Intellectual Property Development Fund

What Is It?

The IP Development Fund assists Ontario corporations by providing a refund of 30% of prior costs incurred in direct support of eligible early stage development activities to bring screen-based content properties closer to production or market ready stage. Qualifying Ontario corporations may apply for expenditures incurred over the course of a taxation year that relate to a slate of early stage development activities undertaken by the corporation. Eligible expenditures are those incurred after March 31, 2009 up to and including March 31, 2010.

Is There a Cap?

The maximum IP Development Fund refund is $150,000 per corporate group for the span of the pilot program plus a possible additional 10% of eligible early stage development activities up to $20,000 per corporate group (subject to available funds).

Who Can Apply?

To be eligible for the IP Development Fund all qualifying corporations must:

• be able to demonstrate that more than 50% of their revenues are derived from the creation, development, and production of screen-based content products;
• be in the business of creating screen-based content products in Ontario for at least 1 year prior to the year in which an application is made. (Applications from emerging companies may also be eligible if the controlling individuals have at least 2 years professional experience developing and producing screen-based content products that have been released to the market for commercial exploitation);
• be a Canadian-owned and controlled corporation;
• maintain a permanent establishment in Ontario;
• be incorporated in Ontario or in Canada;
• be a private sector, for profit corporation – not exempt from paying tax in Ontario;
• be able to demonstrate the corporation has engaged in early-stage development activities with a minimum expenditure threshold of $30,000 incurred during the taxation year being claimed in the application to the IP Development Fund.

What Activities Are Eligible?

Early stage activities include any activity necessary to bring film and television products closer to the pre-production and/or production stage (prior to principal photography) and interactive digital media products closer to the completion of a functioning prototype or market ready stage. 

The following is not an exhaustive list but gives examples of the types of activities considered eligible:

• optioning or acquisition of story rights
• concept, story and character creation (including initial design work for characters, settings and set-ups, and preliminary layouts and storyboards for a demo or pilot and packaging purposes).
• creation of design, game design documents and technical specification documentation
• Research for script and story purposes, treatments and outlines
• script writing (from outline to polish) including story editing and script work-shopping
• creation of prototypes / electronic proof-of-concept / demos / animatics / pilots / coding / testing
• creation of proposals for submission to financiers (budgets, schedules, script breakdown, financing plans, etc.)
• creation of business and marketing plans to secure further development or production financing
• creation of Series Bibles, pitch packages and marketing materials
• market research including: focus groups, audience research, prototype testing and assessment.
• Packaging including research and travel related directly to location scouting, producing a demo or pilot, preliminary casting, and attending at markets for the purpose of pitching to prospective financiers and co-production partners.

What Expenditures Are Eligible?

Eligible Expenditures include an applicant’s eligible labour expenditures, eligible non-labour costs, and eligible corporate overhead expenditures incurred over the course of the taxation year for which the applicant has applied to the IP Development Fund.

Only expenditures incurred after March 31, 2009 up to and including March 31, 2010, and paid no later than 60 days after the applicant’s corporate fiscal year end will be considered eligible. 

How to Apply?

Applicants may apply up to three times during the span of the pilot program. Applicants must submit their application to OMDC at the end of a taxation year in which the applicant has incurred expenditures for eligible early stage development activities (Year End Application). As of May 1, 2010, applicants with fiscal year ends that fall prior to January 2011 may submit an early Year End Application prior to their fiscal year end. If the applicant chooses, they may also file an Interim Application prior to their taxation year end. To be eligible to file an Interim Application a qualifying corporation must still meet all of the eligibility requirements set out in the guidelines, including the requirement to have incurred a minimum $30,000 in early stage development costs.

Read more about the Intellectual Property Development Fund on the OMDC website.