The Canadian province of Ontario just announced new tax credits and incentives that will make developing game in the region even more attractive. Details include:

Increasing the digital media tax credit for large game developers from 25% to 40% for original IP development

The tax credit was also raised to 35% for studios doing work-for-hire projects for international clients.

Ontario will also allow game developers that spend more than$1 million per year on labor costs in the province to benefit from a new 35% Ontario interactive digital media tax credit.

All of this makes development in Canada more attractive and will likely mean less projects going to Australia and Europe unless similar incentives can be added in those regions.

We found information on the Ontario Interactive Digital Media Tax Credit (OIDMTC) for game developers. As part of a push to be competitive both globally and with the province of Quebec, Ontario is offering:

  • The OIDMTC, calculated as 40% of eligible Ontario labor expenditures
  • A work-for-hire tax credit rate of 35% on qualifying expenditures incurred after March 26, 2009
  • There is no limit on the amount of eligible Ontario labour expenditures which may qualify and there are no per project or annual corporate limits on the amount of the OIDMTC which may be claimed.
  • Eligible marketing and distribution expenses are capped at $100,000 per eligible product

It looks like Ontario is making the right moves to give its developers the ability to grow both their original IP and work-for-hire capabilities and I’m sure we’ll see more large companies moving into the province.

The Provincial government of Ontario will invest $263 million over the next decade according to the National Post. This is in addition to Ubisoft’s commitment of $500 million over the same time period. The studio is expected to create an additional 800 jobs in the province.

One of the issues that studios are running into in Canada is the high cost of new hires. While this is offset by generous government subsidies, the technical programs at the universities are almost fully subscribed and the graduating class is almost entirely placced prior to graduation.

Bringing in developers from the rest of the world has raised the cost of new hires in recent years, however the government support continues to make certain provinces (Quebec and now Ontario) some of the most desirable places to develop AAA-Quality games in the Western World. This new commitment by another Canadian province is sure to set off additional debate in Canada from British Columbia’s game development communit as it is difficult to compete even on an intra-provincial level without comparable government support.