Interactive Digital Media Tax Credit - OIDMTC/IDMTC

About Digital Media Tax Credit Programs

Interactive Digital Media Tax Credit (IDMTC) programs support corporations that create eligible digital media products, offering refundable tax credits on development expenses. This program is available in numerous provinces across Canada, all providing generous refunds for local business. However, each province has specific rates and requirements. So, keep reading to learn all about provincial IDMTC programs and what they can do for your business!

Table of Contents

Share on linkedin
Share on facebook
Share on twitter
Share on email
Share on whatsapp

Ontario Interactive Digital Media Tax Credit (OIDMTC)

What is the Ontario Interactive Digital Media Tax Credit?

The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a refundable tax credit for Canadian corporations developing interactive digital media products whose primary purpose is to educate children under 12 or entertain the user. This program offers a credit on eligible Ontario labour expenditures and, potentially, marketing and distributing expenses.

 

Amount: 35-40% of qualified costs, no maximum on labour expenditures.

Are you eligible for the OIDMTC?

To be eligible for the OIDMTC, the interactive digital product must:

1. Have a primary purpose of educating children under 12 or entertaining the user.

2. Use two of text, images, or sound.

3. Be used by individuals.

4. Have a revenue generating stream.

5. Be developed by a taxable Canadian business with a permanent establishment in Ontario.

-> 80% of the development work must be performed in Ontario, by Ontario taxpayers.

There are 4 types of digital media products that are eligible under the tax credit:

1. Non-specified products 

(for corporations that develop or license their own products)

2. Specified products 

(for corporations that develop products for external buyers)

3. Digital games 

developed by a qualifying digital game corporation

4. Digital games 

developed by a specialized digital game corporation

Examples include:

  • mobile applications,
  • digital games,
 
  • interactive websites, 
  • e-learning products for children under 12,
 
  • interactive television,
  • online magazines

What isn't eligible for the OIDMTC?

  • Products providing any content that is news, public affairs, opinion, commentary, advice
  • Blogs
  • Vocational/job training products
  • Databases such as real estates or recipe databases
  • Products created with the key objective of promoting products, services, or companies
  • Reference material products such as software user guides, dictionaries, and maps
  • Search engines
  • Products used primarily for interpersonal communication
  • Content aggregators
  • Operating system software

When Can I Apply?

The deadline to apply for an OIDMTC Certificate of Eligibility is 18 months after the end of your company’s taxation year in which the development of an eligible product was completed. Submitted applications are accepted on a rolling basis.

British Columbia Interactive Digital Media Tax Credit (IDMTC)

What is the Interactive Digital Media Tax Credit?

The British Columbia Interactive Digital Media Tax Credit (IDMTC) is a refundable tax credit for eligible Canadian corporations that create digital media products in B.C. that educate, inform, or entertain individuals. 

 

Amount: 17.5% of qualified labour expenditures, no maximum.

Are you eligible for the IDMTC?

To be eligible for the IDMTC your product must be:

1. Designed to educate, inform, or entertain users.

2. Presenting information in at least two of the following ways: images, sound, text.

3. Used interactively by individuals.

4. In digital format, made up of integrated application and data files.

5. Developed in BC by a taxable Canadian corporation.

Some examples are:

  • video games,
  • simulators,
 
  • educational software,
  • “edutainment” products 
 
  • augmented reality (AR) products
  • virtual reality (VR) products

What isn’t eligible for the IDMTC?

  • Products designed for marketing or promotion
  • Interactive communication products
  • Products that are contrary to public policy (in the opinion of the minister)
  • Games classified as “AO” or adults only by the Entertainment Software Rating Board
  • Operating system software
  • Blogs
  • Online media such as newspapers or magazines
  • Slideshows
  • Videos or video streaming applications
  • Social media products

When Can I Apply?

Corporations must apply with eTaxBC and the Canada Revenue Agency no later than 18 months after the end of the tax year in which the eligible salaries and wages are incurred. Claims must be submitted between March to December of each given year.

Manitoba Interactive Digital Media Tax Credit (MIDMTC)

What is the Manitoba Interactive Digital Media Tax Credit?

The Manitoba Interactive Digital Media Tax Credit (MIDMTC) is a refundable corporate tax credit, designed to stimulate economic growth and job creation in Manitoba’s interactive digital media industry and attract new investment to the sector. Credits are available for labour expenditures, and some marketing and distribution expenses, incurred in the development of eligible interactive digital media products for market.

 

Amount: 40% of qualified expenditures, no maximum.

Are you eligible for the IDMTC?

For your corporation to be eligible, your product must be:

1. Designed primarily to educate, inform, or entertain users.

2. Including a combination of text, sound, or images.

3. Enabled for the user to be an active participant with the media. 

4. In digital format, by employing both software and data files.

5. Developed in a permanent Manitoba establishment by a taxable Canadian corporation.

Examples include: video games, simulators and multi‑pathed, participatory e-learning products.

What isn’t eligible for the IDMTC?

  • Operating system software
  • Interpersonal communication products
  • Promotional products
  • Products that are contrary to public policy (in the opinion of the minister)
  • Discriminatory or pornographic products
  • Products developed for the internal use of the applicant company
  • Games classified as Adults Only by the Entertainment Software Rating Board
  • Product developed for the internal use of a non arms-length purchaser

When Can I Apply?

Corporations must apply for a certificate of eligibility before the project begins. It is recommended to submit this application at least 3 weeks prior to the project’s start date. Then, the MIDMTC tax credit certificate must be filed with the CRA within 18 months of the last day of the corporate tax year that the tax credit applies to. Claims are accepted on a rolling basis.

Newfoundland and Labrador Interactive Digital Media (IDM) Tax Credit

What is the Newfoundland and Labrador Interactive Digital Media Tax Credit?

The Newfoundland and Labrador Interactive Digital Media (IDM) Tax Credit is a refundable tax credit for Canadian corporations. IDM tax credits are based on eligible salaries and service costs incurred for the development of interactive digital media products. 

 

Amount: 40% of qualified expenditures, annual maximum of $2 million per company or $40,000 per eligible employee.

Are you eligible for the IDM Tax Credit?

To be eligible for the IDMTC your product must be:

1. Designed primarily to educate, inform, or entertain users.

2. Presenting information in at least two of the following ways: images, sound, text.

3. Used interactively by individuals. 

4. Developed in a NL establishment by a taxable Canadian corporation. 

Some examples are video games, educational software, and training simulators.

What isn’t eligible for the IDMTC?

  • Products used for interpersonal communication
  • Promotional products
  • Products that are likely to receive an “AO” rating by the Entertainment Software Rating Board
  • Search engines
  • Any product which enables gambling activities with real currency
  • Content aggregators
  • Products primarily providing content that is related to news, public affairs, opinion, commentary, advice, blogs or current affairs
  • Websites that don’t primarily contain or host interactive products

When Can I Apply?

First, corporations should apply for a certificate of registration under the IDM program before beginning the project. Once registered as an eligible corporation, the deadline to apply for a tax credit certificate from the Minister of Finance is within 18 months of the end of each taxation year. Claims are accepted on a rolling basis.

Nova Scotia Digital Media Tax Credit (DMTC)

What is the Nova Scotia Digital Media Tax Credit?

The Nova Scotia Digital Media Tax Credit (DMTC) is a refundable tax credit for Canadian corporations that develop interactive media products in Nova Scotia. Corporations can receive refunds on expenditures incurred and paid in Nova Scotia, which were directly attributable to the development of an eligible interactive digital media product. Credits are claimed on labour, marketing and distribution, or overall expenditures. An additional geographic area bonus is available for products developed outside of the Halifax Regional  Municipality.

 

Amount50% of labour or 25% of total expenditures, and 5-10% geographic area bonus. No maximum.

Are you eligible for the DMTC?

To be eligible, corporations developing interactive digital media products must:

1. Create interactive products, intended to educate, entertain, or inform users (can be businesses or individuals).

2. Present a product’s information in at least two of the three formats: text, images, or sound.

3. Have permanent establishment in NS (i.e. fixed place of business, assets and personnel in the province). 

4. Be a taxable corporation in Canada

-> For the 10% geographic area bonus, 50% of eligible labour expenditures must be paid to employees who work out of a permanent establishment within the qualifying area.

Examples include:

  • digital games,
  • mobile applications,
 
  • interactive websites, 
  • e-learning products for children under 12, 
 
  • interactive television,
  • online magazines

What isn’t eligible for the DMTC?

  • Application software such as database, spreadsheet, word processing
  • Operating system software
  • Products used to market or promote a corporation or organization
  • Products developed for interpersonal communications such as cell phone and email software
  • Discriminatory or pornographic products

When Can I Apply?

Corporations can apply either when the product is completed or at the end of each taxation year in which qualifying expenditures were incurred. Regardless of product completion, applications must be submitted within thirty months of the end of taxation year that incurred expenses for an eligible product.

Prince Edward Island Innovation and Development Labour Rebate (IDLR)

What is the Prince Edward Island Innovation and Development Labour Rebate (IDLR)?

The PEI Innovation and Development Labour Rebate (IDLR) was created to support the growth of Island businesses through a refundable rebate on incremental job creation. Employment growth must be linked to the development, expansion and/or commercialization of new products, processes, and services that will be sold primarily beyond the borders of PEI. 

 

Amount: 25% of labour costs, maximum of 1 year of expenses redeemed.

Are you eligible for the IDLR?

To be eligible for the IDLR, a corporation must:

1. Be a taxable corporation in Canada, registered to operate in PEI.

2. Manufacture, process, or develop goods/services primarily for export.

3. Operate within one of the specified strategic sectors.

The eligible strategic sectors are:

a. bioscience 

d. renewable energy and clean technology

b. aerospace and defence

e. information and communications technology

 

c. advanced manufacturing and processing

f. creative and cultural industries

-> First-of-its-kind exportable goods or services in other sectors may be considered.

What isn’t eligible for the IDLR?

  • A full-time position receiving labour cost funding from another government source 
  • Any individuals maintaining ownership in the business
  • Job positions that have a gross wage less than $35,000 per annum

When Can I Apply?

Applications must be submitted before any financial or legal commitment is made on the project. Detailed business information and supporting documents about the project will be required for submission.

Québec Tax Credit for the Production of Multimedia Titles

What is the Production of Multimedia Titles?

The Production of Multimedia Titles is a tax credit program that is designed to encourage the production of multimedia titles in Québec. Corporations can receive refundable tax credits on eligible labour expenditures.

 

Amount: 37.5% of labour expenditures, no maximum.

Are you eligible for the Tax Credit?

To be eligible, corporations must have an establishment in Québec and produce multimedia titles which are:

1. Presented through a substantial amount of three out of four types of information: text, still images, animated images, and sound.

2. Controlled by software that allows interactive abilities.

3. Published on an electronic medium.

4. Certified in eligibility by Investissement Québec. This requires both an initial certificate and an annually renewed certificate

Digital animation films associated with an eligible multimedia title and produced by your corporation are also eligible. However, the labour expenditure related to the main project must exceed at least $1 million.

Examples of eligible production work include:

  • writing of the scenario
  • development of its interactive structure
  • its system architecture
  • acquisition and production of its constituent elements
  • its computer and online development
  • analysis of quantitative, operations-related data with a view to optimizing the title
  • activities related to the community of users
  • technological activities related to its updating

What isn’t eligible for the the Tax Credit?

  • Interpersonal communication services (e.g., video conferencing, electronic bulletin boards, chat rooms, etc.) 
  • Online transactional services (e.g., teleshopping, virtual shopping centres, electronic ticketing, online payment systems, etc.)
  • Titles that encourage violence, sexism or discrimination
  • Any titles intended to present a for-profit business, publicize its activities or promote its products and services
  • Titles containing explicit or graphic sex scenes

When Can I Apply?

It is recommended for corporations to apply before the 15th month past the end of each taxation year. But, some exceptions will be made for late applications filed before the 18th month past fiscal year. Applications are accepted on a rolling basis.

Filing a Claim in Ontario

Top 3 success factors of DMTC Claim

We follow a clear methodology, built on tested know-how and in full compliance with current legislation. Our team will do the heavy lifting for you!

01

Complete, contemporaneous, and relevant documentation

WE PROVIDE: Assignment of a dedicated Project Manager who will work with you

02

Subject matter expert availability

OUR SERVICE: Assistance in understanding digital media tax credit eligibility and retrieval of all supporting documents

03

Access to the product as it existed at the time of completion 

WE PROVIDE: Comprehensive backups of the product(s) inline with the individual tax credit requirements

Need help? Call our tax funding and grants specialist team at (647) 709-6368

Copyright © TiME Consulting Group Inc. 2021 | Made with Canada funding consultants in Toronto, Canada