A 40% refundable tax credit on Ontario labour for game studios, app developers, and interactive media companies. No cap on eligible labour. Here's exactly how it works.
Check If You Qualify ↓The OIDMTC provides a 40% fully refundable tax credit on eligible Ontario labour expenditures for corporations developing interactive digital media products. The credit rate drops to 35% for fee-for-service (work-for-hire) projects and for qualifying digital game corporations. The OIDMTC has no annual or per-project cap on the labour portion — a 25-person studio with $2M in Ontario labour receives an $840,000 refund. Eligible products include video games, mobile apps, educational software for children under 12, and VR/AR interactive experiences. Most SaaS products, websites, and business software do not qualify. The program is administered jointly by Ontario Creates (issues the Certificate of Eligibility) and the Canada Revenue Agency (processes the credit on the T2 return). Processing takes 18–24 months from filing — the biggest pain point for studios.
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Two questions determine eligibility: does your product qualify, and does your company qualify? The OIDMTC rejects more applicants on product definition than any other criterion.
Both sides must pass. A qualifying product built by a non-qualifying company receives nothing. See Section 2 for full rate details and Section 5 for the 80/25 rule.
Three distinct tracks determine the credit rate, eligible expenses, and whether the 80/25 rule applies to your studio.
The OIDMTC operates through three tracks, each with a different credit rate and set of rules. The track depends on whether the corporation owns the product, builds for a client, or qualifies as a digital game corporation.
The non-specified product track applies when the corporation owns the intellectual property and develops the product for its own account. The OIDMTC covers 40% of eligible Ontario labour expenditures plus marketing and distribution expenses up to $100,000 per product. The corporation must meet the 80/25 rule: 80% of total development labour must come from Ontario residents, and 25% must come from the corporation's own employees (not contractors). This track produces the highest credit amount and is the default path for studios developing their own games, apps, or interactive experiences.
The specified product track applies when the corporation develops an interactive digital media product under contract for a client who owns the IP. The OIDMTC covers 35% of eligible Ontario labour expenditures only — marketing expenses are not eligible because the corporation does not own or distribute the product. The 80/25 rule still applies. Fee-for-service studios building games, educational apps, or interactive experiences for publishers or brands use this track.
The digital game corporation track was introduced to support larger studios that may struggle to meet the 80/25 rule due to distributed teams. Two sub-categories exist: qualifying digital game corporations (incurring $1M+ in Ontario labour on a single eligible game) and specialized digital game corporations (incurring $500K+ in total Ontario labour during the tax year). Both receive a 35% credit rate and are exempt from the 80/25 rule. The tradeoff is a lower credit rate (35% vs. 40%) in exchange for workforce composition flexibility.
Worked calculations across five studio sizes. The OIDMTC has no cap on labour — the credit scales linearly with headcount.
The OIDMTC calculation is straightforward: multiply eligible Ontario labour expenditures by the applicable credit rate, then add marketing expenses (capped at $100,000 per product, non-specified track only). The following table shows realistic refund amounts for studios of different sizes, assuming all labour is Ontario-resident and the 80/25 rule is met.
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| Studio Size | Ontario Labour | Marketing | Total Eligible | Rate | OIDMTC Credit |
|---|---|---|---|---|---|
| 3-person indie studio | $200,000 | $20,000 | $220,000 | 40% | $88,000 |
| 5-person studio | $400,000 | $50,000 | $450,000 | 40% | $180,000 |
| 10-person studio | $800,000 | $100,000 | $900,000 | 40% | $360,000 |
| 25-person studio | $2,000,000 | $100,000 | $2,100,000 | 40% | $840,000 |
| Fee-for-service (10 ppl) | $800,000 | N/A | $800,000 | 35% | $280,000 |
Ontario Creates applies a strict five-part test. The product must combine application files with data files, primarily entertain or educate children, present information in two or more formats, and allow user-directed navigation.
An eligible interactive digital media product must satisfy all five criteria under the Taxation Act, 2007, Section 93. The product must: (1) combine application files and data files, (2) have a primary purpose of entertaining users or educating children under 12, (3) have more than 50% of its content meeting the purpose test, (4) present information in two or more formats (text, sound, images), and (5) allow users to choose what information is presented and in what sequence. The fifth criterion — user-directed navigation — is the most common point of failure for non-game applications.
The distinction between "interactive" and "digital" matters. A video streaming app is digital but not interactive enough — the user selects content but does not control the navigation sequence within that content. A puzzle game on the same platform qualifies because the user actively directs the experience. Ontario Creates evaluates a working copy of the product during review, so studios must have a functional build (not just a design document) before applying.
The workforce composition requirement that trips up studios with distributed teams and heavy contractor reliance.
The 80/25 rule imposes two workforce composition tests on OIDMTC applicants using the standard (non-specified) and specified (fee-for-service) tracks. First, 80% of total development labour expenditures must be paid to Ontario residents — individuals who lived in Ontario at the time they performed the work. Second, 25% of total development labour expenditures must be paid to the corporation's own employees (T4 workers), not independent contractors or subcontracted studios. Both thresholds are measured over a 37-month period ending when the product is completed or the tax year ends, whichever comes first.
Studios relying heavily on freelancers face the 25% employee threshold as the harder test. A 5-person studio with 3 founders on payroll and 2 full-time contractors meets the test easily (60% employee labour). A studio with 1 founder and 4 contractors fails unless the founder's salary represents at least 25% of total labour costs. Track contractor residency from day one — retroactively proving Ontario residency for contractors who worked remotely is the single most common documentation failure.
The single most expensive mistake in Ontario game studio tax planning: claiming both credits on the same labour dollar.
The OIDMTC and the federal Scientific Research and Experimental Development (SR&ED) tax credit cannot be claimed on the same labour expenditure. Any dollar of labour claimed under the OIDMTC is automatically excluded from the SR&ED eligible expenditure pool. Studios that file both credits without separating the labour base receive a CRA reassessment that claws back the overlapping amount — plus interest.
The OIDMTC at 40% typically exceeds SR&ED's 35% investment tax credit (ITC) for Canadian-controlled private corporations (CCPCs) on the first $3M of eligible expenditures. However, SR&ED offers additional federal benefits for CCPCs: the enhanced 35% ITC rate is fully refundable on the first $3M. The optimal strategy for studios with both game development and genuine R&D activity is to split labour between the two credits — allocate game development labour to OIDMTC and allocate separate research labour (engine development, procedural generation algorithms, novel rendering techniques) to SR&ED.
Split total: $308,000. Claiming all $800K under OIDMTC alone yields $320,000 — a higher single-credit amount. However, if the 3 R&D staff also qualify the studio for the Ontario Innovation Tax Credit (8% on R&D = $19,200), the split strategy produces $327,200 total. Studios performing genuine technological advancement should model both scenarios before filing.
How the OIDMTC applies to three common studio types in Ontario's interactive media industry.
Non-specified product track — 40% credit rate
A three-person indie studio in Toronto developing its first commercial game incurs $200,000 in Ontario labour and $20,000 in marketing during the tax year. The OIDMTC at 40% produces an $88,000 refund. All three founders are Ontario residents and on payroll, satisfying both the 80% residency and 25% employee tests. The studio applies to Ontario Creates within 18 months of the tax year end, submits a working build of the game, pays the $1,000 minimum administrative fee, and files Schedule 560 with the T2 return. The refund arrives approximately 18–24 months after filing.
Non-specified product track — 40% credit rate
An eight-person studio builds an educational app for children under 12. The studio incurs $600,000 in Ontario labour (6 employees, 2 Ontario-resident contractors) and $80,000 in marketing. The OIDMTC at 40% produces a $272,000 refund on $680,000 of eligible expenditures. The studio meets the 80/25 rule: 100% Ontario-resident labour (6 employees + 2 local contractors), and 75% employee labour (6 of 8 workers are T4 employees). The educational app qualifies because its primary purpose is educating children under 12, and users control navigation through interactive lessons.
Specified product track — 35% credit rate
A twelve-person studio in Waterloo builds games under contract for international publishers. The studio incurs $900,000 in Ontario labour during the tax year across three publisher contracts. The OIDMTC at 35% produces a $315,000 refund. Marketing expenses are not eligible on the specified (fee-for-service) track because the studio does not own or distribute the products. Each publisher contract constitutes a separate specified product — the studio submits three separate Ontario Creates applications. The 80/25 rule applies to each product individually.
Six steps from tracking expenditures to receiving the refund cheque. Total elapsed time: 18–24 months from the end of the tax year.
Set up separate general ledger (GL) codes for OIDMTC-eligible labour from the start of development. Track wages, salaries, and taxable benefits for every Ontario-resident employee and contractor working on the interactive digital media product. Maintain a running spreadsheet linking each individual to their Ontario residency status, employment type (T4 vs. contractor), hours worked, and total compensation. Separate OIDMTC labour from any SR&ED-eligible R&D labour in the GL to avoid double-claiming.
Submit your application to Ontario Creates within 18 months of the end of the tax year in which the expenditures were incurred. Ontario Creates does not accept late applications under any circumstances — missing this deadline forfeits the entire credit for that tax year. The application portal is available on the Ontario Creates website and requires a detailed project description, budget summary, and expenditure breakdown.
Provide T4 summaries for all employees, contractor invoices with Ontario residency confirmation, a detailed breakdown of hours and wages by individual, and access to a working build of the product. Ontario Creates reviews the product against the interactive digital media definition and verifies that expenditures are eligible. A non-functional prototype or design document does not satisfy the working build requirement — the reviewer must be able to interact with the product.
Ontario Creates charges an administrative fee of 0.15% of total eligible expenditures, with a minimum of $1,000 and a maximum of $10,000. The fee is due at the time of application submission and is non-refundable regardless of the application outcome. A studio claiming $400,000 in eligible expenditures pays $1,000 (the minimum). A studio claiming $2M pays $3,000. Studios above $6.67M in eligible expenditures pay the $10,000 cap.
Ontario Creates reviews the application and issues a Certificate of Eligibility confirming the eligible product, eligible expenditure amounts, and applicable credit rate. The current review timeline is approximately 3 months after the application enters the active review queue — but the queue itself has a backlog of approximately 12 months. Total elapsed time from application submission to certificate: 12–15 months. Studios should plan cash flow accordingly.
Attach the Certificate of Eligibility to the T2 corporate tax return and complete Schedule 560 (Ontario Interactive Digital Media Tax Credit). The CRA processes the credit and issues the refund — typically within 3 months of filing. The total elapsed time from tax year end to refund cheque is 18–24 months. Studios can file the T2 before receiving the certificate and amend it later, but the credit is not processed until the certificate is attached.
Errors that delay refunds, trigger CRA reassessments, or disqualify applications entirely.
How the OIDMTC compares to the five credits most commonly claimed by Ontario interactive media companies.
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| Credit | Rate | Eligible Expenses | Refundable | Cap | Best For |
|---|---|---|---|---|---|
| OIDMTC | 40% / 35% | Ontario labour + $100K marketing | Yes | No cap on labour | Game / app studios |
| SR&ED (federal) | 35% CCPC / 15% other | R&D labour + materials | Partial | $3M expenditure limit for enhanced rate | R&D-heavy companies |
| Ontario Innovation Tax Credit | 8% | R&D expenditures | Yes | First $3M | General R&D in Ontario |
| OFTTC (Ontario Film) | 35% | Ontario labour for film/TV | Yes | No cap | Film / TV production |
| CMF (Canada Media Fund) | Varies | Production costs | N/A (grant) | Per-project | Canadian content |
The ten questions Ontario Creates receives most often from first-time OIDMTC applicants.
Almost certainly not. The OIDMTC requires the product's primary purpose to be entertaining users or educating children under 12. SaaS products designed for business productivity, data management, analytics, or professional workflows do not meet this purpose test — regardless of how interactive the interface is. The only SaaS exception would be a subscription-based entertainment platform where >50% of content is interactive games or educational activities for children.
Yes, but not on the same labour expenditure. A studio can claim the OIDMTC on game development labour and SR&ED on separate R&D labour (engine development, novel algorithms, procedural generation research) within the same project. The critical requirement is that each dollar of labour is allocated to exactly one credit — never both. Maintain separate GL codes from day one.
The total elapsed time from tax year end to refund cheque is 18–24 months. The breakdown: 18 months to file the Ontario Creates application (the deadline), approximately 12 months in the Ontario Creates review queue, approximately 3 months for active review, and approximately 3 months for CRA processing after the certificate is filed with the T2. Studios that file early in the 18-month window move through the queue faster.
The 80/25 rule requires two things: 80% of total development labour expenditures must be paid to Ontario residents, and 25% of total development labour expenditures must be paid to the corporation's own employees (T4 workers, not contractors). Both tests are measured over a 37-month period. Digital game corporations meeting the $1M or $500K labour threshold are exempt from both tests.
For the standard (non-specified and specified) tracks, yes — Ontario Creates requires a working copy of the completed product. For digital game corporations, the rules differ: qualifying and specialized digital game corporations can claim the OIDMTC annually on in-progress games because the credit is based on labour incurred during each tax year, not on product completion. The studio still needs a reviewable build showing the current state of development.
Yes. The OIDMTC is available to any Canadian-incorporated corporation with a permanent establishment in Ontario. The corporation does not need to be Canadian-controlled. A US or European company that incorporates a Canadian subsidiary with an Ontario office, hires Ontario-resident developers, and develops an eligible interactive digital media product can claim the credit. The parent company's country of origin is irrelevant.
The product must allow users to choose what information is presented and in what sequence. Passive viewing (streaming video, reading articles) does not qualify — the user must actively direct the experience through choices that change the content displayed. Game mechanics, branching narratives, interactive simulations, and user-controlled educational exercises all meet this standard. A video player with a playlist is not interactive enough; a choose-your-own-adventure story is.
The standard (non-specified and specified) tracks have no minimum project size or labour threshold. A solo developer with $50,000 in Ontario labour can claim the OIDMTC. The digital game corporation exemptions do have minimums: $1,000,000 in Ontario labour on a single game for the qualifying digital game corporation track, and $500,000 in total Ontario labour during the tax year for the specialized digital game corporation track.
Only on the non-specified (own product) track, and capped at $100,000 per product. Marketing and distribution expenses include advertising, trade show costs, and promotional materials directly related to the eligible product. The specified (fee-for-service) and digital game corporation tracks do not include marketing in eligible expenditures because the corporation either does not own the product (specified) or the exemption applies only to labour (digital game corp).
Each platform version is treated as a separate product for OIDMTC purposes. An iOS version, Android version, and PC version of the same game constitute three separate products — each requires its own Ontario Creates application, its own Certificate of Eligibility, and its own Schedule 560 filing. The $100,000 marketing cap applies per product, which means a multi-platform release can claim up to $100,000 in marketing per platform. Labour must be allocated to each platform version based on actual development effort.
The OIDMTC stacks with grants and credits that cover different expense categories or different labour dollars.
All claims cite official government sources and verified program documentation. Last reviewed March 2026.