Who We Help · Game Studios · Payroll
Game studio payroll: every pay decision is also a tax-credit decision
In an Ontario game studio, payroll is the tax-credit base, not just a cost line. A dollar of T4 salary works harder than the same dollar on a contractor invoice: it fully feeds an SR&ED claim and counts as OIDMTC qualifying labour, while arm's-length contractor fees enter SR&ED at 80 percent and OIDMTC only under conditions. Classify people honestly — then document pay so the credits survive review.
By the AnalytIQ Accounting team · Last reviewed: September 12, 2026
At a glance · game studios
Not sure which applies to you? Get a free proposal or book 15 minutes.
Salaries are the credit base — hire with that in mind
Your two biggest incentives are computed on payroll. SR&ED claims are built on the salaries of employees doing eligible experimental development, and most studios claim under the proxy method, which adds a prescribed 55 percent of that salary base as notional overhead — overhead that contractor invoices never generate. OIDMTC pays 35 to 40 percent of qualifying Ontario labour on eligible interactive products. Run the same dollar through both systems and the pattern is consistent: T4 wages are the strongest currency the studio has.
That is not an argument for putting everyone on payroll regardless of facts — misclassification cuts both ways. It is an argument for making hiring decisions with the credit math on the table, instead of discovering it at the first claim.
Contractors vs employees: the haircut and the 80/25 rule
For SR&ED, only 80 percent of what you pay an arm's-length contractor for eligible work counts as a qualified expenditure, and work performed outside Canada generally falls out of the claim entirely, however eligible it would have been in Kitchener. OIDMTC adds a structural test: on an eligible product, at least 25 percent of total labour must be wages of your own employees, and at least 80 percent must be paid to individuals or their personal corporations for work personally performed in Ontario. A studio built entirely on subcontracted teams can ship a brilliant game and fail the credit on structure alone.
| Pay arrangement | SR&ED treatment | OIDMTC treatment |
|---|---|---|
| Ontario employee on T4 | Full eligible salary, plus 55% proxy overhead | Qualifying wages |
| Employee in another province | Eligible | Not Ontario labour — no credit |
| Arm's-length Canadian contractor | 80% of the fee; no proxy | Only work personally performed in Ontario |
| Contractor working outside Canada | Generally excluded | Excluded |
| Founder holding 10%+ of shares | Capped; profit-based bonuses excluded | Wages qualify |
The classification itself follows CRA's usual control-and-tools factors, and a developer working full-time on your build, your hardware, and your sprint schedule is an employee whatever the invoice says. Retroactive reclassification collects both shares of CPP and EI with penalties — expensive anywhere, and doubly so in a studio, because the fix-up years are exactly the ones under credit review.
Founders are specified employees — set the bonus before you earn it
Once you own 10 percent or more of the studio, SR&ED treats you as a specified employee: bonuses and profit-based remuneration are excluded from your eligible salary, and what can enter the claim is capped by a formula tied to the year's maximum pensionable earnings. The classic owner-manager move — thin salary all year, big discretionary bonus at year-end — quietly shrinks the claim. Founder pay in a claiming studio should be set as deliberate salary before the year runs, alongside the usual salary-dividend arithmetic.
Time records decide what survives review
Both programs are documentation regimes wearing incentive costumes. An SR&ED reviewer wants contemporaneous evidence of who worked on which technological uncertainty and for how long; Ontario Creates wants labour tied to a specific eligible product. The fix is the same and it is cheap: we tag payroll to projects as it is posted — engine work, content, live-ops — so the T661 salary base and the OIDMTC labour schedule are reports we pull, not year-old reconstructions. Live-ops matters more than studios expect: post-launch maintenance sits differently in both programs, and untagged payroll makes every hour arguable.
Remote hires and the border
A remote hire changes the math twice. Inside Canada, the province of employment drives the withholding tables, and a developer in Vancouver or Montreal is real payroll but zero OIDMTC labour — that belongs in the cost model before the offer letter goes out. Outside Canada, a US contractor invoices you and receives no Canadian slip; the file is the contract, the invoices, and proof of where the work was done, and their hours drop out of both credit bases. Either way, settle the classification and the province before the first payday: unwinding a year of wrong withholding tables is tedious, and unwinding a credit claim built on top of it is worse. The platform side of the border — Steam and console payouts, W-8BEN-E, treaty royalty rates — lives in our game studio cross-border guide.
Source: CRA — Scientific Research and Experimental Development (SR&ED) tax incentive program.
What we take off your plate
Payroll for game studios, handled.
- T4 salary versus contractor fee weighed for what each earns in credits
- Founder bonuses structured so the specified-employee cap holds
- Wagepoint or QuickBooks Payroll set up and run on schedule
- CRA source deductions remitted by the 15th
- T4s, T4As and ROEs filed without a February scramble
- WSIB and Ontario EHT tracked alongside payroll
Mistakes we fix
Three things that go wrong for game studios.
- Letting a platform withhold 30% on royalty payouts with no W-8BEN-E on file to stop it
- Claiming the same payroll dollar under both OIDMTC and SR&ED instead of allocating it to one
- Taking US investment terms that quietly cost the studio its CCPC status and refundable SR&ED
Recognise one? Book a call and we will tell you what it is costing you.
Services for game studios
Six services, one team that knows how game studios run.
Start with one. Add the rest when it makes sense; the books, payroll and tax already talk to each other.
Free proposal
A fixed fee for your payroll, in writing.
- Tell us about your business. The form takes about a minute.
- A short discovery call. Fifteen minutes to confirm what you need.
- A fixed fee in writing. We reply within one business day. No hourly surprises.
- Canadian and US filings under one roof
- Cloud-first: QuickBooks Online, Dext, Wagepoint
- Brampton, Ontario, with clients across Canada and the US
Related answers
Browse all 200 answers.
Common questions.
Should we hire devs as employees or contractors for tax credits?
Classify on the facts first — but know the math: T4 salaries feed SR&ED fully and generate the 55% proxy overhead, while arm's-length contractor fees count at 80% with no proxy, and OIDMTC requires at least a quarter of a product's labour to be your own employees' wages.
Does a remote developer in another province hurt our claims?
Not for SR&ED — eligible work anywhere in Canada counts. For OIDMTC it does: qualifying labour must be performed in Ontario, so a Vancouver hire is payroll with no Ontario credit attached. Price that before the offer.
Why does my founder bonus reduce the SR&ED claim?
Shareholders at 10% or more are specified employees: profit-based bonuses are excluded from eligible salary and the claimable amount is capped by formula. Deliberate salary set during the year keeps founder pay inside the claim.
Related reading
Payroll that feeds the credit claims.
Book a consultation and get a plain answer on exactly what applies to you.