Proven Tax Savings for Ontario Game Developers
The Ontario Interactive Digital Media Tax Credit (OIDMTC) offers a generous program to Ontario-based game developers. Qualifying companies can reduce operating costs through a tax credit for expenditures associated with development, marketing and distribution of new products. Enhancements to the OIDMTC regime in 2009 increased the existing credit to 40 percent of eligible expenditures directly incurred by developers. Furthermore, definitions within the legislation were expanded in order to allow previously ineligible corporations to benefit.
Scientific Research and Experimental Development
A common misconception is that the SR&ED program is only for companies engaged in traditional research conducted in dedicated facilities, such as pharmaceutical labs, high-technology businesses and bio-tech companies. In fact, program benefits are available to a diverse range of industries, including Gaming. For Canadian controlled private corporations operating in Ontario, the combined Federal and Provincial refundable tax credit rate can be as high as 73 percent on labour expenditures. Eligible activities may include developing, integrating and testing high performing game engines, developing multi-platform development frameworks, developing scalable online multi-player platforms, and much more. Any organization can take advantage of this benefit if the company can demonstrate that it undertakes a systematic investigation to resolve technological obstacles in order to develop new or improve existing products or processes.
Game developers should keep several considerations in mind when determining how they will file for these tax incentives. For instance, a game developer may need to decide whether it should take advantage of the 35 percent annual OIDMTC tax credit or the more lucrative 40 percent non-specified OIDMTC claim, which can only be claimed when a product is completed. KPMG advisers are available to further assist you in clarifying the eligibility of both your company and the related expenses. We offer considerable experience helping clients in the growing and dynamic gaming sector to successfully apply for tax credits under the both the SR&ED and OIDMTC programs, having established successful claims on behalf of numerous clients.
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