as a Specialized Digital Game Corporation.
    • For claims made by Qualifying Digital Game Corporations under 93.1 the additional fee is in effect for applications received more than 18 months from the year-end of that claim.

  • The new tax fee structure will be applied to tax credit applications received on or after April 1, 2017.

    The additional filing fee and fee for Amended Certificates are separate from the new fee structure. These fees will be applied to older tax credit applications received on or after January 1, 2017 and requests for Amended Certificates received on or after January 1, 2017.

OIDMTC Other Questions

  • If you have further questions, please contact the phone duty line by e-mail taxcredits@ontariocreates.ca, or call us at 416-642-6659. Please leave a detailed message including your name, company, phone number and the tax credit or file about which you are inquiring. There is a different person on phone duty every day, and he/she will respond to your email or call within one business day.

  • Please see the Administrative Process section of the OIDMTC Guidelines. Also see the following link which describes CRA’s role in the OIDMTC review process: http://www.fin.gov.on.ca/en/credit/mtc/faq.html.

  • If an issue of ineligibility arises during review, the Business Officer will communicate with the Applicant to explain the issue, ask further questions and request additional documentation if required. The Applicant will be given the opportunity to provide additional information or documentation to support their position for any issue in dispute.


    After considering any additional information or documentation and consulting with the Ontario Creates Director of Tax Credits, if the issue remains unresolved, Ontario Creates may recommend the Applicant withdraw the product(s)/production(s) from review. If the product(s)/productions(s) are not withdrawn, Ontario Creates will issue a Letter of Ineligibility for those product(s)/production(s).


    If a Letter of Ineligibility has been issued for a product or production, the Applicant cannot resubmit that product or production for a tax credit. CRA is notified of any Letters of Ineligibility issued by Ontario Creates.


    Determinations of ineligibility are not subject to the Ministry of Finance or Canada Revenue Agency objections and appeal process. Applicants can commence an application for judicial review of an Ontario Creates’ decision on eligibility.

  • If you have received a Certificate of Eligibility but wish to appeal the amount of the tax credit determined by the CRA, please refer to the CRA’s objections and appeals process at : https://www.canada.ca/en/revenue-agency/services/about-canada-revenue-agency-cra/complaints-disputes/ontario-corporations-tax.html


    Note that determinations of ineligibility are not subject to the Ministry of Finance or Canada Revenue Agency objections and appeal process.

Help

Links

News

Contact