Ontario interactive digital media tax credit


As a COVID‑19 measure, for products that were not completed before March 15, 2020, and for which eligible labour expenditures were incurred in the 2020 tax year, Ontario has temporarily extended the 37‑month period during which eligible labour expenditures must be incurred by an additional 24 months.

The Ontario interactive digital media tax credit is a refundable tax credit based on qualifying expenditures incurred for eligible products and eligible digital games by a qualifying corporation during a tax year.

This credit focuses on entertainment products and educational products for children under 12. Certain products, such as search engines, real estate databases, or news and public affairs products are excluded. These do not apply to large digital game corporations (qualifying digital game corporations and specialized digital game corporations).

Film and television websites that are bought or licensed by a broadcaster and embedded in the broadcaster's website are now eligible for the Ontario interactive digital media tax credit. This applies to websites that host content related to film, television or Internet productions that, as of November 1, 2017, had not received a certificate of eligibility or a letter of ineligibility.

The following conditions apply:

  • 80% of total labour costs for eligible products have to be attributable to qualifying wages and qualifying remuneration paid to individuals or to corporations that carry on a personal services business
  • 25% of total labour costs for eligible products have to be attributable to qualifying wages of employees of the qualifying corporation

The above-noted eligibility requirements do not apply to large digital game corporations.

Qualifying expenditures

The credit applies to the following situations:

  • all qualifying corporations that develop and market their own eligible products (non-specified products) are eligible to claim a credit equal to 40% of expenditures. These expenditures include marketing and distribution expenditures paid within 60 days of the end of the tax year, for a maximum of $100,000 per eligible product for all tax years
  • qualifying corporations that develop eligible products under a fee-for-service arrangement (specified products) are eligible to claim a credit equal to 35% of expenditures
  • a 35% credit is available to both:
    • qualifying digital game corporations that incur a minimum of $1 million of eligible Ontario labour expenditures over a 36-month period for fee-for-service work done in Ontario for an eligible digital game
    • specialized digital game corporations that incur at least $500,000 ($1 million for tax years starting before April 12, 2019) of Ontario labour expenses each year in developing eligible digital games. A specialized digital game corporation generally would have at least 80% of Ontario payroll or 90% of annual gross revenues directly attributable to developing digital games

For all eligible products, qualifying expenditures include Ontario salaries and wages incurred in a tax year that are directly attributable to the eligible product and paid within 60 days of the end of the tax year.

The amount of eligible remuneration expenditures that a corporation can claim is 100%. It includes amounts paid to other taxable Canadian corporations for services rendered by its employees. 

Qualifying expenditures are reduced by any government assistance reasonably related to these expenditures (some exceptions apply – see Schedule 560).

Eligible corporations


You cannot claim the Ontario interactive digital media tax credit if you claim the Ontario computer animation and special effects tax credit, the Ontario film and television tax credit, or the Ontario production services tax credit for the same expenditure for any tax year.

You can get a certificate of eligibility from Ontario Creates. To be eligible for the credit, a corporation must meet certain criteria, including:

  • be a Canadian corporation
  • have completed development on or developed an eligible interactive digital media product at a permanent establishment in Ontario, as described in subsection 93(16) of the Taxation Act, 2007 (Ontario)
  • not be exempt from tax under Part III of the Taxation Act, 2007 (Ontario) for the tax year
  • not be controlled directly or indirectly, in any way, at any time in the tax year, by one or more corporations, all or part of whose taxable income was 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

In addition, a large digital game corporation must also meet the following criteria:

  • be a corporation that carries on, through a permanent establishment in Ontario, a business that includes developing digital games
  • not be a corporation the primary activity of which is to provide the services of a single individual and all the issued and outstanding shares of the capital stock of which are owned by that individual

Claiming the credit

Before claiming the credit, you must apply online to Ontario Creates for a certificate of eligibility. If the product or digital game 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 products or digital games for the tax year.


You have to apply for this certificate within 18 months of the end of the tax year in which development of the eligible product was completed. Specialized digital game corporations are entitled to file an annual application, rather than having to apply separately for each product they complete.

To claim the credit, file the following with your T2 Corporation Income Tax Return for the year:

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 462 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 560, section 93 of the Taxation Act, 2007 (Ontario), and After you file your claim for Ontario refundable media tax credits.

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