Dealing with technology? You might be eligible for government funding

SR&ED (Scientific Research & Experimental Development) is an incentive program by the Canadian government that refunds companies involved in Research and Development (R&D). (See the information about the program on the CRA website.) Canadian companies that spend money on creating or modifying products or processes through experimenting are eligible for SR&ED. Any company that deals with technology (software and hardware development, machinery, printing etc.) may qualify. If you created an entirely new industrial process or improved an existing one, if you took a database driver and rewrote it so its performance doubled, if you came up with a fuzzy logic algorithm to facilitate scheduling - all of this may be eligible. Innovation, uncertainties you overcame, and technological advancement are the criteria for eligibility. Even failed experiments may qualify. Non-Canadian owned companies also qualify, if they pay salary in Canada.
The SR&ED program is available to companies involved in Research and Development (R&D). Eligible expenditures include your time, employee and subcontractors labour, materials and equipment. SR&ED money is given as a refund for work already done.
Read more about SRED

Ontario Interactive Digital Media Tax Credit (OIDMTC)

Ontario Interactive Digital Media Tax Credit

Program Responsibility:
Ontario Media Development Corporation, administered jointly with the Canada Revenue Agency
Program Description:
The Ontario Interactive Digital Media Tax Credit (OIDMTC) is a refundable tax credit based on eligible Ontario labour expenditures and eligible marketing and distribution expenses claimed by a qualifying corporation to create eligible interactive digital media products in Ontario. The OIDMTC is calculated as:
  • 25% of eligible expenditures
  • 30% of eligible expenditures for “qualifying small corporations” (applies to qualifying expenditures of eligible products and not specified products, please see below for all the definitions).
Expenditures for which the qualifying corporation has made a claim under the Ontario Film and Television Tax Credit, the Ontario Production Services Tax Credit, or the Ontario Computer Animation and Special Effects Tax Credit may not be claimed for the OIDMTC. In addition, expenditures incurred in carrying out scientific research and experimental development activities eligible for a tax deduction under the Income Tax Act (Canada) may not be claimed under the OIDMTC.


Eligibility Criteria:

Qualifying Corporations


A qualifying corporation generally is a Canadian corporation (that is Canadian or foreign-owned), that develops an eligible product at a permanent establishment in Ontario operated by it, and is not exempt from income tax.

A qualifying small corporation is a corporation that meets these criteria and had during the preceding taxation year (on an associated company basis) neither annual gross revenues in excess of $20 million nor total assets in excess of $10 million.

Eligible Products

There are two types of products for which the OIDMTC may be claimed: eligible products and specified products.

Eligible products are interactive digital media products whose primary purpose is to educate, inform, or entertain, and achieve this purpose by presenting information in at least two of the following forms: (i) text, (ii) sound and (iii) images. This includes (but is not limited to) games, educational products and informational products. Operating system software is not eligible for the tax credit, nor are products whose primary purpose is to present, sell or promote the qualifying corporation or its products or services.

Specified products are interactive digital media products that are developed under a fee-for-service arrangement, under the terms of an agreement between the qualifying corporation and an arm's length purchaser corporation for the purpose of sale or license by the purchaser to one or more persons who deal at arm's length with the purchaser. All or most of the product must be developed in Ontario by the qualifying corporation. The contract can be entered into before March 23, 2006, however the development of the product must be completed by the qualifying corporation after March 23, 2006.

Eligible Labour Expenditures


Eligible labour expenditures are 100% of salaries and wages for employees incurred after June 30, 1998 and 50% of remuneration incurred after May 4, 1999 paid to arm's length persons who are not employees. "Persons" may include individuals, partnerships and corporations.

For specified products, qualifying expenditures are restricted only to wage amounts which were incurred by the corporation after March 23, 2006 on account of salaries and wages of its Ontario employees.

Eligible labour expenditures must be paid to individuals resident in Ontario at the end of the calendar year prior to the calendar year in which the services were rendered. The labour expenditures must also be directly attributable to the development of the eligible product.

If the product is completed after March 25, 2008 eligible expenditures would include those incurred in the 37-month period ending at the end of the month in which development of the product is completed. For products completed before March 26, 2008 eligible expenditures would include those incurred in the 25-month period ending at the end of the month in which development of the product is completed. The labour expenditures must also be paid in the taxation year or within 60 days after the end of the taxation year, and paid for services rendered at a permanent establishment in Ontario.

Eligible Marketing Expenditures
Up to $100,000 of eligible marketing and distribution expenditures related to an eligible product that is not a specified product can be included. Eligible marketing and distribution expenses are those incurred after May 2, 2000, and are limited to those incurred in the 24-month period prior to the completion of the eligible interactive digital media product, and those incurred in the twelve months following the completion of the product. Expenditures that have already been claimed as eligible Ontario labour expenditures cannot be claimed as marketing and distribution expenditures.

OIDMTC facts and figures (courtesy of SRED Unlimited)

(The information is taken from http://www.investinontario.com)