Ontario Government Cutting Red Tape for Video Game Developers


Ontario Government Cutting Red Tape for Video Game Developers

Proposals would help smaller video game companies receive their tax credits faster

TORONTO — Ontario’s deep pool of technical and creative talent and its competitive interactive digital media tax credit have helped make the province a hotbed for video game development. Building on this, the Ontario government is proposing a tax credit change that would help smaller video game companies receive their credits sooner and reduce the regulatory burden.

“We’re committed to making Ontario an even better place for video game developers to do business,” said Todd Smith, Minister of Economic Development, Job Creation and Trade, who is also the lead minister on reducing red tape and regulatory burden. “The current tax credit certification process is slow and complex, leaving some companies waiting more than a year for tax credits they’re entitled to. Reducing application processing times would help developers thrive, expand and create good jobs.”

As part of the 2019 Ontario Budget, the government is proposing to allow smaller video game companies to apply for certification of the Ontario Interactive Digital Media Tax Credit annually, rather than separately for each game they complete. The government will also review the tax credit certification process to streamline administration and speed up processing of claims.

To be eligible to apply for tax credit certification annually, a company must spend at least $1 million on qualifying labour costs directly related to game development during its taxation year. The government is proposing to lower this threshold to $500,000, to allow smaller video game companies to apply annually. Applying annually means that these companies would no longer have to wait until a product is completed to claim the credit. This would reduce tax credit paperwork requirements on smaller video game developers and reduce the squeeze on their cash flow as they wait for their refund.

“Our province is home to a mix of burgeoning homegrown developers and the local studios of major global developers,” said Michael Tibollo, Minister of Tourism, Culture and Sport. “We want to support and grow this sector by expediting access to the tax credit for smaller video game companies that could be the birthplace of the next great video game — to help keep Ontario open for business and open for jobs, and to drive economic growth in our province.”

Quick Facts

  • Interactive digital media — which includes video games and other digital products, such as e-learning tools and virtual reality experiences — is one of the leaders in GDP and employment growth within Ontario’s culture sector.
  • In 2017, the interactive digital media industry employed over 22,000 people in Ontario and contributed over $3 billion to the province’s GDP. The video game segment made up most of that activity.
  • The Ontario Interactive Digital Media Tax Credit is a 35-40 per cent refundable tax credit on eligible Ontario labour expenditures and eligible marketing and distribution expenditures for eligible interactive digital media products, including video games.
  • The proposed change would reduce paperwork for smaller video game companies and help these companies receive their tax credits faster.

Additional Resources


“Reducing the labour threshold will support more small and medium‐sized interactive digital media companies, create more permanent jobs and help these companies grow and become more competitive.”

Lucie Lalumière

President and CEO, Interactive Ontario


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