The Ontario government announced this fall that the Ontario Interactive Digital Media Tax Credit (OIDMTC) program is under review as the program has seen a rapid increase in the number of claims in recent years, with a 40 percent annual growth rate in support claims processed. The potential changes in the program may affect the type of businesses that can apply for the tax credit, as well as reducing the rate at which the OIDMTC is earned. With a decision expected in spring 2015, businesses that are currently eligible for the OIDMTC should plan to file as soon as possible prior to the implementation of these changes.
In addition to the OIDMTC program, an array of tax credits are offered by the Canadian and Ontario government to assist companies that drive innovation in their industries. Companies that qualify for the OIDMTC may also be eligible for the federal and provincial Scientific Research and Experimental Development (SR&ED) investment tax credit program. Under the SR&ED program, eligible private companies can receive over 60 percent of qualifying expenditures as a cash refund.
About the Ontario Interactive Digital Media Tax Credit
Committed to developing an innovation-focused economy supported by a highly skilled workforce, the provincial government introduced the Ontario Interactive Digital Media Tax Credit (OIDMTC) in 2000. This incentive has promoted the interactive digital media industry and attracted significant investment in innovation. The OIDMTC provides refunds of up to 40% of eligible amounts, which may include Ontario labour, marketing and distribution expenditures. Initially introduced to assist the games development industry, the OIDMTC has since grown to encompass online publishers, financial institutions and multinationals that produce interactive media.
To qualify, a Canadian corporation must operate a permanent establishment in Ontario, it must file an Ontario tax return, and it must develop a product that fulfills the following criteria:
- An interactive media product that educates, informs or entertains
- Presents information combining at least two of the following channels: text, sound and images.
For greater clarity on the OIDMTC, SR&ED and other related funding, contact the experts at Collins Barrow.
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