Ontario Interactive Digital Media Tax Credit (OIDMTC)

The Ontario Interactive Digital Media Tax Credit (OIDMTC) provides a refundable tax credit of up to 40% on eligible product development costs, plus $100,000 in support for marketing and distribution expenses. This credit is designed to support corporations creating interactive digital media products where users control the sequence of events. The products should aim to educate, inform, or entertain and must include at least two of the following elements: text, sound, or images. 

The Fundamentals Of OIDMTC

The OIDMTC is designed to encourage the development of interactive digital content in Ontario. Eligible corporations can receive significant support for developing projects that integrate innovative user experiences. This tax credit promotes growth in Ontario’s digital media industry by assisting companies in creating high-quality products. 

Who is eligible? ​

The Ontario Interactive Digital Media Tax Credit (OIDMTC) can be claimed by a “qualifying corporation,” defined as a Canadian corporation (or a foreign-owned corporation operating in Canada) that: 

  • Develops an eligible product at a permanent establishment in Ontario. 
  • Files an Ontario Corporate Tax return. 
  • Has annual gross revenue of less than $20 million and total assets of no more than $10 million. 

Note: Tax-exempt entities such as non-profit organizations or “labour-sponsored venture capital corporations” do not qualify for the credit. 

To qualify for the OIDMTC, the corporation must develop an interactive digital media product intended to educate, inform, or entertain users. The product must feature at least two elements among text, sound, or images. Examples of eligible products include websites, CD-ROMs, and DVD-ROMs. Products primarily used for interpersonal communication or promotional purposes are not eligible. Additionally: 

  • 80% or more of the labour expenses must be incurred in Ontario. 
  • No more than 20% of development can be carried out by independent contractors or other corporations. 
  • 25% of the total labour costs must be completed by the qualifying corporation’s employees. 

 

What Kind of Products Are Eligible?

How Does a Company Apply for the Credit?

To claim the OIDMTC, follow these steps: 

  • Complete the product and ensure all associated expenses are paid. 
  • Submit an application through the Ontario Creates (OC) Online Application Portal. 
  • Upload mandatory documents—fields marked with a red asterisk  indicate required information. 
  • First-Come, First-Served: Applications are processed in the order they are received. 
  • Submit One Application Per Fiscal Year: Include all products completed within that fiscal year. Products completed in different fiscal years should be included in separate applications. 
  • For digital game corporations, submit after meeting specific thresholds, such as $1 million in Ontario labour expenditures. 
  • Applications for previous fiscal years are allowed if the fiscal year is not statute-barred. Check this status with the Canada Revenue Agency (CRA). If eligible, you can amend a previously filed tax return. 

For assistance with your application or questions about eligibility, consult our tax credit experts at Media Funds for a free consultation. 

Ontario Interactive Digital Media Tax Credit

The Ontario Interactive Digital Media Tax Credit (OIDMTC) aims to stimulate growth in Ontario’s digital media sector. It offers a 40% refundable credit for eligible expenditures. Recent changes make it easier for corporations to qualify, such as relaxing the requirement for 90% copyright ownership if the product is not developed on a fee-for-service basis. 

The 2015 Ontario Budget introduced the 80/25 rule, which states: 

  • 80% of total labour costs must be for work performed in Ontario and paid to Ontario residents. 
  • 25% of the total labour costs must be paid to employees of the qualifying corporation working in Ontario. 

These changes help companies maintain compliance while encouraging the development of innovative media products. 

FAQs

  • What is the OIDMTC? 
    The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a 40% refundable tax credit for corporations developing interactive digital media products in Ontario, covering development costs and up to $100,000 for marketing and distribution. 
  • What types of products qualify for the OIDMTC? 
    Eligible products include websites, CD-ROMs, and DVD-ROMs that aim to educate, inform, or entertain, featuring at least two elements among text, sound, or images. Products used mainly for communication or promotional purposes do not qualify. 
  • Who can apply for the OIDMTC? 
    Any Canadian or foreign-owned corporation with a permanent establishment in Ontario, an Ontario Corporate Tax return, and annual gross revenue under $20 million may apply. 
  • What costs are covered under the OIDMTC? 
    The credit covers 40% of eligible labour costs associated with product development, plus up to $100,000 in marketing and distribution expenses. Eligible costs include concept development, product design, planning, production, and testing. 
  • How do I apply for the OIDMTC? 
    Submit your application through the Ontario Creates (OC) Online Application Portal. Ensure all required documents are uploaded, and complete mandatory fields indicated by a red asterisk . 
  • Can I claim the credit for past fiscal years? 
    Yes, as long as the fiscal year is not statute-barred. Check with the Canada Revenue Agency (CRA), and if eligible, amend your previous tax return with the OIDMTC certificate amount. 
  • What is the 80/25 rule for labour costs? 
    The 80/25 rule requires that 80% of the total development labour costs be incurred in Ontario, with 25% of these costs paid to Ontario-based employees. 
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