OIDMTC FAQ

The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a 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.

Yes. The OIDMTC is a refundable tax credit, which means the amount of the credit, less any Ontario taxes payable, will be paid to the qualifying corporation.

The OIDMTC is jointly administered by the Ontario Creates, formerly Ontario Media Development Corporation (OMDC) – an agency of the Ontario Ministry of Culture – and the Canada Revenue Agency. Application is made to the Ontario Creates for a certificate of eligibility, which the corporation files with the CRA together with its tax return in order to claim the OIDMTC.

The OIDMTC refund rate is determined by type of the product developed by your corporation. If you own the rights to the eligible product, your eligible product development expenditures as well as the first $100,000 of marketing and distribution expenditures are eligible for a 40% refundable tax credit. If the eligible product was developed for another corporation which owns IP and distribution rights to the product, your eligible product development expenditures are subject to a 35% refundable tax credit. Companies that generate more than 90% of their revenues from digital games or spend more than 80% of their payroll on developing digital games can claim OIDMTC at 35% rate annually as long as their Ontario payroll directly attributable to the development of digital games exceeds $500,000.

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.

To be eligible for the OIDMTC a product must be an interactive digital media (IDM) product whose primary purpose is to educate, or entertain, and that achieves its primary purpose by presenting information in at least two of: (i) text, (ii) sound and (iii) images. Types of interactive digital media products that may be eligible for the tax credit include games, educational products for kids under 12, and some other types of products. To be eligible IDM products must have a an eligible revenue generating stream.

In addition to the primary eligibility requirements of presenting at least two of: (i) text, (ii) sound and (iii) image, the following criteria must also be satisfied in order for a product to be eligible for the OIDMTC.

All or substantially all of the product was developed in Ontario by the qualifying corporation or by the qualifying corporation and a qualifying predecessor corporation.
The product was developed for sale or licensing by the qualifying corporation to one or more arm’s length parties who have not previously entered into an arrangement with the qualifying corporation or a qualifying predecessor corporation for the development of the product.
i. The product is not used primarily for interpersonal communication.
ii. The product is not used primarily to present or promote the qualifying corporation or a qualifying predecessor corporation.
iii. The product is not used primarily to present, promote or sell the products or services of the qualifying corporation or of a qualifying predecessor corporation.

In addition the above requirements, there are many other requirements and restrictions that need to be adhered to in order for the product to be eligible. Please contact us for more information.

It is not required to place an acknowledgement within the product for which an OIDMTC claim is filed. Should you wish to provide an acknowledgement for an Ontario tax credit, the Ontario Creates suggests the following wording: “with the assistance of the Government of Ontario – The Ontario Interactive Digital Media Tax Credit”.

Eligible labour expenditures are 100% of Ontario salaries and wages directly related to product development, 100% of remuneration paid to Ontario freelancers operating as individuals or through personal services corporations, 65% of the contract expenditures paid to Ontario corporations. Eligible marketing and distribution expenditures are expenditures directly attributable to advertising or promoting the eligible product or distributing the eligible product to customers or potential customers.

Eligible marketing and distribution costs may include:
• Attending trade shows where the product is being promoted
• Consultant fees for PR and marketing
• Portion of wages and salaries of employee(s) attributable to specific product marketing and distribution
• Advertising the product in print and electronic media (including design and preparation)
• Preparing the product for display or demonstration
• Product market research/focus group testing
• Product visual identity: logos, branding, merchandising/promotional products e.g. mugs, shirts
• In-store promotions (shelf space), product samples
• Direct Mail Marketing/Telemarketing
• Media kits/news releases (media lists)
• Expenditures related to product distribution, including digital distribution

There is no limit on the amount of eligible Ontario product development expenditures that may qualify and there are 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 eligible product.

A corporation submits an application for a Certificate of Eligibility within 18 months following the end of the fiscal year for which the application is prepared. It is also possible to submit the application three months before the end of the taxation year if all eligible products have been completed before the end of the year. As a general rule, an IDM product must be completed to qualify for OIDMTC, however if a corporation spends more that $500,000 a year on development of digital games, it may qualify for annual filing. In that case, the games do not have to be completed to qualify for OIDMTC. If the corporation has not incurred all eligible costs at the time of applying for an OIDMTC Certificate of Eligibility (i.e. there are additional marketing costs to be incurred) the corporation should submit cost schedules showing expenditures incurred up to the end of the taxation year in which the products were completed. To claim additional marketing and distribution expenditures on products certified in the previous taxation year the corporation should submit a new application for the following taxation year when these additional marketing and distribution expenditures were incurred. Please note that each application is subject to an administration fee.

The Application 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 qualifying expenditures total $800,000, the Application Fee is calculated as follows:
Application Fee = Qualifying Expenditure x 0.0015 = $800,000 x 0.0015 = $1,200.

A Certificate of Eligibility sets out (i) the eligibility of an applicant corporation; (ii) the eligibility of an applicant product(s); and (iii) the estimated amount of the OIDMTC. The amount of the OIDMTC is subject to verification by the CRA.

Mobile Capital Network provides a comprehensive OIDMTC filing service. MCN consultants will prepare an application for a Certificate of Eligibility, including all of the necessary costing schedules, business plans and all other required documents. MCN will work closely with Ontario Creates’ officer to expedite the review process and ensure Ontario Creates’ approval of the claim. Once the Certificate of Eligibility is issued, MCN will prepare necessary tax schedules to be filed with the CRA to claim OIDMTC. If the CRA selects your OIDMTC claim for a review, MCN will represent you during the review, defend the claim and ensure that the CRA processes it expeditiously.

Yes. MCN provides OIDMTC services either on a contingency basis or on a fixed-fee basis. For more information, about our OIDMTC services, please contact us.

No. Our consulting agreement clearly spell out the fee arrangements. There will be no hidden fees, expenses etc.

Mobile Capital Network is a national strategy consulting practice, headquartered in Toronto, Ontario, and the offices in Vancouver, BC, and Calgary, Alberta. MCN has consultants and clients nationwide. However, please note that the OIDMTC is only available to organizations that operate in Ontario through a permanent establishment.