906. (1) This section applies with respect to the Ontario interactive digital media tax credit established by section 43.11 of the Act of a qualifying corporation for a taxation year.  O. Reg. 194/00, s. 2. (2) For the purposes of this section and section 43.11 of the Act, “interactive digital media product” means a combination of one or more application files and one or more data files, all in a digital format, that are integrated and are intended to be operated together and that have the following characteristics when they are being operated: 1. Their primary purpose is to educate, inform or entertain the user. 2. They achieve their primary purpose by presenting information in at least two of the following forms: i. text, ii. sound, iii. images. 3. They are intended to be used by individuals. 4. By interacting with them, the user can choose what information is to be presented and the form and sequence in which it is to be presented.  O. Reg. 194/00, s. 2. (2.1) For the purposes of this section, “qualifying predecessor corporation” has the meaning assigned by subsection 43.11 (15) of the Act.  O. Reg. 232/03, s. 3 (1). (3) A combination of application files and data files that is developed primarily for use as system software does not constitute an interactive digital media product.  O. Reg. 194/00, s. 2. (4) The following are the conditions referred to in clause (a) of the definition of “eligible product” in subsection 43.11 (15) of the Act that must be satisfied for a product other than a specified product to be an eligible product for the purposes of section 43.11 of the Act: 1. The product is an interactive digital media product. 2. If the product was completed before May 12, 2005, i. all or substantially all of the product was developed in Ontario by the qualifying corporation or by the qualifying corporation and a qualifying predecessor corporation, and ii. the product was developed for commercial exploitation by the qualifying corporation or by the qualifying corporation and a qualifying predecessor corporation. 3. If the product was completed after May 11, 2005, i. all or substantially all of the product was developed in Ontario by the qualifying corporation or by the qualifying corporation and a qualifying predecessor corporation, and ii. the product was developed for sale or licensing by the qualifying corporation to one or more persons dealing at arm’s length with the qualifying corporation who have not previously entered into an arrangement with the qualifying corporation or a qualifying predecessor corporation for the development of the product. 4. The product is not used primarily for interpersonal communication. 5. The product is not used primarily to present or promote the qualifying corporation or a qualifying predecessor corporation. 6. The product is not used primarily to present, promote or sell the products or services of the qualifying corporation or of a qualifying predecessor corporation.  O. Reg. 194/00, s. 2; O. Reg. 232/03, s. 3 (2); O. Reg. 57/06, s. 1; O. Reg. 52/07, s. 1 (1, 2). (4.1) The following are the conditions referred to in paragraph 1 of subsection 43.11 (15.1) of the Act that must be satisfied for a product to be a specified product for the purposes of section 43.11 of the Act: 1. The product is an interactive digital media product. 2. The product is not used primarily for interpersonal communication. 3. Development of the product was started by the qualifying corporation or a qualifying predecessor corporation and completed by the qualifying corporation in Ontario. 4. The product is not used primarily to present or promote the qualifying corporation, a qualifying predecessor corporation or the purchaser referred to in paragraphs 2 and 3 of subsection 43.11 (15.1) of the Act. 5. The product is not used primarily to present, promote or sell the products or services of the qualifying corporation, a qualifying predecessor corporation or the purchaser referred to in paragraphs 2 and 3 of subsection 43.11 (15.1) of the Act.  O. Reg. 52/07, s. 1 (3). (5) For the purposes of the definition of “Ontario labour expenditure” in subsection 43.11 (15) of the Act, the amount of the Ontario labour expenditure of the qualifying corporation or of the qualifying predecessor corporation, as the case may be, incurred in a taxation year with respect to an eligible product is the sum of, (a) the qualifying wage amount described in subsection (6) of the qualifying corporation or qualifying predecessor corporation for the taxation year with respect to the eligible product; and (b) if the eligible product is not a specified product, 50 per cent of the qualifying remuneration amount as described in subsection (7) of the qualifying corporation or qualifying predecessor corporation for the taxation year with respect to the eligible product.  O. Reg. 232/03, s. 3 (3); O. Reg. 52/07, s. 1 (4). (6) Subject to subsection (8), the qualifying wage amount of the qualifying corporation or qualifying predecessor corporation for a taxation year with respect to the eligible product is the amount incurred during the taxation year and after June 30, 1998 on account of salaries or wages of its employees.  O. Reg. 232/03, s. 3 (4). (7) Subject to subsection (8), the qualifying remuneration amount of the qualifying corporation or qualifying predecessor corporation for a taxation year with respect to the eligible product is the amount incurred during the taxation year and after May 4, 1999 by the qualifying corporation or qualifying predecessor corporation on account of remuneration, which is paid to any of the following persons or entities in the circumstances that are described: 1. An individual who is not an employee of the qualifying corporation or qualifying predecessor corporation, as the case may be, and who deals at arm’s length with that corporation, if the expenditure is attributable to services personally rendered by the individual. 2. An individual described in paragraph 1 for services rendered by the individual’s employees, if the expenditure does not exceed the salaries or wages of those employees for personally rendering those services. 3. A taxable Canadian corporation for services rendered person-ally by an individual, i. if all of the issued and outstanding shares of the capital stock of the taxable Canadian corporation (other than directors’ qualifying shares) are owned by the individual, ii. if the individual deals at arm’s length with the qualifying corporation or qualifying predecessor corporation, as the case may be, and iii. if the activities of the taxable Canadian corporation consist principally of the provision of the individual’s services. 4. A taxable Canadian corporation that deals at arm’s length with the qualifying corporation or qualifying predecessor corporation for services rendered by employees of the taxable Canadian corporation, if the expenditure does not exceed the salaries or wages of those employees for personally rendering those services. 5. An eligible partnership described in subsection (9), i. for services rendered personally by a member of the eligible partnership, or ii. for services rendered personally by employees of the eligible partnership, if the expenditure does not exceed the salaries or wages of those employees for personally rendering those services.  O. Reg. 194/00, s. 2; O. Reg. 232/03, s. 3 (5-8). (8) An expenditure is not to be included in the qualifying wage amount or qualifying remuneration amount of the qualifying corporation or qualifying predecessor corporation, as the case may be, for a taxation year with respect to the eligible product unless it meets all of the following conditions: 1. The expenditure is directly attributable to the development of the eligible product. 2. The expenditure is included in the cost or, in the case of depreciable property, the capital cost of the eligible product. 3. The expenditure is paid no later than 60 days after the end of the taxation year. 4. The expenditure was incurred for services personally rendered by an individual who was subject to tax under section 2 of the Income Tax Act (by virtue of being an individual described in clause 2 (a) of that Act) for the calendar year before the calendar year in which he or she rendered the services. 5. In the case of the qualifying wage amount, the expenditure is paid to an employee of the qualifying corporation or qualifying predecessor corporation, as the case may be, who reported to a permanent establishment of that corporation in Ontario at which the eligible product was being developed. 6. In the case of the qualifying remuneration amount, the expenditure is paid for services rendered at a permanent establishment in Ontario of the qualifying corporation, of a qualifying predecessor corporation or of a person or entity described in one of the paragraphs of subsection (7). 7. The expenditure is not an amount, i. for which the qualifying corporation or qualifying predecessor corporation makes a claim under section 43.5, 43.8 or 43.10 of the Act, or ii. incurred by the qualifying corporation or a qualifying predecessor corporation in carrying out activities that constitute scientific research and experimental development for the purposes of paragraph 37 (1) (a) of the Income Tax Act (Canada) or subparagraph 37 (1) (b) (i) of that Act.  O. Reg. 194/00, s. 2; O. Reg. 232/03, s. 3 (9, 10). (8.1) If an expenditure is not included in the qualifying wage amount or qualifying remuneration amount of the qualifying corporation or qualifying predecessor corporation, as the case may be, for a taxation year because of paragraph 3 of subsection (8), the expenditure may be included in the qualifying wage amount or qualifying remuneration amount for a subsequent taxation year if the expenditure is paid no later than 60 days after the end of that subsequent taxation year.  O. Reg. 232/03, s. 3 (11). (9) For the purposes of paragraph 5 of subsection (7), an eligible partnership is a partnership carrying on business in Canada whose members are all individuals.  However, a partnership is not an eligible partnership in relation to a qualifying corporation or in relation to a qualifying predecessor corporation, as the case may be, if more than 50 per cent of the income of the partnership is allocable (or would be allocable if it had income) to one or more members, (a) who directly or indirectly control the qualifying corporation or qualifying predecessor corporation; or (b) who are related to one or more persons who directly or indirectly control the qualifying corporation or qualifying predecessor corporation.  O. Reg. 232/03, s. 3 (11). (10) For the purposes of the definition of “marketing and distribution expenditure” in subsection 43.11 (15) of the Act and subject to subsection (11), the marketing and distribution expenditure incurred by a qualifying corporation or qualifying predecessor corporation in respect of an eligible product is the amount of any expenditure incurred by the qualifying corporation or qualifying predecessor corporation in the taxation year that meets all of the following conditions: 1. The expenditure is directly attributable to advertising or promoting the eligible product or distributing the eligible product to customers or potential customers. 2. The expenditure is incurred after May 2, 2000. 3. The expenditure is paid no later than 60 days after the end of the taxation year. 4. The expenditure is not an amount, i. for which the qualifying corporation or qualifying predecessor corporation, as the case may be, makes a claim under section 43.5, 43.8 or 43.10 of the Act, or ii. incurred by the qualifying corporation or qualifying predecessor corporation in carrying out activities that constitute scientific research and experimental development for the purposes of paragraph 37 (1) (a) of the Income Tax Act (Canada) or subparagraph 37 (1) (b) (i) of that Act. 5. If the qualifying corporation sells the eligible product directly to a consumer of the eligible product, the expenditure is not directly related to processing an order by a consumer or shipping an eligible product to a consumer. 6. If the expenditure relates to an amount paid or payable for meals or entertainment, only 50 per cent of the amount is included in the marketing and distribution expenditure incurred by the qualifying corporation or qualifying predecessor corporation, as the case may be, in a taxation year.  O. Reg. 160/01, s. 3 (2); O. Reg. 232/03, s. 3 (12, 13). (11) If an expenditure is not included in the marketing and distribution expenditure incurred by the qualifying corporation or qualifying predecessor corporation, as the case may be, in a taxation year because of paragraph 3 of subsection (10), the expenditure may be included in the marketing and distribution expenditure incurred by the corporation in a subsequent taxation year if the expenditure is paid no later than 60 days after the end of that subsequent taxation year.  O. Reg. 160/01, s. 3 (2); O. Reg. 232/03, s. 3 (14). PART X   ROLLOVERS AND ELECTIONS