OIDMTC Consulting Services

percent The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a refundable tax credit based on eligible Ontario labour expenditures and eligible marketing and distribution expenses claimed by a qualifying corporation with respect to interactive digital media products.

Resultel Technologies helps companies understand, navigate, prepare, file, and successfully claim OIDMTC refundable tax credits. Here's the 10 step process that we use to do it right the first time, and get you maximum benefits:

1. Identify Projects

You provide a very high level view of the key development activities for the fiscal period; we jointly analyze these activities in light of the eligibility guidelines and facilitate identification of projects that have the potential for being eligible for OIDMTC refundable tax credits

2. Collect Project Data

We work with you and your team to walkthrough the technical details for the projects identified in Step 1; for each activity, we probe: 'why? why? why?' to identify the technological challenges and systematic investigation conducted to overcome them. We clearly distinguish the technological advancements from project’s business objectives, the latter being of no consequence from OIDMTC’s perspective.

3. Develop Draft Technical Write Ups

We develop and draft the technical write-up of the projects; clearly identify technological advancements, challenges, and the work done to overcome them, ensure sufficiency of data and identify any additional information required. We benchmark the technological advancements against the contemporary ‘state of the art’ technologies. This step does not involve any participation from your end as it is accomplished at our facility.

4. Conduct Technical Reviews

We email the draft technical write-ups to you, walk through them with you, incorporate your feedback and finalize the project descriptions. Occasionally, at this point, more sub-projects, or OIDMTC activities, may be identified, and repeat of Steps 1 to 3 may be warranted.

5. Prepare Financial Data

We conduct detailed labour analysis, project costs estimation, and preliminary calculations for the OIDMTC claim. We review such documents as employees T4’s, supply agreements and contract payments, as part of due diligence to ensure all expenses claimed are justifiable.

6. Conduct Financial Review

We prepare and review financial assertion with you, to ensure we have not missed any important cost factors.

7. Identify Required Supporting Documentation

We help collect supporting documentation; this includes both contemporaneous technical and financial information. Although, most of the claims filed by us are approved without a detailed on-site audit, we ensure projects’ back up details are readily available for a potential audit.

8. Develop Submission

If you have not filed your corporate tax return, we provide the OIDMTC claim related information to the accountant and work with him/her to file the claim as part of the filed your corporate tax return. If you have already filed it, we submit the OIDMTC claim and amend the tax return without any assistance from your accountant.

9. Participate In Audit / Follow Up

We participate in the audit and all OIDMTC related meetings to clarify justify and defend the submission

10. Train Your Company For Subsequent Submissions

Finally, we review lessons learned and prepare guidelines for further submissions

We do not actively engage in reviewing previously or currently submitted OIDMTC claims, or pursue notice of objection or process appeals for claims prepared by others.

Fee Structure

These services are provided both on a flat fee basis and success-based compensation.

About The OIDMTC Program

How Much Is The Tax Credit?

The OIDMTC is calculated as 40%* of eligible Ontario labour expenditures and eligible marketing and distribution expenses incurred after March 26, 2009 by qualifying corporations, regardless of size of corporation, to create eligible interactive digital media products in Ontario. For those qualifying corporations applying for an OIDMTC on "specified products", products developed under a fee-for-service arrangement, the OIDMTC tax rate is 35%* on qualifying expenditures incurred after March 26, 2009. For expenditures incurred prior to March 26, 2009 see chart below for applicable tax credit rates.

There is no limit on the amount of eligible Ontario labour expenditures which may qualify and there are no per project or annual corporate limits on the amount of the OIDMTC which may be claimed. Eligible marketing and distribution expenses are capped at $100,000 per eligible product.

Who is Eligible?

A qualifying corporation is a Canadian corporation (that is Canadian or foreign-owned), that develops an eligible product at a permanent establishment in Ontario operated by it, and files an Ontario tax return. A qualifying small corporation meets these criteria as well, and had during the preceding taxation year (on an associated company basis) neither annual gross revenues in excess of $20 million nor total assets in excess of $10 million.

Corporations that are prescribed labour-sponsored venture capital corporations under the regulations made under the Income Tax Act (Canada) and corporations that are exempt from tax or are controlled directly or indirectly by a corporation exempt from tax are not eligible for the OIDMTC.

What Types of Products Are Eligible for the Tax Credit?

There are now two types of products that can be claimed under the OIDMTC: eligible products and specified products. 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. Types of interactive digital media products that may be eligible for the tax credit include but are not restricted to games, educational and informational products. Operating system software is not eligible for the tax credit.

In addition, the following requirements must be satisfied for a product to be an eligible product (other than specified products) of the qualifying corporation: all or substantially all of the product was developed in Ontario by the qualifying corporation; the product was not developed under a fee-for-service arrangement; the product is not used primarily for interpersonal communication; the product is not used primarily to present or promote the qualifying corporation; and the product is not used primarily to present, promote or sell the products or services of the qualifying corporation.

Specified products are interactive digital media products that are developed under a fee-for-service arrangement, under the terms of an agreement between the qualifying corporation and an arm's length purchaser corporation for the purpose of sale or license by the purchaser to one or more persons who deal at arm's length with the purchaser. All or substantially all, of the product must be developed in Ontario by the qualifying corporation. The development of the product must be completed by the qualifying corporation after March 23, 2006.

Digital Media Game Exceptions*

Digital media game developers that incur a minimum $1 million of eligible labour expenditures after March 26, 2009 over a 3 year period for fee-for-service work done in Ontario would not be required to be at arm's length with the purchaser corporation, or to develop all, or substantially all, of the product.

What Expenditures Are Eligible?

The credit may be claimed with respect to qualifying Ontario expenditures which include eligible labour expenditures and marketing and distribution expenditures.

Eligible labour expenditures are 100% of salaries and wages for employees and 100%* of remuneration incurred after March 26, 2009 and paid to arm's length persons who are not employees. "Persons" may include individuals, partnerships and corporations. For eligible remuneration expenditures incurred prior to March 26, 2009 see chart below.

Eligible Labour expenditures must also be paid to individuals resident in Ontario, directly attributable to the development of the eligible product, and paid for services rendered at a permanent establishment in Ontario. For those products completed after March 25, 2008 eligible labour expenditures incurred in the three year period prior to the completion of the product can be included in the OIDMTC claim. For products completed prior to March 26, 2008 eligible labour expenditures incurred in the two year period prior to completion can be claimed.

Up to $100,000 of eligible marketing and distribution expenditures related to an eligible product can be included. Eligible marketing and distribution expenses are those incurred in the 24-month period prior to the completion of the eligible interactive digital media product, and those incurred in the twelve months following the completion of the product. Expenditures that have already been claimed as eligible Ontario labour expenditures cannot be claimed as marketing and distribution expenditures.

For specified products qualifying expenditures are restricted to eligible labour expenditures and do not include marketing and distribution expenditures