Rob DePetris, Senior Tax Manager, Deloitte (Southern Ontario)Rob DePetris has developed a keen understanding of the interactive media sector through his past work as Vice-President of Silicon Knights and his involvement in creating an action plan for the Ontario video game industry. Rob is currently a senior tax manager in Deloitte's Southwestern Ontario practice has worked with the Interactive Ontario, the Ontario Media Development Corporation, the Ontario Ministry of Economic Development and Trade and the Ontario Ministry of Research and Innovation to create an action plan to create a vibrant video game industry in Ontario. He has also spear-headed the creation of nGen, the Niagara Interactive Media Generator. This organization has started the incubation of small interactive media companies in Niagara. Rob has an Honours Bachelor of Business Administration in Co-op Accounting from Brock University. He is also a graduate of University of Toronto Law School and was called to the Bar in 1994. He has previously worked for PricewaterhouseCoopers LLP in Toronto and articled at Lancaster, Mix and Welch. He is the chair of the Games Committee and Treasurer of Interactive Ontario. He is the chair of the Board of Directors of nGen (Interactive Niagara). He is chair of the Cities of St. Catharines and Thorold Prosperity Council. He is a member of the board of directors of the United Way of St. Catharines & District and is First Vice-President of the St. Catharines-Thorold Chamber of Commerce.
In Canada, we have the some of the most talented and creative game developers in the world. Every company has its own value proposition. Each game developer has his own special skill which helps to make them unique and able to sell their products to the world.
As GDC comes closer, I am sure many of you are scheduling meetings with potential publishers and distributors to pitch, re-pitch or demonstrate the creative ideas that you and your company have developed. Each game developer has a sense of what they can produce and they know the strengths, uniqueness and weaknesses of their ideas.
My background is finance and taxation. I will leave it to the creative voices in each company to develop the pitches of their game ideas for the meetings at GDC. I thought it would be interesting to talk about the advantages of working with Canadian game development companies. I propose to list some of the financial reasons why developing a game in Canada makes sense. I hope that this may provide some further ammunition to Canadian game developers to convince a publisher to choose their project. If this is all old hat to those reading then perhaps others can add their own insights whether it is information about tax credits, or other financial incentives that makes Canada one of the most economical places to make quality games. Today, I thought I would start by outlining the current advantages provided by our dollar and the federal government.
Our Dollar
In the past few years, our dollar has been a disadvantage as it continued to rise above par with the US dollar and then hovered around par for what seemed to be an eternity. But lately, our dollar has fallen back to a more comfortable US $0.80. Given that Canadian game developers expenses (labour and other costs) are in Canadian dollars, over the last few months Canadian Game Developers have become significantly cheaper to US publishers and to many other publishers dealing in other foreign currencies. Will this last? Who knows? But today, we are significantly cheaper and if a game developer has an opportunity to hedge or to convince their publisher to hedge then the dollar advantage today can be extended over the term of a project.
Federal Government
Canadian New Media Fund (“CNMF”)
The Canadian government just released the federal budget last Tuesday (January 27, 2009), and somewhere, buried deep inside, the government committed to provide $28.6 million of funding for the Canadian New Media Fund over the next two years and continually provide funding of $14.3 million for each year thereafter. http://www.budget.gc.ca/2009/plan/bpc3e-eng.asp
Telefilm, the federal agency who administers this fund states that “The Product Assistance component of the Fund provides conditionally repayable advances for the development, production and marketing of Canadian interactive digital cultural content products in both official languages that are intended for the general public.” http://www.telefilm.gc.ca/03/311.asp?lang=en&fond_id=3
The guidelines for the CNMF are not simple and the funding is granted through a competition so not all worthy products receive funding. As well, matching funds must be found and intellectual property rights retained. All that said, the fund provides potential funding to Canadian Controlled corporations of up to $550,000 for each of the development, production and marketing segments of the interactive product.
What would be even better would be for the federal government to increase this fund to a much greater level - similar to the $100 million Canadian Television Fund - and also provide a tax credit similar to the Federal Film Tax Credit. Perhaps the industry can push for this in next year’s budget.
Scientific Research and Experimental Development (“SR&ED”)
Canada Revenue Agency sets out that “The SR&ED program is a federal tax incentive program to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada that will lead to new, improved, or technologically advanced products or processes. The SR&ED program is the largest single source of federal government support for industrial research and development.” A Canadian-controlled private corporation that qualifies can receive a refundable tax credit of up to 35% on eligible expenditures of up to $3 million dollars. This is significant funding on an annual basis. Much of the programming work done by game developers may qualify for this tax credit. That said, I would strongly recommend that game developers not try and prepare this claim themselves. They should hire experienced accountants to prepare the claim to ensure they qualify and they are getting the maximum cash back from the program.
In addition to the benefits received, many of the provinces have additional tax credits and other advantages for SR&ED in the particular province.
National Research Council-Industrial Research Assistance Program (NRC-IRAP)
In addition to SR&ED, the federal government provides non-repayable assistance to small and medium Canadian corporations who are developing commercial uses of technology. http://irap-pari.nrc-cnrc.gc.ca/financialassistance_e.html#rd
There are local advisors in each region in Canada who can be contacted to discuss qualifications and opportunities.
Next Blog - The Provinces
I must admit that I live in Ontario and am very familiar with the various advantages here. That said, I will try to outline in my next post some of the advantages in each province. If I miss some, please chime in and let us know.
As GDC comes closer, I am sure many of you are scheduling meetings with potential publishers and distributors to pitch, re-pitch or demonstrate the creative ideas that you and your company have developed. Each game developer has a sense of what they can produce and they know the strengths, uniqueness and weaknesses of their ideas.
My background is finance and taxation. I will leave it to the creative voices in each company to develop the pitches of their game ideas for the meetings at GDC. I thought it would be interesting to talk about the advantages of working with Canadian game development companies. I propose to list some of the financial reasons why developing a game in Canada makes sense. I hope that this may provide some further ammunition to Canadian game developers to convince a publisher to choose their project. If this is all old hat to those reading then perhaps others can add their own insights whether it is information about tax credits, or other financial incentives that makes Canada one of the most economical places to make quality games. Today, I thought I would start by outlining the current advantages provided by our dollar and the federal government.
Our Dollar
In the past few years, our dollar has been a disadvantage as it continued to rise above par with the US dollar and then hovered around par for what seemed to be an eternity. But lately, our dollar has fallen back to a more comfortable US $0.80. Given that Canadian game developers expenses (labour and other costs) are in Canadian dollars, over the last few months Canadian Game Developers have become significantly cheaper to US publishers and to many other publishers dealing in other foreign currencies. Will this last? Who knows? But today, we are significantly cheaper and if a game developer has an opportunity to hedge or to convince their publisher to hedge then the dollar advantage today can be extended over the term of a project.
Federal Government
Canadian New Media Fund (“CNMF”)
The Canadian government just released the federal budget last Tuesday (January 27, 2009), and somewhere, buried deep inside, the government committed to provide $28.6 million of funding for the Canadian New Media Fund over the next two years and continually provide funding of $14.3 million for each year thereafter. http://www.budget.gc.ca/2009/plan/bpc3e-eng.asp
Telefilm, the federal agency who administers this fund states that “The Product Assistance component of the Fund provides conditionally repayable advances for the development, production and marketing of Canadian interactive digital cultural content products in both official languages that are intended for the general public.” http://www.telefilm.gc.ca/03/311.asp?lang=en&fond_id=3
The guidelines for the CNMF are not simple and the funding is granted through a competition so not all worthy products receive funding. As well, matching funds must be found and intellectual property rights retained. All that said, the fund provides potential funding to Canadian Controlled corporations of up to $550,000 for each of the development, production and marketing segments of the interactive product.
What would be even better would be for the federal government to increase this fund to a much greater level - similar to the $100 million Canadian Television Fund - and also provide a tax credit similar to the Federal Film Tax Credit. Perhaps the industry can push for this in next year’s budget.
Scientific Research and Experimental Development (“SR&ED”)
Canada Revenue Agency sets out that “The SR&ED program is a federal tax incentive program to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada that will lead to new, improved, or technologically advanced products or processes. The SR&ED program is the largest single source of federal government support for industrial research and development.” A Canadian-controlled private corporation that qualifies can receive a refundable tax credit of up to 35% on eligible expenditures of up to $3 million dollars. This is significant funding on an annual basis. Much of the programming work done by game developers may qualify for this tax credit. That said, I would strongly recommend that game developers not try and prepare this claim themselves. They should hire experienced accountants to prepare the claim to ensure they qualify and they are getting the maximum cash back from the program.
In addition to the benefits received, many of the provinces have additional tax credits and other advantages for SR&ED in the particular province.
National Research Council-Industrial Research Assistance Program (NRC-IRAP)
In addition to SR&ED, the federal government provides non-repayable assistance to small and medium Canadian corporations who are developing commercial uses of technology. http://irap-pari.nrc-cnrc.gc.ca/financialassistance_e.html#rd
There are local advisors in each region in Canada who can be contacted to discuss qualifications and opportunities.
Next Blog - The Provinces
I must admit that I live in Ontario and am very familiar with the various advantages here. That said, I will try to outline in my next post some of the advantages in each province. If I miss some, please chime in and let us know.
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I like this post and SR&ED program which helps to business in Canada
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