Entertainment and Media Tax Clip: Ontario enhances its Interactive Digital Media Tax Credit for large game developers (October 23, 2009)

The Ontario government’s 2009 Economic Outlook and Fiscal Review enhanced the 35% Ontario Interactive Digital Media Tax Credit (OIDMTC) for large game developers, retroactive to March 27, 2009. Certified game developers that incur at least $1 million of Ontario labour expenditures annually in eligible interactive digital media game development can claim the tax credit on Ontario-based salaries and wages. Typically, certified game developers have at least 80% of their Ontario payroll or 90% of annual revenues attributed to interactive digital media game development.

The measure was announced in Ontario's 2009 Economic Outlook and Fiscal Review. It replaces a 2009 Ontario budget proposal that had extended the OIDMTC to digital media game developers that incur a minimum of $1 million of eligible labour expenditures over a 36-month period for fee-for-service work done in Ontario in respect of an eligible product.

The OIDMTC is a refundable tax credit that is based on eligible Ontario labour expenditures and eligible marketing and distribution expenses claimed by a qualifying corporation for an interactive digital media product that was:

• Created to educate, inform or entertain, and achieves these primary objectives by presenting information in at least two of the following ways: text, audio and visual, or
• Developed under a fee-for-service arrangement

PricewaterhouseCoopers Comments
This measure demonstrates Ontario’s commitment to the importance of the growing digital media sector. The 35% credit will reduce the after-tax cost of developing interactive digital media games in Ontario for large game developers, making the province an even more attractive jurisdiction in which to carry on these activities.