Don’t Forget About Ontario’s Refundable Media Tax Credit

by Craig Anthony

1 min read

If your business develops interactive digital media products in Ontario, you may qualify for a refundable tax credit. The Ontario Interactive Digital Media Tax Credit is worth 35 or 40% of eligible labour, marketing, and distribution expenses. If your company develops and markets its own products, it generally receives a 40% credit. Digital game corporations and companies that develop products under a fee-to-service arrangement receive the 35% credit. In general, companies that develop digital games, mobile apps, and e-learning products for children typically qualify for this credit. Companies that make operating software usually don’t.To understand how the credit works, image your company has $1 million in eligible expenses and it falls into 40% category. In this case, you receive a tax credit of $400,000. This is a refundable credit, which means it can cover your tax bill and possibly result in a refund. For instance, if the business owes $350,000 in tax, it receives a $50,000 refund.To apply for this credit, your company must obtain an eligibility certificate from the Ontario Media Development Corporation. Then, you need to send the certificate to the Film Services Unit that covers your area. As of April 1, 2017, the application fee for the OIDMTC is 0.15% of your eligible expenses. The minimum fee is $1,000, and the maximum is $10,000. To continue with the above example, if you have $1 million in eligible expenses, your application fee is $1,500. You should apply within 18 months of the last day of the tax year in which you completed the project. If you apply after that deadline, there is an additional $100 fee.To encourage the production of media in Ontario, the CRA offers a special tax credit. The credit requires a bit of additional paperwork – unfortunately, you can’t just claim it on your corporate tax return. However, it’s a generous credit; if you think you might be eligible, you should definitely check it out.

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