Ontario computer animation and special effects tax credit
The Ontario computer animation and special effects tax credit is a refundable tax credit equal to 18% of the qualifying labour expenditures for eligible computer animation and special effects activities, incurred by a qualifying corporation in a tax year for an eligible production.
Qualifying labour expenditures equal the corporation's Ontario labour expenditures for the tax year less any assistance reasonably related to these expenditures, other than excluded government assistance.
The Ontario labour expenditures are the sum of the salaries and wages and the remuneration incurred in a tax year that are directly attributable to computer animation and special effects activities performed in Ontario and paid to certain persons or entities, within 60 days of the end of the tax year.
You can get a certificate of eligibility from Ontario Creates. To be eligible for credit, a corporation must meet certain criteria, including all of the following:
- be a Canadian corporation
- perform eligible computer animation and special effects activities for the eligible production at a permanent establishment in Ontario for the tax year
- not be exempt from tax under Part III of the Taxation Act, 2007 (Ontario) for the tax year
- not be controlled directly or indirectly, at any time in the tax year, in any way, by one or more corporations, all or part of whose taxable income is exempt from tax under section 57 of the Corporations Tax Act (Ontario) or Part III of the Taxation Act, 2007 (Ontario)
- not be a prescribed labour-sponsored venture capital corporation at any time in the tax year
- for productions starting after April 23, 2015, receive the Ontario production services tax credit or the Ontario film and television tax credit
Claiming the credit
Before claiming the credit, you must apply online to Ontario Creates for a certificate of eligibility. If the production is eligible, Ontario Creates will issue a certificate indicating the estimated amount of the tax credit. Only one certificate of eligibility is issued for all of the eligible productions for the tax year.
To claim the credit, file the following with your T2 Corporation Income Tax Return for the year:
- a certificate of eligibility (or copy) issued by Ontario Creates
- a completed Schedule 554, Ontario Computer Animation and Special Effects Tax Credit, for each eligible production
If you file your return electronically, see T2 Attach-a-Doc.
If you file a paper return, send the return and required attachments to your tax centre.
On line 456 of Schedule 5, Tax Calculation Supplementary – Corporations, enter the total amount of the credit you are claiming.
The CRA will not begin to process the media tax credit claim until it receives all of the required documentation. A claim is considered to be complete when all of the above documentation is filed with the CRA.
For more information on the credit, see Schedule 554, section 90 of the Taxation Act, 2007 (Ontario), and After you file your claim.
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