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Koroll & Company Blog

What is the Ontario Interactive Digital Media Tax Credit (OIDMTC)?

[fa icon="calendar"] Dec 20, 2021 8:00:00 AM / by Allen Koroll

What is the Digital Tax CreditThe Ontario Interactive Digital Media Tax Credit (OIDMTC) is a refundable tax credit that was introduced in 1998 but there are many small to medium-sized businesses that don’t realize they qualify for the credit. 

When it was originally introduced, the purpose of the tax credit was to support the emerging digital media industry and help develop additional highly skilled jobs.

Over the years, it has undergone several changes. Today, the goal of the tax credit is similar to its original purpose … to foster innovation and growth. However, it is less broad than it was in 1998. 

The current OIDMTC can be claimed on expenses related to:

  • Software development
  • Digital applications and games
  • Mobile apps 
  • Educational products for children under 12
  • Other entertainment products 

In addition to the above service, film and TV websites purchased by broadcasters and embedded in their websites. 

Some exemptions from the tax credit include products such as search engines, real estate databases and public affairs products. Large digital game corporations (qualifying digital game corporations and specialized digital game corporations) also have additional requirements to meet. 

If you are not a large digital corporation, you may be eligible for the OIDMTC if your corporation:

  • Is a Canadian corporation (includes foreign-owned corporations)
  • Has developed an eligible product at a permanent establishment in Ontario]
  • Is not exempt from tax under Part III of the Taxation Act, 2007 (Ontario) for the tax year
  • Is not controlled directly or indirectly, in any way, at any time in the tax year, by one or more corporations, all or part of whose taxable income was exempt from tax under section 57 of the Corporations Tax Act (Ontario) or Part III of the Taxation Act, 2007 (Ontario)
  • Is not a prescribed labour-sponsored venture capital corporation at any time in the tax year

If you meet these requirements, you can recover up to 40% of labour costs and $100,000 of marketing and distribution expenses paid within 60 days of the end of the tax year for products you develop and market as your own product. These are called non-specified products. 

For specified products, which are developed under a fee-for-service arrangement (products developed because someone asked you to), you can claim a 35% credit of labour expenses incurred. You cannot claim marketing and distribution costs for specified products, as these would be incurred by the buyer. Note that there is no limit on the eligible labour nor are there per-project or annual limits on what can be claimed. 

To qualify for the OIDMTC your costs must meet the 80/25 rule: 

  1. 80% of labour costs for eligible products have to be attributable to qualifying wages and qualifying remuneration paid to individuals or to corporations that carry on a personal services business 
  2. 25% of total labour costs for eligible products have to be attributable to qualifying wages of employees of the qualifying corporation

Furthermore, the expenses can’t have been claimed under one of the following tax credits at any time. 

  • Ontario Computer Animation and Special Effects Tax Credit
  • Ontario Film and Television Tax Credit
  • Ontario Production Services Tax Credit

To apply, you must also have a certificate of eligibility from Ontario Creates that you applied for within 18 months of the end of the tax year in which development of the eligible product was completed. 

For more information on OIDMTC or to seek other business tax advice, please contact our team today.


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The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.



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Allen Koroll

Written by Allen Koroll