What kinds of products are eligible under the OIDMTC regulations of April 23, 2015?
Products that may be eligible for the OIDMTC include, but are not restricted to, digital games, mobile applications, certain websites, and e-learning products for children.
The OIDMTC regulations have narrowed the primary purpose requirement for eligible specified and non-specified products. Previously a product’s primary purpose could be to inform, educate or entertain users. Under the OIDMTC regulations of April 23, 2015, a product’s primary purpose must be to entertain users or educate children under the age of 12.
The OIDMTC regulations exclude most websites. Websites would only be eligible if more than 50% of the site hosts any of the following:
- one or more digital games;
- content related to a film, television or internet production (see OIDMTC regulation 34(6)) ;
- one or more virtual or augmented reality experiences; and/or
- content that is designed to educate users who are under 12 years of age.
The former 90% developed-by rule (which required the applicant company to have developed all or substantially all of the product themselves) has been replaced with a new 80/25 rule. The 80% test requires that 80% of total development labour costs to create the product be for work performed in Ontario and paid as eligible salaries or wages to applicant’s employees and eligible remuneration to personal corporations and individuals providing services as part of sole proprietorships with no employees. This 80% test applies to all products certified as eligible on or after April 24, 2015. The 25% test requires that 25% of the total development labour costs must be paid as eligible salaries or wages to employees of your company for work performed in Ontario. This 25% test applies to all products that apply for certification on or after April 24, 2015.
The OIDMTC regulations of April 23, 2015 state that specified and non-specified products must now have a revenue generating stream. Revenue generating streams include: the sale of the product, fees for the use of the product, including licence and subscription fees, in-product purchases, arm’s length third party advertising, and the sale or license of another product developed by the applicant that can reasonably be considered an extension or upgrade of the product being claimed.
Please note: There is no specific amount of revenue that needs to be generated in order to be considered eligible. Also for specified products the agreement between your company and the Purchaser corporation to develop the product cannot be used to satisfy the requirement of having a revenue generating stream. The product must be used by the Purchaser corporation to generate revenue.
Products that only have development labour costs incurred after April 23, 2015 must meet all of the new eligibility requirements stated in the OIDMTC regulations.