Are you leaving money on the table?

6b88c34cd64b83eac2709d6c8c29fd54_LBy Alkarim Jivraj

Many digital media companies in the province of Ontario do not realize that they may be eligible for a labour tax refund from the province. The Ontario Interactive Digital Media Tax Credit provides a refundable tax credit on Ontario labour.

What you need to know:

  • There is no maximum refund
  • Covers 40% of eligible Ontario labour costs allocated to an “unspecified” product
  • Covers eligible marketing and distribution expenditures (maximum of $100,000 per eligible product) for “unspecified” products
  • Covers 35% of labour allocated to “specified” fee for service products
  • In many cases, ability to back file tax credits for up to 8 years
  • Canadian taxable corporations (Canadian or foreign-controlled) with a permanent establishment in Ontario, that file an Ontario tax return
  • The interactive digital media product must educate, inform or entertain, and present information in at least two of: text, sound or images. “Specified” Products must meet certain additional requirements.

Who can apply?

Filing Requirements: Application for a certificate can be made to the Ontario Media Development Corporation (OMDC) once the eligible product has been completed. Tax credit claims should be made on the corporation income tax return.

Fees: Greater of 0.1% of total final qualifying expenditures and $100 (maximum of $2,000).

In addition to receiving the digital media tax credit you may also be eligible to receive bridge financing for your credits. Venture capital firms like Espresso Capital provide financing solutions to bridge the time between when you file your tax credit and when your receive your funds – which can take as long as 1 year.

For further details see:

http://www.espressocapital.com/

http://www.omdc.on.ca/interactive/Tax_Credits/OIDMTC.htm

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