Howard Lerner is an Chartered Professional Accountant with Richter LLP who has offices adjacent to Wires Law. Howard services a diverse range of clients, with particular expertise in high-tech businesses, construction companies, and some of Ontario’s top professional firms. He specializes in identifying eligibility and claiming special tax credits, such as Scientific Research & Experimental Development (SR&ED) and the Ontario Digital Media Tax Credit (OIDMTC). Howard also represents Richter as an active member of the York Technology Alliance.
He agreed to share his expertise on the Digital Media Tax credit for Ontario companies.
Ontario Interactive Digital Media Tax Credits
Chances are, you haven’t heard about the Ontario Interactive Digital Media Tax Credit (OIDMTC)…but it might just reap you tens of thousands of dollars in cash! Here are some of the facts to help you determine if you are eligible:
What is it?
The OIDMTC is a refundable tax credit based on eligible Ontario labour and marketing and distribution expenditures claimed by qualifying corporations with regard to their work on interactive digital media products. The credit has been designed to encourage development in the area of digital media and can result in significant tax-savings.
How much is the tax credit?
The OIDMTC is calculated as up to 40% of the eligible labour, marketing and distribution expenses incurred to create interactive digital media products in Ontario – regardless of the size of the company. For products developed under a fee-for-service arrangement, the OIDMTC tax rate is up to 35% on qualified expenditures.
There is no limit on the amount of eligible Ontario labour expenses which may qualify and there are no per project or annual corporate limits on an OIDMTC claim. Eligible marketing and distribution expenses are capped at $100,000 per eligible product.
The credit is fully refundable in cash, to the extent that it exceeds tax payable.
Who is eligible?
The OIDMTC is available to qualifying Canadian corporations (can include foreign-owned or public companies) that develop an eligible product at a permanent establishment in Ontario and that file an Ontario tax return.
What types of products are eligible for the tax credit?
To be eligible for the OIDMTC, a product must be an interactive digital media product whose primary purpose is to educate, inform, or entertain, and that achieves its primary purpose by presenting information in at least two of: (i)text, (ii)sound and (iii)images. All or substantially all of the product must have been developed in Ontario.
Some examples of acceptable products include:
- Mobile/tablet applications
- Interactive websites
- Digital media games
Digital media is your area of expertise. Saving you tax, is ours.
Developing successful interactive digital media products can be a monumental and challenging task. You don’t have the time to research the latest tax credits or look around for a qualified service provider with expertise in making the claims. Let Richter take a load off your shoulders!
How can we help?
Richter can help your company determine if you will qualify for the tax incentive program and we can assist you in making the actual claim. We have developed an expertise in assisting our clients with the application process for the Ontario Interactive Digital Media Tax Credit, among many others.
How does the OIDMTC claim process work?
Richter works closely with each client to ensure the OIDMTC claim is made correctly and the tax credits are maximized.
The process goes like this:
- An initial kick-off meeting to detail the requirements of the claim and identify eligible activities and costs
- We assist you in gathering the necessary documentation required for the application
- A sign-off review meeting prior to filing the claim. Once you have approved the application, we file the claim with Ontario Media Development Corporation (OMDC)
- Upon approval of the OMDC, a Certificate of Eligibility is issued and then submitted with the active or amended corporate tax return to the Ministry of Finance
- Once the credits have been approved and processed by the Ministry of Finance, we invoice for our services on a success basis.
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