Nova Scotia digital animation tax credit

• Completed Part A application form, signed and dated.
• Synopsis and Script/Treatment of the production.
• Detailed locked budget signed and dated by the Producer, with breakdowns of estimated eligible NS Labour Expenditures – Employees, estimated eligible NS Labour Expenditures – Third Party, estimated eligible NS Animation Labour Expenditures, and estimated NS Production Costs.
• Certificate of Incorporation for the applicant company; Shareholder Registers for both the applicant and parent company; Production Service and/or Co-production agreements, if applicable; Certificate of Election, if applicable; Broadcaster/Distribution agreement, if applicable.
• For Part B, completed Part B application form, signed and dated; a Producer Affidavit, Review Engagement Report or Audit Report depending on production costs; the Eligibility Certificate; and the Certificate of Election if not provided in Part A. Additional supporting documents may include declarations of residency.

Who is eligible?

• Eligible corporations incorporated in Canada or in a province of Canada that are taxable Canadian corporations, Canadian-controlled, and primarily carrying on a film or video production business with a permanent establishment in Nova Scotia.
• A corporation that developed an eligible production but does not own the property rights may apply if the rights owner authorizes it to claim the DATC through a Certificate of Election.

Who is not eligible

• Prescribed labour-sponsored venture capital corporations.
• Corporations registered as an eligible business under subsection 3(2) or 11(2) of the Equity Tax Credit Act.

Eligible expenses

• Eligible Nova Scotia labour expenditures: salaries or wages incurred and paid by an eligible corporation to NS eligible employees, including salaries, vacation pay, statutory holiday pay, sick leave pay, and taxable benefits.
• Eligible remuneration: salaries or wages of third party employees or owners who provide services personally for the eligible production and are incurred and paid by an eligible corporation to arm's length entities or individuals.
• Eligible Nova Scotia animation labour expenditures: amounts paid for technical activities to produce animation, including designing, modeling, rendering, lighting, painting, animating, rigging, storyboarding and compositing.

Ineligible Costs and Activities

• Advertising, marketing or market research.
• Amounts determined by reference to profits or revenues.
• Amounts claimed under the Research and Development Tax Credit.
• In-kind payments, dividends, stock options, and employer contributions to the Canada Pension Plan, Employment Insurance, Worker’s Compensation Board, or approved pension, dental, medical or optical care plans unless they are taxable benefits to the employee.
• Animation created by post-production activities or primarily for promotional material, and animation or visual effects created by editing activities; audio effects, in-camera effects, credit rolls and subtitles are also excluded from the animation bonus.

• Submit a mandatory Part A application electronically to apply for an Eligibility Certificate before principal photography or key animation begins.
• After you receive an Eligibility Certificate and complete the production, submit a mandatory Part B application electronically to apply for a Tax Credit Certificate.
• Submit the Part B application no later than 30 months after the end of the taxation year in which expenditures for the eligible production were made.

• Part A applications for an Eligibility Certificate are mandatory, must be submitted electronically, and must be filed before principal photography or key animation begins.
• Approved Part A applicants receive an Eligibility Certificate with a preliminary indication and an estimated amount of the DATC, but it does not guarantee production eligibility or issuance of a credit.
• Part B applications for a Tax Credit Certificate are mandatory, must be submitted electronically once the production is completed, and no later than 30 months after the end of the taxation year in which eligible expenditures were made.
• Approved Part B applicants receive a Tax Credit Certificate stating that the corporation is eligible for the DATC and showing the value of the credit by tax year.
• To claim the credit, the eligible corporation must file a T2 and Schedule 5 to the CRA and provide a copy of the Tax Credit Certificate; the CRA assesses the return, reduces tax payable, and refunds any excess amount to the corporation. The Department may request additional documentation or information, and the Minister may revoke a Tax Credit Certificate if false or misleading information is provided or a material fact is not disclosed.

• Where there is a conflict between the Guidelines and the legislation or regulations, the legislation and regulations governing the DATC take precedence.
• Documentation and information received from applicants are maintained in strictest confidence by the Department of Finance and Treasury Board.