Ontario Computer Animation & Special Effects Tax Credit
Please note: Effective April 1, 2017 there is a new administration fee structure for tax credits which will offset the costs of administering the program. The OCASE tax credit administration fee will be calculated as 0.15% of eligible expenditures for the application. There is a minimum fee of $500 per application and maximum fee of $10,000 per application.
As previously announced, effective January 1, 2017 there is an additional filing fee of $100 applied to applications for Certificates of Eligibility received more than 24 months after the year-end of the claim. As well, there is a fee of $100 for each Amended Certificate requested.
What Is It?
The OCASE Tax Credit is a refundable tax credit based on eligible Ontario labour expenditures incurred by a qualifying corporation during a taxation year with respect to eligible computer animation and special effects activities. The OCASE Tax Credit may be claimed on eligible expenditures in addition to the Ontario Film and Television Tax Credit (OFTTC) or the Ontario Production Services Tax Credit (OPSTC).
How Much Is The Tax Credit?
The OCASE Tax Credit is calculated as 18% of the eligible Ontario labour expenditures incurred by a qualifying corporation with respect to eligible computer animation and special effects activities. There is no cap on eligible Ontario labour expenditures.
Who Is Eligible?
A qualifying corporation is a Canadian corporation that is Canadian or foreign-owned, has a permanent establishment in Ontario and files an Ontario corporate tax return. Qualifying corporations may include animation or visual effects houses, post-production houses and film and television production companies which perform eligible computer animation and special effects activities.
What Types of Production Are Eligible?
Eligible productions are productions created for commercial exploitation, which are not in an excluded genre, or for which financial support would be contrary to public policy. Where all eligible expenditures on the production are incurred after April 23, 2015, the production must also have received an OFTTC or OPSTC certificate to be eligible for the OCASE tax credit.
Eligible computer animation and special effects activities are those carried out in Ontario directly in support of the production of eligible animation or visual effects for use in eligible productions.
Eligible animation or visual effects means animation or visual effects created using digital technologies but does not include:
- audio effects
- in-camera effects
- credit rolls
- animation or visual effects all or substantially all of which are created by editing activities, or
- animation or visual effects for use in promotional material for the eligible production
Eligible computer animation and special effects activities include designing, modelling, rendering, lighting, painting, animating and compositing but do not include activities that are scientific research and experimental development.
What Expenditures Are Eligible?
Qualifying labour expenditures are
a) salaries and wages (i.e., amounts paid to employees) directly attributable to eligible activities carried on by the qualifying corporation, that are paid to Ontario residents (individuals resident in Ontario at the end of the previous calendar year) who report to a permanent establishment of the qualifying corporation in Ontario at which the eligible activities are carried out;
b) freelancers who are individuals, partnerships, or arm’s-length incorporated individuals (such as corporations).
The labour expenditures must be incurred in the taxation year for which they are being claimed and paid in the taxation year or within 60 days after the end of the taxation year.
How Is The Credit Administered?
The OCASE Tax Credit is jointly administered by the Ontario Media Development Corporation (OMDC) – an agency of the Ontario Ministry of Tourism, Culture and Sport - and the Canada Revenue Agency. Application is made to OMDC for a Certificate of Eligibility for the taxation year, which the qualifying corporation files with the Canada Revenue Agency together with its tax return in order to claim the OCASE Tax Credit. The amount of the credit, net of any Ontario taxes owing will be paid to the qualifying corporation. If the qualifying corporation does not owe any taxes the full amount will be paid out.
*PLEASE NOTE: CANADA REVENUE AGENCY (CRA) ADMINISTERS BOTH FEDERAL AND ONTARIO CORPORATE TAXES. THE CRA IS THE FIRST POINT OF CONTACT FOR ALL CORPORATE TAX ENQUIRIES (1 800 959-5525).
Note: This sheet is a general guide and may not be relied upon in order to determine eligibility or the amount of an anticipated credit. Please consult the OCASE legislation and regulation for further details.