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OIDMTC Guidelines - Specialized and Qualifying Digital Game Corporation Claims

Sections 93.2 and 93.1 of Taxation Act 2007

Introduction

The JUNE 2020 version of the Guidelines has been updated to provide a new separate guideline package that focuses on OIDMTC for digital game company claims made under sections 93.2 and 93.1 as Specialized Digital Game Corporations and Qualifying Digital Game Corporations. (Please see the new, separate guideline package for claims made under section 93 of the Taxation Act 2007, as non-specified and specified products: http://www.ontariocreates.ca/tax-incentives/oidmtc/oidmtc-guidelines-non-specified)

Changes include:

  • Overview of changes to section 93.2 of the OIDMTC ;egislation, regarding the eligibility of corporations that can apply annually as a Specialized Digital Game Corporation. The changes to section 93.2 involve lowering the minimum eligible Ontario labour expenditure directly related to the development of digital games from $1 million to $500,000 in a tax year. The change will apply to taxation years that start after April 11, 2019.
  • Expanded notes regarding interactivity of games (casino/slot/games of chance).
  • Expanded notes on meeting the minimum Ontario labour threshold and Scenario “A” and “B” for Specialized Digital Game Corporation claims under section 93.2.

The Guidelines

These Guidelines have been prepared to assist companies applying for an Ontario Interactive Digital Media Tax Credit (the “OIDMTC”).

Please note that the OIDMTC legislation (sections 93, 93.1 and 93.2 of the Taxation Act, 2007) and OIDMTC regulation (Regulation 37/09) take precedence over any provisions of these Guidelines.

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A. Overview of the OIDMTC[1]

The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a refundable tax credit which means that the amount of the credit, minus any Ontario taxes payable, will be paid to the qualifying corporation. The OIDMTC is based on eligible Ontario labour expenditures for the development of eligible interactive digital products, including games.

Companies that develop digital games may apply for an OIDMTC for completed digital games as specified or non-specified products under section 93 or they may apply for an OIDMTC before the digital game is completed if they meet the requirements for a Qualifying Digital Game Corporation under section 93.1 or as a Specialized Digital Game Corporation under section 93.2.

Digital Game Company Claims

Instead of applying for the OIDMTC for specified and non-specified products, Ontario-based digital game companies have the option of applying for the OIDMTC under two additional streams:

  1. Qualifying Digital Game Corporations under Section 93.1
  2. Specialized Digital Game Corporations under Section 93.2

Eligible expenditures include Ontario labour expenditures for work rendered in Ontario that is directly attributable to the development of eligible digital games. The tax credit rate is 35%.

Specialized Digital Game Corporations can claim the OIDMTC under section 93.2 for digital game development work carried out on one or more digital games in a tax year. To qualify as a Specialized Digital Game Corporation your company has to incur a minimum of $500,000 in Ontario labour directly attributable to the development of eligible digital games in the year (for tax years starting after April 11, 2019), or $1 million if your tax year starts before April 12, 2019. Regardless of the applicable threshold per tax year, your company would also need to have either 80% of Ontario salaries and wages directly attributable to digital game development or 90% of annual gross revenues attributable to digital game development.

To make a claim under Section 93.1 as a Qualifying Digital Game Corporation, your company has to have incurred a minimum of $1 million in Ontario labour directly attributable to the development of a single game over a three year period. This game must be developed under an agreement with a purchaser corporation. Your company must include the development of digital games as part of your business activities.

Eligibility requirements are summarized in Table 1 below.

Table 1 – Qualifying and Specialized Digital Game Corporations

GamesDefinition
Developed by a Qualifying Digital Game Corporation (s93.1) Developed under a fee-for-service arrangement.

Incur a minimum of $1 million in Ontario labour, over a 3 year period for a single game.
Developed by a Specialized Digital Game Corporation (s93.2) Incur $500K in Ontario labour directly related to the development of digital games in a tax year that starts after April 11, 2019, or $1million if your tax year starts before April 12, 2019.

In addition:
  • 80% of salaries and wages rendered in Ontario must be directly related to game development
    OR
  • 90% of yearly gross revenues must be directly related to game development.
Can claim OIDMTC annually.
* Your game products do not need to meet the 80/25 rule. Your game products do not need to be completed.

There are several benefits for large digital game companies which apply under these streams. For example:

What is Eligible for Digital Game Company Claims?

i. Interactive Digital Media Products

To be an eligible digital media product of a qualifying or Specialized Digital Game Corporation, the primary purpose of your digital game must be to educate, inform or entertain the user.

Eligible digital games claimed under s93.2 and s93.1 must also be eligible interactive digital media products as defined in the OIDMTC Regulations.

ii. Qualifying Corporations

A qualifying corporation for OIDMTC is an Ontario-based Canadian or foreign-controlled corporation that develops an eligible product at a permanent establishment in Ontario. The qualifying corporation must operate the business and file Ontario tax returns.

In addition, to qualify as a Specialized Digital Game Corporation under section 93.2 your company has to incur a minimum of $500,000 in Ontario labour directly attributable to the development of eligible digital games in the year (for tax years starting after April 11, 2019), or $1 million if your tax year starts before April 12, 2019. Regardless of the applicable threshold per tax year, your company would also need to have either 80% of Ontario salaries and wages directly attributable to digital game development or 90% of annual gross revenues attributable to digital game development.

To meet the requirements of a Qualifying Digital Game Corporation under section 93.1 your company would have to be a qualifying corporation for OIDMTC and also be in the business that includes the development of digital games. Your company has to have incurred a minimum of $1 million in Ontario labour directly attributable to a single game over a three year period.

iii. OIDMTC Expenditures: Digital Game Company Claims

You can claim Ontario labour expenditures (salaries and wages for your employees and remuneration for arm’s length individuals who are not employees of your company).

Additionally, OIDMTC labour expenditures must be:

  • Paid to individuals resident in Ontario at the end of the calendar year that precedes the calendar year in which the individual rendered the services.
  • Directly attributable to the development of eligible digital games.
  • Paid for services rendered at a permanent establishment in Ontario.
  • Incurred in the tax year of the OIDMTC claim (for eligible digital games claimed under s93.2 by Specialized Digital Game Corporations) or
  • incurred within any 36 month period ending in the taxation year of the OIDMTC claim (for the eligible digital game claimed under s93.1 by Qualifying Digital Game Corporations).

Amounts paid as remuneration to multi-shareholder or multi-employee Canadian corporations for the services of their employees are not eligible for games claimed under s93.1 or s93.2. Also, Ontario labour expenditures incurred by a qualifying predecessor corporation are not eligible for games claimed under s93.2 by Specialized Digital Game Corporations.

How Much is the OIDMTC for Digital Game Company Claims?

Your company’s eligible OIDMTC expenditures can be refunded at 35% for eligible digital games claimed under s93.2 for Specialized Digital Game Corporations or under s93.1 for Qualifying Digital Game Corporations. Table 2 below summarizes OIDMTC rates for eligible digital games claimed under s93.2 and s93.1.

Table 2 – OIDMTC Rates as of March 26, 2009, for Digital Game Claims made under Section 93.2 and 93.1

ProductTax Credit RateWages & Remuneration paid to individualsIncludes amounts paid to qualifying predecessor corporations
Eligible Digital Game (93.2) 35% N/A
Eligible Digital Game (93.1) 35%
Please note: There is no maximum for eligible Ontario labour expenditures that may qualify for a credit. Also, there are no per-product or annual corporate limits on the amount of OIDMTC that can be claimed.

Should your company not meet the requirements of a Qualifying Digital Game Corporation under Section 93.1 or of a Specialized Digital Game Corporation under Section 93.2, you may still be able to claim your interactive digital game products under Section 93, as non-specified or specified products. Please see the new, separate guideline package for claims made under section 93 of the Taxation Act 2007, as non-specified and specified products: https://www.ontariocreates.ca/tax-incentives/oidmtc/oidmtc-guidelines-non-specified

How is the Tax Credit Administered?

The OIDMTC is jointly administered by Ontario Creates and the Canada Revenue Agency (CRA). You submit your application to Ontario Creates for certification at your company’s year-end, based on expenditures that have already been paid. If your company and product meet eligibility requirements, Ontario Creates will issue a Certificate of Eligibility.

To claim the OIDMTC, your company must file the Certificate of Eligibility with the CRA along with your corporate tax return. The amount of the credit, net of any Ontario taxes owing, will be paid to your company. If you do not owe any taxes, the full amount will be paid out.

Please note: The OIDMTC is an after-the-fact tax credit. You can apply to Ontario Creates for a Certificate of Eligibility:

  • (For Specialized Digital Game Corporations under section 93.2)
    At the end of the tax year in which your company has incurred the required minimum Ontario labour expenditures for developing eligible digital games –  $500,000 for tax years starting after April 11, 2019 and $1 million for tax years starting prior to April 12, 2019.
  • (For Qualifying Digital Game Corporations under section 93.1)
    After the end of the 36-month period in which your company incurred $1 million in Ontario labour expenditures developing the eligible digital game.

There is no application deadline for digital game corporation claims made under Sections 93.2 and 93.1. However, if your OIDMTC application also includes completed products claimed as specified or non-specified products under Section 93, there is an 18 month application deadline. Please see the guidelines for specified and non-specified products here: https://www.ontariocreates.ca/tax-incentives/oidmtc/oidmtc-guidelines-non-specified

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B. Legislative Requirements Sections 93.2 and Section 93.1

1. Digital Game Company Claims

Ontario based digital game companies can apply for an OIDMTC as a Specialized Digital Game Corporation or a Qualifying Digital Game Corporation. Products being claimed under section 93.2 or 93.1 must be a “digital game” in the opinion of Ontario Creates (see iii. Digital Games below).

Your company’s qualifying expenditures can be refunded at 35% of eligible labour if it is a Qualifying or Specialized Digital Game Corporation.

Your digital game company must be an Ontario-based, Canadian or foreign-controlled corporation which develops digital games at a permanent establishment in Ontario. It must operate the business and file Ontario tax returns.

i. Specialized Digital Game Corporations (Section 93.2)

Eligible digital games are developed by your Specialized Digital Game Corporation for the purpose of sale or license by your company, or a buyer, to one or more arm’s length customers.

Ontario labour expenditures directly related to the development of eligible digital games must equal an aggregated minimum of $500,000 incurred in the tax year that the company makes an OIDMTC claim if your tax year starts after April 11, 2019, or $1 million if your tax year starts prior to April 12, 2019. This Ontario labour threshold can be for work done on more than one digital game in the tax year.

Additionally, your company must meet the following test:

  • 80% of salaries and wages paid to your employees for services rendered in Ontario in the tax year must be directly related to the development of digital games

OR

  • 90% of your company’s total yearly gross revenues must be directly related to the development of digital games

Ontario Creates will need to confirm the nature of your company’s activities and sources of revenue for the tax year. See Table 4 below - Example of Scenario A or B.

Table 4 – Example of Scenario A or B

Specialized Digital Game Corporation:
The corporation must satisfy one of the following conditions A or B:
Scenario (A)
Salaries and Wages for services rendered in Ontario directly attributable to the development of digital games
*must not be less than 80%
Salaries and Wages for services rendered in Ontario attributable to other activities of the corporationTotal Salaries and Wages incurred in the taxation year for services rendered in Ontario
$560,000= 80%$140,000= 20%$700,000= 100%
OR:
Scenario (B)
Gross Revenue for the taxation year that is directly attributable to the development of digital games
*must not be less than 90%
Gross Revenue for the taxation year that is attributable to other activities of the corporationTotal Gross Revenue of corporation for the taxation year
$1,200,000= 100%$0= 0%$1,200,000= 100%

Please note that certain types of digital games may not be eligible for the OIDMTC, such as promotional “advergaming” products, and games that do not meet the minimum interactivity requirements, e.g. games of chance such as casino/slot games. In these cases, you will not be able to include the expenditures incurred for the development of these ineligible games in your minimum Ontario labour threshold of $500,000 or $1 million to qualify as a Specialized Digital Game Corporation.

A Specialized Digital Game Corporation claim can also include games that meet the requirements of non-specified and/or specified products, along with games that are only eligible under s.93.2. Although there are different claim periods for eligible labour for non-specified and specified game products, you can include eligible labour as described in s93.2 that relates to these games incurred in the tax year of your claim to help meet the minimum Ontario labour threshold.

Labour incurred for game development activities claimed for the federal Scientific Research & Experimental Development tax credit (“SR&ED”) is not eligible Ontario labour under section 93.2 and therefore, cannot be included in the minimum Ontario labour threshold to qualify as a Specialized Digital Game Corporation.

ii. Qualifying Digital Game Corporations (Section 93.1)

Eligible digital games are those created by your Qualifying Digital Game Corporation and are developed under a fee-for-service agreement. The agreement is between your company and a purchaser corporation (buyer) for the purpose of sale or license to one or more arm’s length customers. Your company and the purchaser corporation (buyer) can be related entities.

Labour expenditures directly related to development of the game must equal a minimum of $1 million incurred over any three-year period. The game must not have previously received an OIDMTC tax credit.

Your company must incur a minimum of $1 million per game submitted under section 93.1, so please note that Ontario Creates will not accept a suite or bundle of digital games as one game for the purposes of qualifying under this section.

2. Eligibility Criteria Digital Games

iii. Digital Games

Games developed by your Qualifying or Specialized Digital Game Corporation must meet Ontario Creates requirements of an interactive digital media product. (See iv. Interactive Digital Media Products). Your game must also include the following components:

  • Be played on one or more platforms using digital technology.
  • Be played interactively by one or more users and involve a set of goals and rules for game play.
  • Have variable outcomes and a number of elements used in combination (i.e. narrative, visual representation, music, sound).
  • Be a screen-based interactive game intended for a general consumer audience. Note that customized games may be considered on a case-by-case basis.

iv. Interactive Digital Media Products

An interactive digital media product is defined as a combination of one or more application files and one or more data files that are digital, integrated and intended to be operated together.

For your interactive digital media product to be eligible for the OIDMTC, the following criteria must be met:

  • Primary Purpose: The primary purpose of your product must be to educate, inform or entertain the user.
  • Present Information: Use at least two of the three following formats: i) text, ii) sound and iii) images.
  • Choice/Interactivity: User can choose the form and sequence in which information is presented.
  • Use: Intended to be used by individuals.
  • Communication: Not used primarily for interpersonal communication.
  • Non-promotional: Not used primarily for promotion of any products, services, or companies.

v. Interactivity

Not all game products meet the interactivity requirement for OIDMTC.

Specifically, games of chance, or casino/slot type gambling games where the user’s only choice is to press “start” or “play” would not be eligible for the OIDMTC. The user must be able to change the form and sequence of the information being presented to them while operating the game.

You cannot use the expenditures incurred on ineligible digital games to meet the minimum $500,000, or $1 million Ontario labour threshold to qualify as a Specialized Digital Game Corporation under section 93.2.

Products must also not be “contrary to public policy”.[2]

vi. Expenditures

Eligible labour expenditures for your Qualifying and Specialized Digital Game Corporations:

  • Include employee salaries and wages for work rendered in Ontario that is directly attributable to the development of the digital game.
  • Include arm’s length remuneration paid to non-employees for services rendered in Ontario by individuals, personal corporations for the services of the sole shareholder, or partnerships for the services of one of the partners.
  • Exclude amounts paid to another taxable Canadian corporation for the services of their employees.
  • Exclude amounts paid to a qualifying predecessor corporation if applying under section 93.2 as a Specialized Digital Game Corporation.

Eligible labour expenditures must also meet the following critieria:

  • Be directly attributable to the development of the eligible digital game;
  • Paid for services personally rendered by an individual who was resident in Ontario at the end of the calendar year preceding the calendar year in which services were rendered;[3]
  • Paid for services rendered at a permanent establishment in Ontario;
  • Paid no later than 60 days after the end of the tax year of your OIDMTC application;
  • Not incurred as part of scientific research and experimental development (SR&ED) federal tax credit; and
  • Not incurred as part of OCASE, OFTTC or OPSTC claims.

vii. How To Estimate the OIDMTC for Digital Game Companies

To estimate your company’s OIDMTC refund, please refer to Table 5 below.

Table 5 – Expenditure Conditions for Digital Game Companies

Qualifying Digital Game Corporations (93.1)Specialized Digital Game Corporations (93.2)
35% of the eligible labour expenditures incurred in any 36-month period, net of government assistance. 35% of the eligible labour expenditures incurred in the tax year, net of government assistance.
Government assistance includes grants, subsidies, forgivable loans, deductions from tax other than OIDMTC and investment allowance from a government, municipality or other public authority.

C. Administrative Process

The OIDMTC is jointly administered by Ontario Creates and the Canada Revenue Agency (CRA) as described below.

Ontario Creates’ Role

i. Issuance of Certificate of Eligibility

Ontario Creates is responsible for issuing a Certificate of Eligibility which your company files with your corporate tax return with the CRA in order to claim the OIDMTC.

A Certificate of Eligibility sets out the following:

  1. Eligibility of the company claiming the OIDMTC,
  2. Eligibility of the product(s) included in the OIDMTC claim, and
  3. Estimated amount of the OIDMTC.[3]

Where more than one product has been claimed by your company, the Certificate of Eligibility will list all eligible products and an estimated OIDMTC attributed to each product.

For Specialized Digital Game Corporations that make a claim under s93.2, a Certificate of Eligibility will be issued for the tax year in which your company has incurred the minimum Ontario labour threshold amount in respect of a digital game, or slate of eligible digital games.

If your tax year started after April 11, 2019, the minimum Ontario labour threshold is $500,000 and for tax years starting prior to April 12, 2019, the minimum Ontario labour threshold is $1 million.

For companies that apply as a Qualifying Digital Game Corporation under s93.1, a Certificate of Eligibility will be issued for the tax year after the 36-month period in which your company incurred $1 million in Ontario labour expenditures in respect of an eligible digital game.

If your claim includes specified and/or non-specified game products, the Certificate of Eligibility will list all games claimed under Section 93.1 or 93.2 and all specified and non-specified products that have been completed in your company’s tax year.

Ontario Creates reserves the right to ask any question necessary to determine eligibility issues. Failure to provide Ontario Creates with requested information may result in your file being closed or denied eligibility. As issues and fact patterns will differ depending on the specifics of any application, so too may the line of inquiry. Please note that receipt of a certificate for one product may not be relied upon as a guarantee of certification for subsequent filings.

ii. Amendment and Revocation of a Certificate of Eligibility

A Certificate of Eligibility may be amended to correct an error and, under certain circumstances, may be revoked by Ontario Creates. An amended Certificate of Eligibility replaces any Certificate of Eligibility previously issued to your company. If a Certificate of Eligibility is revoked by Ontario Creates, the revoked Certificate of Eligibility is treated as if it had never been issued.

Please note that there is a fee of $100 for each amended Certificate of Eligibility. Please see section 5(iii) below.

2. Canada Revenue Agency (CRA) Role

The CRA is responsible for assessing and auditing your company’s Corporate Income Tax Return. The T2 Form, along with Schedule T2SCH560, must be filed by your company in order to claim the OIDMTC. The CRA also processes T2 tax returns and issues notices of assessment and tax refunds.

3. Filing a Corporate Tax Return

The CRA administers both federal and Ontario corporate taxes. A corporation must file its T2 return for a tax year with the CRA within six months after the end of the corporation’s tax year.

To claim the OIDMTC, your company must file its T2 return with Schedule T2SCH560 and the Certificate of Eligibility with the CRA. Following its review or audit of the OIDMTC claim, the CRA processes the T2 return, issues a notice of assessment and, if applicable, a refund. The refund amount may be reduced by your corporation’s outstanding federal and Ontario taxes.

In the event that your Certificate of Eligibility is not available at the time of submitting your corporation's tax return to the CRA, we recommend that you enter your own OIDMTC estimate on Schedule T2SCH560 and include this schedule with your corporate tax return. Once the Certificate of Eligibility is received from Ontario Creates, submit the Certificate (or copy of) to the CRA. The CRA will process the claim once they have received the Certificate of Eligibility as well as the T2 Corporation Income Tax Return and applicable schedules.

The T2 Corporation Income Tax Return is available (opens new window)here and the applicable schedule is available (opens new window)here.

For additional information visit this page on (opens new window)the CRA website.

Inquiries should be directed to CRA’s Toronto Film Services Unit at (416) 973-3407 or (416) 954-0542.

4. Payment of an OIDMTC Refund

If a corporate tax refund (which may include an OIDMTC refund) is due, a cheque or direct deposit payable to your company will be sent by the CRA.

5. Applying for a Certificate of Eligibility

i. Who Applies to Ontario Creates?

Your company must submit a completed OIDMTC Application via Ontario Creates Online Application Portal for all eligible products for the applicable tax year. For administrative convenience, your company may appoint an agent to apply on its behalf, but any Certificate of Eligibility issued will be in the name of your company.

ii. When Should Your Application Be Made to Ontario Creates?

If your Specialized Digital Game Corporation is making an OIDMTC claim, apply to Ontario Creates at the end of the tax year in which your company has incurred the minimum Ontario labour threshold amount in respect of eligible digital games. If your tax year started after April 11, 2019, the minimum Ontario labour threshold is $500,000 and for tax years starting prior to April 12, 2019, the minimum Ontario labour threshold is $1 million.

If your Qualifying Digital Game Corporation is making an OIDMTC claim, apply to Ontario Creates after the end of the 36-month period in which your company incurred $1 million in Ontario labour expenditures in respect of an eligible digital game.

If your claim includes a specified and/or non-specified game product you can apply to Ontario Creates at the end of your company’s tax year in which your specified or non-specified product has been completed. Include all specified and/or non-specified products completed in your company’s tax year in one OIDMTC application.

There is no application deadline for digital game corporation claims made under Sections 93.1 and 93.2. However, if your OIDMTC application also includes completed products claimed as specified or non-specified products under Section 93, there is an 18 month application deadline. Please see the guidelines for specified and non-specified products here: https://www.ontariocreates.ca/tax-incentives/oidmtc/oidmtc-guidelines-non-specified

Please note that each application is subject to an administration fee.

Please note that there is an additional fee for filing claims that are more than 18 months old. Please see section 5(iii) below.

iii. What is the Administration Fee?

A non-refundable Administration Fee is payable with respect to each OIDMTC application submitted to Ontario Creates. Administration Fees are used to offset operating costs of the OIDMTC program. Please note that the administration fee is required in order for the application to receive an eligibility review.

The administration fee is calculated as 0.15 per cent of the total eligible OIDMTC expenditures. The minimum Administration Fee is $1,000 and the maximum is $10,000 per application.

For example, where eligible OIDMTC expenditures total $700,000, the Administration Fee is calculated as follows: Application Fee = Qualifying Expenditure x 0.0015 =$700,000 x 0.0015 =$1,050

Applicants now have the option of paying the administration fee through Interac E-Transfer. Please visit the following pages on the Ontario Creates website for more information:

Please direct inquiries to applyhelp@ontariocreates.ca.

The administration fee may also be paid by cheque or money order to Ontario Creates when the application is submitted. The fee must be paid in full in order for your application to be reviewed.

Please note: there is a fee of $100 for each amended Certificate.

Please note: there is an additional filing fee of $100:

  • 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.

iv. What Documentation is Required?

You must submit the documents that are outlined in the OIDMTC Document Checklist (see Appendix 1). In some cases, Ontario Creates may also require additional documentation or information in order to issue a Certificate of Eligibility. All documentation and correspondence that relates to your application must go through Ontario Creates Application Portal. All documentation or information received from an applicant is subject to the confidentiality provisions of the Taxation Act and will be maintained in strictest confidence by Ontario Creates, the Ministry of Finance and the CRA.

v. How Long Does the Process Take?

Ontario Creates Tax Credit Department reviews completed applications on a first-come, first-served basis. Processing time will depend on the volume of applications received. If you file an incomplete application, you will be notified about deficiencies with the filing. Where significant delays are encountered in obtaining responses from applicants, Ontario Creates reserves the right to close the file after 30 days.

vi. Online Application

All Ontario Creates tax credit applications must be submitted via the Online Application Portal (OAP).

Ontario Creates has created a series of training videos describing in detail how to perform the most common actions on the portal. These training videos can be accessed on Ontario Creates website at: http://www.ontariocreates.ca/online-application-portal/online-application-portal-training-videos

When you start an application on the OAP you can save your work and come back to it before submitting the application online. However, please note that once you have started the application on the OAP you have 90 days to submit it before the application expires.

Please ensure that your application includes all of the required information and supporting documentation. All applications will be reviewed by a tax credit intake officer for completeness. If required documentation is missing, the file will not enter the queue. Applicants will be advised that the file will not move forward until the requested documentation is submitted.

vii. Do Different Versions of a Product Need to be Submitted as Separate Products in an OIDMTC Claim?

Yes. Each version of a product that is developed for a specific platform should be submitted as a separate product in an OIDMTC application, e.g. Product A [Android], Product A [iOS], Product A [PC]. Each version of a product should have separate expenditure allocations and may also have different start and completion dates.

If during the course of review Ontario Creates discovers that a single product submitted in the OIDMTC application was actually developed for multiple platforms, we will request that the applicant re-submit their OIDMTC application and split out the products and development expenditures by platform as noted above.

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CONTACT INFORMATION

If you require assistance, please contact the Tax Credits Phone Duty line (416) 642-6659 or mailbox at taxcredits@ontariocreates.ca. Please leave a detailed message including your name, company, phone number and which tax credit or file you are inquiring about. Phone calls and emails will be responded to within one business day. For further information please also check out our Frequently Asked Questions.

APPENDIX 1 - OIDMTC DOCUMENT CHECKLIST (Digital Games claimed by a Qualifying Digital Game Corporation (s.93.1) or a Specialized Digital Game Corporation (s.93.2))

*Note: if your OIDMTC application also includes completed products claimed as specified or non-specified products under Section 93, there is a different set of documents required for those products. Please see the documents checklist in the guidelines for specified and non-specified products here: https://www.ontariocreates.ca/tax-incentives/oidmtc/oidmtc-guidelines-non-specified

Your company is responsible for ensuring that all application documentation is current and accurate.

  1. OIDMTC Application Form (You must register on Ontario Creates Online Application Portal to access the Application Form.)
  2. Administration Fee, payable to Ontario Creates,
    calculated as 0.15 percent of the total final Eligible Expenditures.
    The minimum Administration Fee is $1,000 and the maximum is $10,000 per application.
    Please note:
    • There is an additional filing fee of $100 for applications that are submitted more than 18 months from the company’s relevant year-end; and
    • There is a fee of $100 for amended Certificates.
  3. Incorporation documents for your company, including amendments. (If these documents are already on file with Ontario Creates Tax Credits Department, please provide all updates, amendments or revisions.)
  4. Corporate chart for Qualifying Corporation. Please complete and sign the Corporate Schedule for the applicant company for the fiscal year of the application with all the information requested on the form.
  5. Consolidated annual financial statements of your company for the current tax year.
  6. Description of product development: Design and technical specification documentation, where applicable, including a flow chart, functional design, a description of the user experience, storyboard, a list of technical requirements and specifications or script.
  7. Complete, detailed production schedule and timeline showing who did what and when (e.g. Gantt chart).
  8. Financing plan/sources of financing for the interactive digital media product (required for each interactive digital media product included in the application).
  9. Financing contracts, if available (for all sources of financing for each interactive digital media product included in the application). Include financing documents for government assistance/grants.
  10. A description of the product is required.
  11. If applying under section 93.2 as a Specialized Digital Game Corporation please provide:
    1. Detailed Payroll report or Wage Schedule that relates to the tax year in which the Specialized Digital Game Corporation is making an annual claim. This document will be used to confirm the percentage of the total salaries and wages incurred by your company in Ontario, in the tax year, that are directly attributable to digital game development as reported in your OIDMTC application. The detailed Payroll Report or Wage Schedule should list names of all employees, their addresses, and job descriptions
    OR
    1. If not clearly notated in the company’s financial statements, please submit General Ledger Account details showing sources of gross revenue that relate to the tax year in which the Specialized Digital Game Corporation is making an annual claim. This document will be used to confirm the percentage of total gross revenue for the year that is directly attributable to the development of digital games as reported in your OIDMTC application. If the General Ledger Accounts do not contain enough detail, additional documentation may be requested, i.e. an agreement with a related or parent corporation that provides all revenue to the Ontario based Specialized Digital Corporation for digital game development.
    Companies must meet the requirements of a Specialized Digital Game Corporation for every tax year that they make an OIDMTC claim under section 93. 2, even if your company has previously been certified as a Specialized Digital Game Corporation in the past.
  12. If applying under section 93.2 as a Specialized Digital Game Corporation, please provide:
    Development Agreements between the Specialized Digital Game Corporation and Purchaser Corporation(s) if applicable for each eligible digital game included in the application (i.e. purchaser agreements, fee-for-service agreements etc.).

    If applying under section 93.1 as a Qualifying Digital Game Corporation, please provide:
    Development Agreement(s) between the Qualifying Digital Game Corporation and Purchaser Corporation(s) for each eligible digital game included in the application (i.e. purchaser agreements, fee-for-service agreements etc.).

    If your claim includes non-specified or specified games under section 93 please provide:
    Chain of title documentation for each interactive digital media product included in the application: (i.e. documentation of ownership rights to the product, for example, licensing agreements, rights agreements, domain name registration, co-production agreements, distribution agreements, where applicable. For specified products provide fee-for-service agreement with the purchaser corporation. Documentation should clearly indicate ownership rights to the completed product.)
  13. Business and Marketing Plan including a description of the target audience/market and revenue model.
    Where possible, please include letters and or agreements that confirm interest and proposed terms from third-party distributors or equivalent. (Required for each interactive digital media product included in the application.)
  14. For each eligible digital game included in the application being claimed under section 93.2 for a Specialized Digital Game Corporation, you must use the (opens new window)OIDMTC Expenditure Breakdown Spreadsheet for Specialized Digital Games (Section 93.2) that can be downloaded from Ontario Creates website. This is a schedule of actual eligible Ontario labour expenditures incurred by the Specialized Digital Game Corporation in the year for which an OIDMTC application is submitted.

    The schedules should make a clear distinction between, and provide subtotals for:
    • Wage Amounts on account of salaries and wages of its employees; and
    • Remuneration Amounts paid to:
      1. Arm’s length Ontario-based individuals who are not employees of your corporation;
      2. Ontario-based individuals who deal at arm’s length with your Qualifying Digital Game Corporation for the services personally rendered by their employees;
      3. Ontario-based Canadian corporations for the services rendered personally by an Ontario-based individual if the individual deals at arm’s length with the Qualifying Digital Game Corporation and is the sole shareholder of the corporation (i.e. personal loan-out corporation);
      4. Eligible partnerships for the services rendered personally by a member of the eligible partnership or for services rendered personally by employees of the eligible partnership.
    * Eligible partnerships for the services rendered personally by a member of the eligible partnership or for services rendered personally by employees of the eligible partnership.

    Please note: Ontario Creates may request documentation to verify expenditures such as Detailed General Ledger Reports, Project Accounts etc.

    Note: If your OIDMTC application includes any non-specified or specified game products there is a different spreadsheet that must be used for those products:
    Specified and Non-Specified Products Expenditure Breakdown (Section 93) see here.
  15. List of names and roles (with brief description) of all individuals and companies working on the product(s). This list should include employees and individuals who are not employees of your company. Please include addresses.
  16. For each eligible digital game included in the application being claimed under section 93.1 for a Qualifying Digital Game Corporation, you must use the (opens new window)OIDMTC Expenditure Breakdown Spreadsheet for Qualified Digital Games (Section 93.1) that can be downloaded from Ontario Creates website. This is a schedule of ACTUAL eligible Ontario labour expenditures incurred by the Qualifying Digital Game Corporation within any period of 36 months that ends in a tax year, in which an OIDMTC application is submitted. Those expenditures must not be less than $1,000,000.

    The schedules should make a clear distinction between, and provide subtotals for:
    • Wage Amounts on account of salaries and wages of your employees; and
    • Remuneration Amounts paid to:
      1. Arm’s length Ontario-based individuals who are not employees of your corporation;
      2. Ontario-based individuals who deal at arm’s length with your Qualifying Digital Game Corporation for the services personally rendered by their employees;
      3. Ontario-based Canadian corporations for the services rendered personally by an Ontario-based individual if the individual deals at arm’s length with the Qualifying Digital Game Corporation and is the sole shareholder of the corporation (i.e. personal services corporation);
      4. Eligible partnerships for the services rendered personally by a member of the eligible partnership, or for services rendered personally by employees of the eligible partnership
    * Please note: Remuneration paid to a taxable Canadian corporation for services rendered by its employees cannot be included as eligible labour under section 93.1.
  17. If applying under section 93.2 (Specialized Digital Game Corporation) or 93.1 (Qualifying Digital Game Corporation) please provide evidence or a copy of each eligible digital game included in the application, including online games. Please submit copies of completed eligible digital games, if available.

    Other documentation to evidence development of eligible digital games may include detailed design or technical specification documents, working prototypes, mock ups, wire frames, copies of graphics and art assets created, game design documents, physics or game engine descriptions. For websites, a copy of all associated text and image files with the address where the game may be accessed is required. Please include any password, registration or access codes that may be required to review the game.

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APPENDIX 2 - ONTARIO INTERACTIVE DIGITAL MEDIA TAX CREDIT LEGISLATION

Current to May 29, 2019

The Legislation governing the OIDMTC is set out in Section 93 of the Taxation Act, S.O. 2007, Chapter 11, Schedule A, and can be found (opens new window)here.

APPENDIX 3 - ONTARIO INTERACTIVE DIGITAL MEDIA TAX CREDIT REGULATION

Current To May 15, 2017

* This Regulations is made in English only.

The Regulations governing the OIDMTC are set out in Ontario Regulation 37/09, and can be found (opens new window)here.

APPENDIX 4 - ONTARIO INTERACTIVE DIGITAL MEDIA TAX CREDIT RELATED PROVISIONS

NOTE: Ontario Creates versions reproduced in this Appendix are for purposes of convenience only. The authoritative text of the following provisions is set out in the official volumes.

4-I - DEFINITION OF “CANADIAN CORPORATION”

Subsection 89(1) of the Income Tax Act (Canada)

89. (1) “Canadian corporation” at any time means a corporation that is resident in Canada at that time and was

  1. incorporated in Canada, or
  2. resident in Canada throughout the period that began on June 18, 1971 and that ends at that time,

and, for greater certainty, a corporation formed at any particular time by the amalgamation or merger of, or by a plan of arrangement or other corporate reorganization in respect of, 2 or more corporations (otherwise than as a result of the acquisition of property of one corporation by another corporation, pursuant to the purchase of the property by the other corporation or as a result of the distribution of the property to the other corporation on the winding up of the corporation) is a Canadian corporation because of paragraph (a) only if

  1. that reorganization took place under the laws of Canada or a province, and
  2. each of those corporations was, immediately before the particular time, a Canadian corporation

4-II - DEFINITION OF “PERMANENT ESTABLISHMENT”

Subsection 400 of the Federal Income Tax Regulations

(2) For the purposes of this Part, “permanent establishment” in respect of a corporation means a fixed place of business of the corporation, including an office, a branch, a mine, an oil well, a farm, a timberland, a factory, a workshop or a warehouse, and

  1. where the corporation does not have any fixed place of business it means the principal place in which the corporation’s business is conducted;
  2. where a corporation carries on business through an employee or agent, established in a particular place, who has general authority to contract for his employer or principal or who has a stock of merchandise owned by his employer or principal from which he regularly fills orders which he receives, the corporation shall be deemed to have a permanent establishment in that place;
  3. an insurance corporation is deemed to have a permanent establishment in each province and country in which the corporation is registered or licensed to do business;
  4. where a corporation, otherwise having a permanent establishment in Canada, owns land in a province, such land shall be deemed to be a permanent establishment;
  5. where a corporation uses substantial machinery or equipment in a particular place at any time in a taxation year it shall be deemed to have a permanent establishment in that place;
    (e.1) if, but for this paragraph, a corporation would not have a permanent establishment, the corporation is deemed to have a permanent establishment at the place designated in its incorporating documents or bylaws as its head office or registered office;
  6. the fact that a corporation has business dealings through a commission agent, broker or other independent agent or maintains an office solely for the purchase of merchandise shall not of itself be held to mean that the corporation has a permanent establishment; and
  7. the fact that a corporation has a subsidiary controlled corporation in a place or a subsidiary controlled corporation engaged in trade or business in a place shall not of itself be held to mean that the corporation is operating a permanent establishment in that place.

4-III - DEFINITION OF CONTROL IN FACT

“CONTROLLED, DIRECTLY OR INDIRECTLY IN ANY MANNER WHATEVER”
Subsection 256(5.1) of the Income Tax Act (Canada)

256 (5.1) Control in fact – For the purposes of this Act, where the expression “controlled, directly or indirectly in any manner whatever,” is used, a corporation shall be considered to be so controlled by another corporation, person or group of persons (in this subsection referred to as the “controller”) at any time where, at that time, the controller has any direct or indirect influence that, if exercised, would result in control in fact of the corporation, except that, where the corporation and the controller are dealing with each other at arm’s length and the influence is derived from a franchise, licence, lease, distribution, supply or management agreement or other similar agreement or arrangement, the main purpose of which is to govern the relationship between the corporation and the controller regarding the manner in which a business carried on by the corporation is to be conducted, the corporation shall not be considered to be controlled, directly or indirectly, in any manner whatever, by the controller by reason only of that agreement or arrangement.

4-IV – REGARDING APPLICABLE ASSET AND REVENUE CAPS

Subsection 57.2(1) of the Corporations Tax Act (Ontario)

57.2 (1) Except as provided in section 57.11, every corporation subject to tax under Part II for a tax year is liable to pay to the Crown in right of Ontario a corporate minimum tax for the taxation year as determined under this Part if,

  1. the corporation’s total assets at the end of the tax year exceed $5,000,000;
  2. the corporation’s total revenue for the tax year exceeds $10,000,000; or
  3. the corporation has one or more associated corporations during the taxation year and,
    1. the aggregate of the total assets of the corporation at the end of the taxation year and of each associated corporation at the end of the associated corporation’s last taxation year ending in the corporation’s taxation year exceeds $5,000,000, or
    2. the aggregate of the total revenue of the corporation for the taxation year and of each associated corporation for the last taxation year of the associated corporation ending in the corporation’s taxation year exceeds $10,000,000.

4-V - DEFINITION OF “ASSOCIATED CORPORATIONS”

Subsection 256(1) of the Income Tax Act (Canada)

256. (1) Associated corporations – for the purposes of this Act, one corporation is associated with another in a taxation year if, at any time in the year,

  1. one of the corporations controlled, directly or indirectly in any manner whatever, the other;
  2. both of the corporations were controlled, directly or indirectly in any manner whatever, by the same person or group of persons;
  3. each of the corporations was controlled, directly or indirectly in any manner whatever, by a person and the person who so controlled one of the corporations was related to the person who so controlled the other, and either of those persons owned, in respect of each corporation, not less than 25% of the issued shares of any class, other than a specified class, of the capital stock thereof;
  4. one of the corporations was controlled, directly or indirectly in any manner whatever, by a person and that person was related to each member of a group of persons that so controlled the other corporation, and that person owned, in respect of the other corporation, not less than 25% of the issued shares of any class, other than a specified class, of the capital stock thereof; or
  5. each of the corporations was controlled, directly or indirectly in any manner whatever, by a related group and each of the members of one of the related groups was related to all of the members of the other related group, and one or more persons were members of both related groups, either alone or together, owned, in respect of each corporation, not less than 25% of the issued shares of any class, other than a specified class of the capital stock thereof.

4-VI - DEFINITION OF “ARM’S LENGTH”

Section 251 of the Income Tax Act (Canada)

251. (1) Arm’s length – for the purposes of this Act,

  1. related persons shall be deemed not to deal with each other at arm’s length;
  2. a taxpayer and a personal trust (other than a trust described in any of paragraphs (a) to (e.1) of the definition “trust” in subsection 108(1)) are deemed not to deal with each other at arm’s length if the taxpayer, or any person not dealing at arm’s length with the taxpayer, would be beneficially interested in the trust if subsection 248(25) were read without reference to subclauses 248(25)(b)(iii)(A)(II) to (IV); and
  3. in any other case,it is a question of fact whether persons not related to each other are, at a particular time, dealing with each other at arm’s length.

(2) Definition of “related persons” – for the purposes of this Act, “related persons”, or persons related to each other are

  1. (a) individuals connected by blood relationship, marriage or common-law partnership or adoption:
  2. a corporation and
    1. a person who controls the corporation, if it is controlled by one person,
    2. a person who is a member of a related group that controls the corporation, or
    3. any person related to a person described in subparagraph 251(2)(b)(i) or 251(2)(b)(ii); and
  3. any two corporations
    1. if they are controlled by the same person or group of persons,
    2. if each of the corporations is controlled by one person and the person who controls one of the corporations is related to the person who controls the other corporation,
    3. if one of the corporations is controlled by one person and that person is related to any member of a related group that controls the other corporation,
    4. if one of the corporations is controlled by one person and that person is related to each member of an unrelated group that controls the other corporation,
    5. if any member of a related group that controls one of the corporations is related to each member of an unrelated group that controls the other corporation, or
    6. if each member of an unrelated group that controls one of the corporations is related to at least one member of an unrelated group that controls the other corporation.

(3) Corporations related through a third corporation – Where two corporations are related to the same corporation within the meaning of subsection 251(2), they shall, for the purposes of subsections 251(1) and 251(2), be deemed to be related to each other.

(3.1) Relation where amalgamation or merger – Where there has been an amalgamation or merger of two or more corporations and the new corporation formed as a result of the amalgamation or merger and any predecessor corporation would have been related immediately before the amalgamation or merger if the new corporation were in existence at the time, and if the persons who were the shareholders of the new corporation immediately after the amalgamation or merger were the shareholder of the new corporation at that time, the new corporation and any such predecessor corporation shall be deemed to have been related persons.

(3.2) Amalgamation of related corporations – Where there has been an amalgamation or merger of 2 or more corporations each of which was related (otherwise than because of a right referred to in paragraph 251(5)(b)) to each other immediately before the amalgamation or merger, the new corporation formed as a result of the amalgamation or merger and each of the predecessor corporations is deemed to have been related to each other.

(4) Definitions concerning groups – In this Act,

  • “related group” means a group of persons each member of which is related to every other member of the group;
  • “unrelated group” means a group of persons that is not a related group.

(5) Control by related groups, options, etc – For the purposes of subsection 251(2) and the definition of “Canadian-controlled private corporation” in subsection 125(7).

  1. where a related group is in a position to control a corporation, it shall be deemed to be a related group that controls the corporation whether or not it is part of a larger group by which the corporation is in fact controlled;
  2. where at any time a person has a right under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently,
    1. to, or to acquire, shares of the capital stock of a corporation or to control the voting rights of such shares, the person shall, except where the right is not exercisable at that time because the exercise thereof is contingent on the death, bankruptcy or permanent disability of an individual, be deemed to have the same position in relation to the control of the corporation as if the person owned the shares at that time,
    2. to cause a corporation to redeem, acquire or cancel any shares of its capital stock owned by other shareholders of the corporation, the person shall, except where the right is not exercisable at that time because the exercise thereof is contingent on the death, bankruptcy or permanent disability of an individual, be deemed to have the same position in relation to the control of the corporation as if the shares were so redeemed, acquired or cancelled by the corporation at that time,
    3. to, or to acquire or control, voting rights in respect of shares of the capital stock of a corporation, the person is, except where the right is not exercisable at that time because its exercise is contingent on the death, bankruptcy or permanent disability of an individual, deemed to have the same position in relationship to the control of the corporation as if the person could exercise the voting rights at that time, or
    4. to cause the reduction of voting rights in respect of shares, owned by other shareholders, of the capital stock of a corporation, the person is, except where the right is not exercisable at that time because its exercise is contingent on the death, bankruptcy or permanent disability of an individual, deemed to have the same position in relation to the control of the corporation as if the voting rights were so reduced at that time; and
  3. where a person owns shares in two or more corporations, the person shall as shareholder of one of the corporations be deemed to be related to himself, herself or itself as shareholder of each of the other corporations.

(6) Blood relationship, etc – For the purposes of this Act, persons are connected by

  1. a blood relationship if one is the child or other descendant of the other or one is the brother or sister of the other;
  2. marriage if one is married to the other or to a person who is so connected by blood relationship to the other;
    (b.1) common-law partnership if one is in a common-law partnership with the other or with a person who is connected by blood relationship to the other; and
  3. adoption if one has been adopted, either legally or in fact, as the child of the other or as the child of a person who is so connected by blood relationship (otherwise than as a brother or sister) to the other.

4-VII - DEFINITION OF LIABILITY FOR ONTARIO PERSONAL INCOME TAX

Subsection 2 of the Income Tax Act (Ontario)

2. An income tax shall be paid as hereinafter required for each taxation year by every individual,

  1. who was resident in Ontario on the last day of the taxation year; or
  2. who, not being resident in Ontario on the last day of the taxation year, had income earned in the taxation year in Ontario as defined in section 4.

4-VIII - DEFINITION OF “ASSISTANCE”

Paragraph 12(1)(x) of the Income Tax Act (Canada)

12(1)(x) Inducement, reimbursement, etc. – any particular amount (other than a prescribed amount) received by the taxpayer in the year, in the course of earning income from a business or property, from

  1. a person or partnership (in this paragraph referred to as the “payer”) who pays the particular amount
    1. in the course of earning income from a business or property,
    2. in order to achieve a benefit or advantage for the payer or for persons with whom the payer does not deal at arm’s length, or
    3. in circumstances where it is reasonable to conclude that the payer would not have paid the amount but for the receipt by the payer of amounts from a payer, government, municipality, or public authority described in this subparagraph or in subparagraph (ii), or
  2. a government, municipality or other public authority,

where the particular amount can reasonably be considered to have been received

  1. as an inducement, whether as a grant, subsidy, forgivable loan, deduction from tax, allowance or any other form of inducement, or
  2. as a refund, reimbursement, contribution or allowance or as assistance, whether as a grant, subsidy, forgivable loan, deduction from tax allowance or any other form of assistance in respect of
    1. an amount included in, or deducted as, the cost of property, or
    2. an outlay or expense,

to the extent that the particular amount

  1. was not otherwise included in computing the taxpayer’s income or deducted in computing, for the purposes of this Act, any balance of undeducted outlays, expenses or other amounts for the year or a preceding taxation year,
    (v.1) is not an amount received by the taxpayer in respect of a restrictive covenant, as defined by

subsection 56.4(1), that was included, under subsection 56.4(2), in computing the income of a person related to the taxpayer,

  1. except as provided by subsection 127(11.1), 127(11.5) or 127(11.6) does not reduce, for the purpose of an assessment made or that may be made under this Act the cost or capital cost of the property or the amount of the outlay or expense as the case may be,
  2. does not reduce, under subsection 12(2.2) or 13(7.4) or paragraph 53(2)(s), the cost or capital cost of the property or the amount of the outlay or expense, as the case may be, and
  3. may not reasonably be considered to be a payment made in respect of the acquisition by the payer or the public authority of an interest in the taxpayer, an interest in, or for civil law a right in, the taxpayer’s business or an interest in, or for civil law a real right in, the taxpayer’s property.

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  1. ^Overview of guidelines follows for section 93.2 Specialized Digital Game Corporations and section 93.1 Qualifying Digital Game Corporations. For information on section 93 for non-specified and specified products, please see the separate guideline package for these claims: http://www.ontariocreates.ca/tax-incentives/oidmtc/oidmtc-guidelines-non-specified
  2. ^Products for which public financial support would in the opinion of Ontario Creates be contrary to public policy may include products which are capable of inciting hatred against an identifiable group, including a section of the public distinguished by colour, race, religion, sex, sexual orientation or ethnic origin and products whose dominant characteristic is the undue exploitation of sex or violence, or the combination of sex and one or more of the following subjects: crime, horror, cruelty or violence.
  3. ^Factors that are relevant in establishing an individual’s residency in a jurisdiction include the location of the individual’s principal residence, and social and financial ties to the jurisdiction.
  4. ^The amount of the OIDMTC is subject to verification by the Canada Revenue Agency as indicated below.

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