On April 23, 2015 the Ontario government tabled a 2015 budget that proposes significant changes to the programs aimed at supporting film, television and digital media.
Ontario Interactive Digital Media Tax Credit (OIDMTC)
- Eligibility criteria for the program will be restricted to supporting entertainment products as well as educational products for children under the age of 12. The list of specifically excluded products will be extended to include products centered on news and public affairs. Exclusions to promotional products will be further strengthened. These changes are effective immediately and will apply to expenditures incurred after April 23, 2015. Products which qualified for the credit under the old rules but are no longer eligible will qualify for relief with respect to expenditures incurred prior to April 24th, 2015.
- The “all of substantially all” rule requiring that at least 90% of the product be developed in Ontario by the company claiming the credit is changing. The new rule requires that 80% of total labour costs for eligible products be attributed to qualifying salaries and wages as well as qualifying remuneration (contract payments to Ontario freelancers operating either as sole proprietors or through personal service corporations). In addition, at least 25% of the total labour costs for eligible products must be comprised of wages paid to the employees of the qualifying corporation. The new rule will be applied retroactively and will affect all products awaiting certification regardless of the completion date. Already certified products will not be affected.
On the brighter side, investment in the Interactive Digital Media Fund (IDMF) will increase. In the current fiscal year IDMF will receive $6 million and starting next year $10 million per year. IDMF criteria are broader than those of OIDMTC and the government has positioned the increase in IDMF financing as an offset to narrowing OIDMTC eligibility criteria.
It is important to note that the Budget does not specify the details of the proposed new regime. The specific information and examples of eligible products are to be announced in a bulletin at a later date.
Film and Television Tax Credits
- Ontario Film and Television Tax Credit (OFTTC) – The rate is reduced from 25% to 21.5%. The new rate applies to expenditures incurred after April 23, 2015. The government also is introducing changes affecting eligibility of certain expenditures.
- Ontario Computer Animation and Special Effects Tax Credit (OCASE) – The rate is reduced from 20% to 18%. The new rate applies to the expenditures incurred after April 23, 2015. Further, in order to claim OCASE for productions started after April 23, 2015, the productions must receive either OFTTC or OPSTC.
- Ontario Film and Television Tax Credit (OFTTC) – The rate remains intact. Further, the government is filing a regulation that would stop treating government equity investment in a production as government assistance.
- Ontario Sound Recording Tax Credit (OSRTC) – This credit has been eliminated. Expenditures related to eligible sound recordings commenced prior to April 23, 2015 may qualify under certain circumstances.