If you’re developing interactive digital media products in Ontario—games, educational apps, VR experiences, or e-learning platforms—the Ontario Interactive Digital Media Tax Credit (OIDMTC) can fund up to 40% of your development costs.

With Canada’s highest provincial rate for own-IP products and the ability to claim up to $100,000 in additional marketing and distribution support, OIDMTC is one of the most valuable digital media tax credits in North America.

This guide breaks down everything you need to know: Eligibility requirements, the critical 80/25 rule, credit rates, application process, and strategic considerations for maximizing returns.

OIDMTC at a Glance

Credit rates:

  • 40% refundable on own-IP products (non-specified)
  • 35% refundable on fee-for-service work (specified)
  • 35% for qualifying/specialized digital game corporations
  • Plus up to $100,000 on marketing/distribution (own-IP only)

Administered by: Ontario Creates + Canada Revenue Agency (CRA)

Available to: Canadian corporations (Canadian or foreign-owned) with permanent establishment in Ontario

Claim period: Within 18 months of product completion (or annually for specialized game corps)

What Qualifies: Products and Activities

Eligible Products

Your product must be interactive digital media where the user controls the sequence or pace of content, and the primary purpose is to educate, inform, or entertain.

Eligible product types:

  • Video games (mobile, console, PC, VR/AR)
  • Educational software for children under 12
  • E-learning platforms and training applications
  • Edutainment products
  • Interactive entertainment applications
  • Educational mobile apps
  • Film and TV websites purchased by broadcasters

Technical requirement: Must incorporate at least two of the following: text, sound, images

Ineligible products:

  • Social media platforms
  • Messaging/communication apps
  • Products primarily for corporate promotion
  • Search engines
  • Real estate databases
  • News and public affairs products

Eligible Labour Expenditures

What counts:

  • Development and programming
  • Design and artwork
  • Animation and visual effects
  • Sound design and music
  • Quality assurance and testing
  • Project management (directly attributable)

Employee requirements:

  • Must be actual employees (not contractors)*
  • Ontario residents on December 31 of year preceding fiscal year-end
  • Time directly attributable to eligible development

*Note: Contractors can count toward the 80% test but not the 25% test (see 80/25 rule below)

Eligible period: Labour costs incurred in 37 months prior to product completion

Marketing and distribution (non-specified products only):

  • Up to $100,000 per product
  • Costs incurred 24 months before to 12 months after completion
  • Includes advertising, promotion, distribution setup

Understanding the 80/25 Rule

The 80/25 rule is OIDMTC’s most critical requirement for standard products. Both tests must be satisfied:

The 80% Test: Ontario Labour

80% of total development labour must be paid to:

  • Ontario-based employees of your corporation
  • Contractors/individuals working in Ontario
  • Personal corporations with services performed in Ontario

Example:

  • Total development labour: $1,000,000
  • Minimum required in Ontario: $800,000 (80%)
  • Out-of-province work: Maximum $200,000 (20%)

The 25% Test: Direct Employees

25% of total development labour must be paid to:

  • Direct employees of your corporation
  • Working in Ontario
  • Not contractors or personal corporations

Example:

  • Total development labour: $1,000,000
  • Minimum employee wages: $250,000 (25%)
  • Contractors/personal corps: Maximum $750,000 (75%)

Practical Implications

Scenario: Toronto mobile game studio

  • Total dev costs: $800,000
  • Must be Ontario-based: $640,000+ (80%)
  • Must be direct employees: $200,000+ (25%)
  • Can be contractors: Up to $600,000 (75%)

Common mistake: Companies with heavy contractor reliance often fail the 25% employee test.

Strategic fix: Convert key contractors to employees or balance team composition.

Exemptions from 80/25 Rule

Specialized digital game corporations are exempt from the 80/25 rule if they meet:

  • Minimum $500,000 Ontario labour on digital games annually, AND
  • Either 80% of Ontario payroll OR 90% of annual revenue from game development

OIDMTC Product Categories: Which Rate Applies?

Non-Specified Products (40% rate)

Definition: Products you develop and own yourself—your IP, your distribution rights.

Credit rate: 40% on eligible Ontario labour + up to $100,000 on marketing/distribution

Example: Toronto edtech startup

  • Develops educational math game for children
  • Owns all IP and distribution rights
  • Eligible Ontario labour: $600,000
  • Marketing costs: $80,000
  • OIDMTC credit: ($600,000 × 40%) + ($80,000 × 40%) = $240,000 + $32,000 = $272,000

Who this fits: Studios building own games, original IP developers, self-publishing companies

 

Specified Products (35% rate)

Definition: Fee-for-service work where client owns IP and distribution rights.

Credit rate: 35% on eligible Ontario labour only (no marketing/distribution support)

Example: Hamilton service studio

  • Develops mobile game for U.S. publisher
  • Publisher owns all IP
  • Eligible Ontario labour: $400,000
  • OIDMTC credit: $400,000 × 35% = $140,000

Who this fits: Work-for-hire studios, service providers, contractors to larger publishers

 

Qualifying Digital Game Corporations (35% rate)

Definition: Studios with minimum $1M Ontario labour on digital games within any 36-month period.

Credit rate: 35% on eligible Ontario labour

Key benefit: Can claim before game is completed (unlike standard products)

Requirements:

  • Minimum $1M Ontario labour expenditures within 36-month period
  • Contract with arm’s-length purchaser (client)
  • Developing eligible digital game

Example: Ottawa mid-size studio

  • Spends $1.2M on digital game over 24 months
  • Can apply at end of 36-month period
  • Eligible labour: $1,200,000
  • OIDMTC credit: $1,200,000 × 35% = $420,000

 

Specialized Digital Game Corporations (35% rate)

Definition: Studios highly focused on digital game development meeting revenue or payroll thresholds.

Credit rate: 35% on eligible Ontario labour

Key benefits:

  • Exempt from 80/25 rule
  • Can file annually (not per-product)
  • No requirement for arm’s-length purchaser

Requirements (all must be met):

  • Minimum $500,000 Ontario labour on digital games annually, AND
  • Either:
  • 80% of Ontario salaries/wages attributable to game development, OR
  • 90% of gross annual revenue from game development

Example: Toronto game-focused studio

  • Annual Ontario game dev labour: $2,000,000
  • 85% of Ontario payroll on games (meets 80% test)
  • Can file annually covering all projects
  • OIDMTC credit: $2,000,000 × 35% = $700,000

Who this fits: Dedicated game studios, mid-to-large developers with consistent output

 

Quick Decision Tree: Which Category Are You?

Start here: Do you develop digital games?

? NO: Apply as non-specified (40%) or specified (35%) based on IP ownership

? YES: Continue below

 

Do you spend $500K+ annually on Ontario game dev labour?

? NO: Apply as non-specified (40%) or specified (35%) per product

? YES: Continue below

 

Does your studio meet either:

  • 80% of Ontario payroll on games, OR
  • 90% of revenue from game development?

? YES: Apply as specialized digital game corporation (35%)

  • Benefits: Annual filing, exempt from 80/25 rule

? NO: Do you have $1M+ Ontario labour within 36 months on a specific game?

 

YES: Apply as qualifying digital game corporation (35%)

  • Benefits: Claim before completion

NO: Apply as non-specified (40%) or specified (35%) per product

 

How to Apply for OIDMTC: Step-by-Step Process

Step 1: Verify Eligibility (Before Product Completion)

Checklist:

  • Canadian corporation with Ontario permanent establishment
  • File Ontario corporate tax returns
  • Product meets eligibility requirements
  • Labour meets 80/25 rule (if applicable)
  • Ontario residency verified for employees

Timing: Plan throughout development—track time, residency, costs from day one.

 

Step 2: Complete Product Development

For non-specified/specified products: Product must be completed before applying.

Definition of completion: Product is shelf-ready and could be distributed.

For qualifying/specialized game corporations: Can apply before completion.

 

Step 3: Prepare Documentation

Required documents:

  • Completed OIDMTC application form
  • Corporate financial statements
  • Detailed labour cost schedules
  • Product description and screenshots
  • 80/25 rule calculations (if applicable)
  • Marketing/distribution cost breakdown (non-specified only)
  • Proof of Ontario residency for employees
  • Contracts (for specified products)

Administrative fee:

  • 15% of eligible expenditures
  • Minimum: $1,000
  • Maximum: $10,000

 

Step 4: Submit to Ontario Creates

Portal: Ontario Creates online application portal

Deadline: Within 18 months of fiscal year-end in which product was completed

Processing time: Varies by volume; Ontario Creates reviews first-come, first-served

Important: You can file your corporate tax return with an estimated OIDMTC amount before receiving Certificate of Eligibility.

 

Step 5: Receive Certificate of Eligibility

Issued by: Ontario Creates after reviewing your application

What it contains: Approved OIDMTC amount for the fiscal year

Processing: Ontario Creates may request additional documentation during review

Amendment: Certificates can be amended for errors ($100 fee per amendment)

 

Step 6: File Corporate Tax Return

File with CRA:

  • T2 Corporation Income Tax Return
  • Schedule T2SCH560 (OIDMTC schedule)
  • Certificate of Eligibility from Ontario Creates

Deadline: Six months after fiscal year-end

Credit processing: CRA refunds OIDMTC amount net of any Ontario taxes owing.

Fully refundable: If no taxes owing, full OIDMTC amount is paid out.

 

OIDMTC + Federal SR&ED: Strategic Stacking

OIDMTC can be claimed alongside federal SR&ED for qualifying R&D work, but OIDMTC reduces your SR&ED base due to government assistance rules.

How the Stack Works

Government assistance rule: OIDMTC credits count as government assistance and reduce federal SR&ED eligible expenditures.

Example calculation:

Waterloo VR studio (CCPC):

  • Eligible Ontario labour: $500,000
  • Work qualifies for both OIDMTC and SR&ED

Step 1: Claim OIDMTC

  • Own-IP product: $500,000 × 40% = $200,000

Step 2: Calculate Federal SR&ED

  • Original SR&ED base: $500,000
  • Less OIDMTC assistance: $200,000
  • Adjusted SR&ED base: $300,000
  • Federal SR&ED (35% CCPC rate): $300,000 × 35% = $105,000

Total combined credits: $305,000 (61% of original $500K)

The Math Still Favors Stacking

Comparison:

OIDMTC + SR&ED stack:

  • OIDMTC: $200,000 (40%)
  • Federal SR&ED: $105,000 (21% on reduced base)
  • Combined: $305,000 (61% effective rate)

Federal SR&ED alone:

  • SR&ED only: $500,000 × 35% = $175,000 (35% rate)

Benefit of stacking: $130,000 additional funding (74% more)

Strategic Approach

For Ontario digital media companies:

  • Claim OIDMTC first (higher rate: 40% vs. 35%)
  • Layer federal SR&ED on remaining eligible base
  • Combined effective rate approaches 60%+

OIDMTC always increases total funding even after SR&ED reduction.

 

Common OIDMTC Mistakes and How to Avoid Them

Mistake #1: Missing the 25% Employee Test

The error: Heavy contractor reliance without enough direct employees.

Example:

  • Total labour: $800,000
  • Contractors: $650,000
  • Employees: $150,000 (only 18.75%)
  • Fails 25% test—claim rejected

The fix:

  • Convert strategic contractors to employees
  • Balance team composition to meet 25% threshold
  • Plan ahead during hiring decisions

 

Mistake #2: Out-of-Province Employees Not Verified

The error: Claiming employees who aren’t Ontario residents on critical determination date (Dec 31 of prior year).

Audit trigger: T4 addresses outside Ontario.

The fix:

  • Annual December 31 residency verification
  • Document employee relocations
  • Maintain proof (T4s, provincial ID, leases)

 

Mistake #3: Claiming Ineligible Contractors

The error: Including contractors who don’t meet “personal services business” or sole proprietor requirements.

The issue: Corporate contractors may not count toward 80% test properly.

The fix:

  • Understand contractor classification rules
  • Verify incorporation status
  • Document services rendered in Ontario

 

Mistake #4: Product Doesn’t Meet “Interactive” Definition

The error: Claiming products primarily for communication or promotion.

Example: Company website, marketing portal, internal tools.

The fix:

  • Ensure primary purpose is educate/inform/entertain
  • User controls sequence or pace of content
  • Include at least two of: text, sound, images

 

Mistake #5: Missing 18-Month Deadline

The error: Applying more than 18 months after fiscal year-end.

Consequence: Entire claim disallowed—even if otherwise eligible.

The fix:

  • Calendar product completion dates
  • Set reminders for 18-month deadline
  • Apply promptly after completion

 

Mistake #6: Not Tracking Time Throughout Development

The error: Trying to reconstruct labour allocation retroactively at year-end.

Audit risk: Insufficient documentation to support 80/25 calculations.

The fix:

  • Implement time tracking from day one
  • Track even at project level (doesn’t need to be detailed timesheets)
  • Maintain contemporaneous records

 

Real-World OIDMTC Scenarios

Scenario 1: Indie Studio (Own-IP Mobile Game)

Company profile:

  • 6 developers, 1 designer, 1 producer
  • Toronto-based
  • Developing original puzzle game
  • Total Ontario labour: $400,000

OIDMTC calculation:

80/25 rule check:

  • All labour in Ontario: $400,000 (100% > 80%) ?
  • Employee wages: $300,000 (75% > 25%) ?

Credits:

  • Labour: $400,000 × 40% = $160,000
  • Marketing: $30,000 × 40% = $12,000
  • Total OIDMTC: $172,000

Federal SR&ED:

  • Base after OIDMTC: $400,000 – $160,000 = $240,000
  • SR&ED: $240,000 × 35% = $84,000

Total funding: $256,000 on $400,000 costs = 64% funded

 

Scenario 2: Service Studio (Fee-for-Service)

Company profile:

  • 15 developers
  • Ottawa-based
  • Develops game for U.S. publisher under contract
  • Publisher owns all IP
  • Total Ontario labour: $900,000

OIDMTC calculation:

80/25 rule check:

  • Ontario labour: $800,000 (88.9% > 80%) ?
  • Employee wages: $600,000 (66.7% > 25%) ?

Credits:

  • Labour: $900,000 × 35% = $315,000
  • (No marketing support for specified products)
  • Total OIDMTC: $315,000

Federal SR&ED:

  • Base after OIDMTC: $900,000 – $315,000 = $585,000
  • SR&ED: $585,000 × 35% = $204,750

Total funding: $519,750 on $900,000 costs = 58% funded

 

Scenario 3: Specialized Game Corporation (Annual Filing)

Company profile:

  • 30 employees
  • Mississauga-based
  • Multiple game projects annually
  • 90% of revenue from game development
  • Annual Ontario game labour: $2,500,000

Eligibility:

  • $2.5M > $500K minimum ?
  • 90% revenue test met ?
  • Qualifies as specialized digital game corporation

Benefits:

  • Exempt from 80/25 rule
  • Annual filing (not per-product)
  • Can mix specified/non-specified work

OIDMTC calculation:

  • All eligible labour: $2,500,000 × 35% = $875,000

Federal SR&ED:

  • Base after OIDMTC: $2,500,000 – $875,000 = $1,625,000
  • SR&ED: $1,625,000 × 35% = $568,750

Total funding: $1,443,750 on $2,500,000 costs = 58% funded

 

OIDMTC Best Practices

Design Your Team Structure for OIDMTC

From day one:

  • Balance employees (25%+) vs. contractors (up to 75%)
  • Verify Ontario residency for all hires
  • Structure roles to maximize eligible activities

Example optimization:

  • Core dev team: Direct employees (ensures 25% test)
  • Specialized roles: Contractors acceptable (audio, art)
  • Management/admin: Typically not eligible

 

Track Everything Contemporaneously

Don’t wait until year-end.

Implement tracking for:

  • Employee time by project/activity
  • Ontario residency (Dec 31 verification)
  • Labour costs by category
  • Product development milestones
  • Marketing/distribution costs

Tools: Basic project management software or time tracking is sufficient—doesn’t need to be sophisticated.

 

Plan for the 18-Month Deadline

Product completion triggers the 18-month clock.

Create calendar reminders:

  • Product completion date
  • 12 months before deadline (start preparation)
  • 18-month deadline (final submission)

Note: Fiscal year-end matters, not calendar year.

 

Consider Specialized Status for Eligible Studios

If you’re a dedicated game studio meeting revenue/payroll thresholds:

  • Specialized status (35%) may offer more value than product-by-product filing
  • Annual filing simplifies administration
  • Exemption from 80/25 rule provides flexibility

Trade-off: 35% rate vs. 40% for own-IP products—run the math for your situation.

 

Coordinate with Your Accountant and Tax Advisors

OIDMTC requires coordination:

  • Corporate tax filing (CRA)
  • Certificate application (Ontario Creates)
  • SR&ED claims (if applicable)
  • Financial statement preparation

Engage specialists early: OIDMTC has nuances that generalist accountants may miss.

 

How Boast Helps Ontario Digital Media Companies Maximize OIDMTC

Navigating OIDMTC’s 80/25 rule, product categories, and application process—while coordinating with Ontario Creates and CRA—is complex. Especially when you’re trying to build great products.

Boast’s platform automates OIDMTC management while our Ontario-specific experts optimize every claim:

Automated OIDMTC tracking:

  • Integrates with payroll and time tracking
  • Automatically calculates 80/25 rule compliance
  • Tracks Ontario residency from T4 data
  • Manages marketing/distribution expenses
  • Handles government assistance calculations for SR&ED stacking

Ontario expertise:

  • Specialists who understand OIDMTC vs. federal SR&ED strategy
  • Navigate non-specified vs. specified vs. game corporation decisions
  • Optimize contractor vs. employee structure
  • Support Ontario Creates application and CRA filing

Strategic guidance:

  • Advise on specialized vs. qualifying game corporation status
  • Forecast OIDMTC + SR&ED combined returns
  • Plan team structure around 80/25 requirements
  • Identify opportunities to maximize 40% vs. 35% rates

100% audit defense:

  • Built-in audit protection at no additional cost
  • Comprehensive documentation meets Ontario Creates requirements
  • Expert support through CRA reviews
  • Track record of successful OIDMTC claims

Since 2011, Boast has helped 2,000+ businesses across North America access $675M+ in innovation funding—including hundreds of Ontario digital media companies maximizing OIDMTC and federal SR&ED.

Conclusion: Ontario’s OIDMTC Advantage

Ontario’s OIDMTC offers some of the highest refundable tax credit rates for digital media development in North America:

  • 40% on own-IP products (highest provincial rate)
  • Up to $100,000 additional marketing support
  • Stackable with federal SR&ED for combined 60%+ funding
  • Flexible game corporation options for dedicated studios

For Toronto, Ottawa, Waterloo, and Ontario-based studios developing games, VR/AR, educational software, or interactive entertainment, OIDMTC can fund the majority of your development costs.

The key is understanding eligibility requirements—especially the 80/25 rule—planning your team structure accordingly, and coordinating OIDMTC with federal SR&ED for maximum returns.

The funding you need to extend runway, hire talent, and accelerate development is waiting.

The question is whether you’ll claim it.

 

Ready to maximize your OIDMTC claim?

Schedule a free consultation with Boast’s Ontario funding specialists to:

  • Calculate your OIDMTC opportunity at 40% or 35%
  • Verify 80/25 rule compliance
  • Optimize your OIDMTC + federal SR&ED strategy
  • Implement automated tracking and documentation

Since 2011, Boast has helped Ontario digital media companies access millions in OIDMTC funding.

 

OIDMTC Quick Reference

Credit Rates:

  • Non-specified (own-IP): 40% + marketing support
  • Specified (fee-for-service): 35%
  • Qualifying/specialized game corps: 35%

80/25 Rule:

  • 80% labour in Ontario
  • 25% labour from direct employees

Marketing Support:

  • Up to $100,000 per non-specified product
  • Costs from 24 months before to 12 months after completion

Application Deadline:

  • 18 months after fiscal year-end of product completion

Administrative Fee:

  • 15% of eligible expenditures
  • Min: $1,000 | Max: $10,000

Administered By:

  • Ontario Creates (Certificate of Eligibility)
  • Canada Revenue Agency (tax credit processing)

 

Additional OIDMTC Resources

Ontario Creates:

Canada Revenue Agency:

  • T2 Corporation Income Tax Return
  • Schedule T2SCH560 (OIDMTC schedule)

Industry Associations:

  • Interactive Ontario: Ontario’s digital media trade association
  • IIDEA (formerly ESA Canada): Video game industry association

 

About Boast

Boast specializes in helping organizations claim and access eligible R&D tax credits, minimizing audit risks and time-consuming processes in Canada and the United States. Boast combines in-house technical and R&D tax expertise with AI-powered technology to help companies effortlessly navigate the complexities of tax credits, enabling them to focus on what they do best: innovate.

Since Boast’s founding in 2011, we’ve helped more than 2,000 businesses across North America tap into more than $900 million in innovation capital to build stronger products, extend their runway, and drive world-changing innovation.