When the government of Ontario announced that it would be reviewing the Interactive Digital Media (IDM) Tax Credit last November, digital media trade association Interactive Ontario went straight to work.

“We immediately started to advocate, do town halls with our constituency and book meetings with the [Ministry of Tourism, Culture and Sport, Ministry of Finance and Treasury Board],” Christa Dickenson, executive director, Interactive Ontario, told Playback Daily.

In 14 meetings over the course of five months, the non-profit, along with members representing a cross-section of digital media, met with the provincial government to discuss what changes to the Ontario Interactive Digital Media Tax Credit (OIDMTC) could look like, and might mean.

In addition to providing sector data, Interactive Ontario also provided case studies of its member companies outlining predicted future growth, with multiple reports forecasting companies doubling in size with the next two years.

Citing unsustainable growth in applications to the OIDMTC, the province was looking to narrow the credit’s eligibility criteria. But some Interactive Ontario members were concerned that too narrow a definition would inadvertently harm the industry by excluding sectors that may grow in importance in the future. There was no question, however, it needed revision.

“The Ontario IDM Tax Credit was created over a decade ago when IDM was only a website. If you look at it today, IDM is so much more. It’s more than just website; it’s mobile apps, it’s video games, it’s web series, it’s augmented reality, e-learning and virtual reality,” Dickenson said.

Joining the efforts was Simon Foster, SVP digital publishing and business development at Blue Ant Media.

“My concern was finding a way to help them achieve their budget needs but without constricting the tax credit with language that would not allow for the industry to be agile and evolve the way it traditionally has and therefore potentially not deliver that return to the province on the investment they made,” Foster said.

While Foster said that there was no “universal win” because of the cuts to eligibility, the preservation of entertainment as a focus area showed him that the government recognizes the potential of companies like Blue Ant to create jobs and provide revenue for the province.

In the end, changes to the tax credit saw its eligibility restricted to products in the entertainment and children’s products fields, with projects such as real estate databases and search engines specifically excluded. The government also renewed and expanded its commitment to the Interactive Digital Media Fund, investing $6 million this year (2015-2016) and $10 million after that.

Daniel Dales, CEO at Toronto-based prodco Digital Howard, was also involved in the pre-budget meetings. Speaking with Playback, he said he was pleased with the outcome and was especially happy to see the labour-based criteria criteria introduced, instead of the previous rule that 90% of a product be developed by an Ontario company.

“[The changes] will greatly help speed up the processing of our tax credit applications with the OMDC because it’s a lot less of a subjective measure and overall we’re very pleased,” he said.

Dales did say, however, that he would have liked to see a relaxation of the eligibility rules surrounding collaboration with another company, which is currently not allowed under the legislative requirements for the tax credit. However, he said, “we can’t get everything you want and in the absence of getting that, we’re very pleased with the result.”

According to Interactive Ontario, the interactive digital media industry in Ontario currently employs over 17, 000 people and generates over $1 billion.

– Image courtesy of Shutterstock