What is considered 'government assistance' for the OIDMTC and therefore grinds the tax credit?
Government assistance includes government grants, subsidies, forgivable loans, deductions from tax other than OIDMTC and investment allowances. These will reduce (‘grind’) the OIDMTC.
The following are not considered government assistance:
- Other tax credits such as Scientific Research & Experimental Development (SR&ED),
- Bona fide loans with a set repayment date, (See Canada Revenue Agency’s (CRA) Application Policy on Bona Fide Loan – FAS 2008-01 for more information), and
- Equity investments.
Note that labour deferrals (amounts not paid within 60 days of the tax year end) cannot be claimed for the OIDMTC for that tax year. However if it is paid within 60 days after the end of the subsequent tax year, the labour expenditures can be claimed in the subsequent tax year as part of qualifying expenditures.
Ontario Creates requires documentation of all financial contributions to the development of a product, including loans, deferrals, and sponsorship amounts.