The Ontario government has identified interactive media as a key sector and is providing games producers and outsourcers based in Ontario with some powerful financial incentives.

• Our R&D tax credits are among the most generous of any G7 country – the combined federal and provincial tax incentives can cut the cost of $100 in R&D to less than $46.

• We have a number of programs targeted at helping digital games producers cut costs, including the Ontario Interactive Digital Media Tax Credit, the Ontario Computer Animation and Special Effects Tax Credit and the Ontario Sound Recording Tax Credit. In fact, Ontario's R&D tax credits and digital media incentives can cut R&D costs by more than 60%.

• Game producers can also take advantage of the Video Game Prototype Initiative, which provides a repayable contribution of up to $500,000 to help create a market-ready game.

Tax credits significantly lower R&D costs Small and medium-sized non-manufacturers1 (public, private or foreign-owned) R&D expenditures R&D expenditures at eligible Ontario Research Institutes2 Gross expenditure $100.00 $100.00 Ontario – 10% OITC3 (10.00) (10.00) Ontario – 20% OBRI tax credit4   (20.00) Federal investment tax credit – 20% (18.00) (14.00) Tax deduction5 $72 x 33.5% (24.12)   $56 x 33.5%   (18.76) Ontario exemption of federal investment tax credit Tax deduction $18 x 14.0% (2.52)   $14 x 14.0%   (1.96) After-tax cost of $100 expenditures $45.36 $35.28

NOTES:
¹ Medium-sized companies have taxable income of less than $400,000 and taxable capital of less than $50 million.
² Eligible Ontario research institutes include universities, colleges of applied arts and technology, research hospitals and other entities in Ontario.
³ The 10% refundable Ontario Innovation Tax Credit.
⁴ The 20% refundable Ontario Business-Research Institute Tax Credit.
⁵ Tax rates for non-manufacturers: Federal 19.5% plus Ontario 14.0% = Total 33.5%.