Ontario tax credits and assistance for tech companies
Ontario tries to show you the money (but for how long?)
In these turbulent economic times, it has never been more important to take advantage of existing government programs and tax credits. Ontario has a number of such programs and tax credits to assist emerging video game companies. With government belt-tightening in full swing, it would be wise to act quickly since, as they say, quantities are limited.
Assistance Programs:
The Ontario Media Development Corporation's ("OMDC") Interactive Digital Media (IDM) Fund is designed to provide Ontario interactive digital media content companies with access to the final piece of funding required to move their content projects into production. Successful applicants will receive a non-refundable contribution of up to $150,000 to a maximum of 50% of the project budget to create a market-ready interactive digital media content product. The deadline for applications is November 16, 2009. Almost two years ago, the Government of Ontario introduced The Next Generation of Jobs Fund ("NGJF") to support companies that would develop job-creating projects in Ontario. While companies in a broad range of industries can access the NGJF, digital media is a priority industry. Since the NGJF has been around for two years, there has likely been a material allocation of its funds (and further applications), so interested parties should act quickly before all of the funds are allocated. Finally, at least two game developers have received investments through the OMDC's Video Game Prototype Initiative.
Detailed IDM information here: http://www.omdc.on.ca/Page3215.aspx
Detailed NGJF information here: http://www.ontariocanada.com/ontcan/1med/en/nextgen_main_en.jsp
Tax Credits:
The OMDC also jointly administers with the Canada Revenue Agency a number of media related tax credits which may result in the recovery of a substantial amount of media development expenses. At least two of those tax credits may be of significant interest in the video game industry.
The Ontario Interactive Digital Media Tax Credit ("OIDMTC") is a refundable tax credit for up to 40% of eligible labour, marketing and distribution expenses. The Ontario Computer Animation and Special Effects Tax Credit ("OCASETC") is a refundable tax credit for up to 20% of eligible labour expenses. For both of those tax credits, the process involves first applying to the Ontario Media Development Corporation for a certificate of eligibility and then filing it with your T2 income tax return. The amount of the tax credit less any taxes owing is refunded to you. Generally speaking, qualifying applicants must be corporations with a permanent establishment in Ontario and eligible expenses must be consistent with the particular tax credit you are applying for and must be paid to persons in Ontario.
Detailed OIDMTC information here: http://www.omdc.on.ca/Page3400.aspx
Detailed OCASETC information here: http://www.omdc.on.ca/Page3402.aspx
Many thanks to our tax colleague Dennis Yee for his assistance with this posting