The Government of Ontario has proposed changes to its digital animation and visual effects tax credit as part of the province’s 2024 budget.

The Ontario Computer Animation and Special Effects Tax Credit (OCASE) covers 18% of eligible labour expenses related to digital animation and visual effects. To be eligible for the credit, a production must be certified for the Ontario Film and Television Tax Credit (OFTTC) or the Ontario Production Services Tax Credit.

The government has proposed a modification to the eligibility requirements to untether OCASE from the other tax credits. Instead, to be eligible, a production would need to have a minimum of $25,000 in Ontario labour expenditures for related activities. Activities such as instructional videos, music videos and gaming videos would not be eligible, according to the budget.

The change is expected to simplify the process and help companies receive the tax credit faster, and was proposed based on industry consultations, read the budget. Once the rule changes are in place, they will be in effect for eligible productions that begin computer animation and special effects work on or after March 26.

In other tax credit-related budget measures, the government said it plans to review the OFTTC’s regional bonus “to ensure it effectively supports film and television production across the province.”

The current regional bonus applies to Ontario productions with at least 85% of location days taking place outside of the Greater Toronto Area (including animated projects), and offers a 10% bonus on eligible labour expenditures.

The 2024 budget, titled Building a Better Ontario, forecasts a $3 billion deficit in 2023-24, which is projected to hit $9.8 billion in 2024-25 and $4.6 billion in 2025-26, before reaching a predicted surplus of $500 million in 2026-27.

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