How much funding can be received?

Get a refundable tax credit equal to 50% of qualifying labour costs, as well as an additional credit of 17.5% for labour costs directly related to animation-specific activities.

grant_single_labels|projects

Yes, there are specific project or activities eligible for this grant.

Productions having a minimum viewing time of 20 minutes
Productions broadcast, distributed or available for viewing no later than 24 months after completion
Productions with a production services agreement or written agreement with a corporation that is a distributor of film or video productions, or a broadcaster
Technical activities to produce animation, including designing, modeling, rendering, lighting, painting, animating, rigging, storyboarding, and compositing

grant_single|admissibleProjectsExample

$160,000

Halifax

Develop a 30-minute animated educational series for children about environmental conservation.

$82,500

Halifax

Create a 3D animated short film for children focusing on environmental conservation.

$110,000

Toronto

Develop an educational animation series to teach elementary mathematics.

$96,250

Vancouver

Produce a documentary-style animation on Canadian wildlife.

$123,750

Montréal

Create an interactive animated app to teach basic coding to children.

grant_single_labels|admissibility

To be eligible for the Nova Scotia Digital Animation Tax Credit (DATC), the applicant must be an "eligible corporation" that meets specific criteria. The production must also meet certain requirements to qualify.

Incorporated in Canada either federally or in one of the provinces and is a taxable Canadian corporation
Has a permanent establishment in Nova Scotia as defined by Subsection 400(2) of the Income Tax Regulations
Canadian-controlled and primarily engaged in film or video production (more than 50%)
Not a labour-sponsored venture capital corporation or registered under the Equity Tax Credit Act
Demonstrates ownership of property rights of the production or has authorization from the owner

grant_eligibility_criteria|who_can_apply

Yes, there are eligible types of companies for the Nova Scotia Digital Animation Tax Credit (DATC). Eligible corporations must meet specific criteria to qualify for the tax credit.

Incorporated in Canada either federally or in one of the provinces and is a taxable Canadian corporation as defined in subsection 89(1) of the Income Tax Act (Canada).
Must have a permanent establishment in Nova Scotia.
Canadian-controlled and primarily engaged in film or video production where "primarily" means more than 50%.
Cannot be a labour-sponsored venture capital corporation, an Equity Tax Credit company, or a Community Economic Development Investment Fund under subsection 3(2) or 11(2) of the Equity Tax Credit Act.
The corporation must own the property rights of the production or be authorized to claim the DATC by the owner through a Certificate of Election form.

grant_eligibility_criteria|who_cannot_apply

There are specific types of companies that are not eligible for the Nova Scotia Digital Animation Tax Credit.

Labour-sponsored venture capital corporations.
Companies registered as an Equity Tax Credit company.
Community Economic Development Investment Funds.

grant_eligibility_criteria|eligible_expenses

There are eligible expenses for this grant. These eligible expenses include NS labour expenditures and specific activities related to digital animation production.

Salaries or wages for NS eligible employees
Technical activities to produce animation
Salaries and wages for third-party employees or owners who provide services for the eligible production
Directly attributable production costs excluding advertising and marketing

grant_eligibility_criteria|zone

To be eligible for the Digital Animation Tax Credit (DATC), the corporation must have a permanent establishment in Nova Scotia.

Permanent establishment must be in Nova Scotia.

grant_single_labels|criteria

Yes, there are specific criteria for evaluating and selecting applications for the Nova Scotia Digital Animation Tax Credit. Applicants must ensure their corporation and production meet certain eligibility requirements.

Corporation must be an "eligible corporation" under the defined terms.
Corporation must demonstrate permanent establishment in Nova Scotia.
Corporation must be Canadian-controlled and primarily engaged in film or video production.
Corporation must not be a labor-sponsored venture capital corporation or registered under certain tax credit acts.
Corporation must own property rights of the production or have authorization if not the owner.
Production must have a minimum viewing time of 20 minutes.
Production must be broadcast, distributed, or available for viewing within 24 months of completion.
Production must have a production services agreement or written agreement with a distributor or broadcaster.
Certain types of productions are deemed ineligible (e.g., fundraising, news, current events, etc.).
NS Labour expenditures must be directly related to production and paid to NS residents.
Eligible remuneration includes salaries or wages of third-party employees or owners providing services to the production.

grant_single_labels|register

Step 1: Part A Application - Obtain an Eligibility Certificate
Submit the Part A application before principal photography or key animation begins.
Submit the following documents:
Completed Part A application form, fully filled and emailed to TFFRD.
Signed and dated copy of the application form.
Synopsis & Script/Treatment of the production.
Detailed locked budget signed and dated by the Producer with specific breakdowns.
Certificate of Incorporation for the applicant company.
Shareholder Registers (both applicant and parent company).
Production Service and/or Co-production agreements, if applicable.
Certificate of Election, if the corporation does not own property rights of the eligible production.
Broadcaster/Distribution agreement, if applicable.
Receive an Eligibility Certificate stating provisional eligibility and an estimated tax credit amount.
Step 2: Part B Application - Obtain a Tax Credit Certificate
Submit Part B application no later than 30 months after the end of the taxation year in which the expenditures were made.
Submit the following documents:
Completed Part B application form, fully filled and emailed to TFFRD.
Signed and dated copy of the Part B application form.
Producers Affidavit, Review Engagement Report or Audit Report (dependent on production costs).
Detailed list of Accounts Payable and breakdowns of NS Production Costs and eligible labour costs.
Production Service and/or Co-production agreements, if applicable.
Eligibility Certificate.
Certificate of Election, if not provided in the Part A application.
Broadcaster/Distribution agreement, if applicable.
Receive a Tax Credit Certificate indicating the eligible corporation and the value of the tax credit.
Step 3: Claim the Credit
File a T2 and Schedule 5 with the CRA and provide a copy of the Tax Credit Certificate.
The CRA assesses the T2 return, uses the credit to reduce tax payable, and refunds any excess amount.

grant_single_labels|otherInfo

Additional information about the Nova Scotia Digital Animation Tax Credit includes specifics about the eligibility and compliance requirements.

Eligible corporations must demonstrate ownership of the property rights of the production, or obtain authorization from the owner to claim the DATC through a Certificate of Election form.
Corporations must submit a Part A application before principal photography or key animation begins and receive an Eligibility Certificate prior to applying for a Tax Credit Certificate (Part B).
Salaries and wages paid must be reasonable, directly attributable to the production, and conform to general industry standards.
The application for a Tax Credit Certificate must be submitted no later than 30 months after the end of the taxation year in which the expenditures were made.
Applicant corporations are responsible for maintaining records such as employee time sheets and third-party invoices, and are subject to audits.
False or misleading information can result in the revocation of the Tax Credit Certificate by the Minister of Finance and Treasury Board, and any amounts incorrectly claimed can be recovered from the corporation.
Published information for accountability purposes may include the name of the corporation, parent company, production name, and the amount of the DATC.

Apply to this program

Nova Scotia Digital Animation Tax Credit (DATC)

The Nova Scotia Digital Animation Tax Credit (DATC) is a refundable provincial corporate income tax credit designed to support qualifying labour expenditures directly related to the development of eligible digital animation productions within Nova Scotia. Administered by the Nova Scotia Department of Finance and Treasury Board, this initiative helps corporations reduce their income tax payable, promoting growth in the local digital animation sector.

Understanding the Nova Scotia Digital Animation Tax Credit (DATC)

The Nova Scotia Digital Animation Tax Credit (DATC) is an essential financial incentive aimed at boosting the digital animation industry in the province. This tax credit not only supports local production companies but also attracts external businesses to invest in Nova Scotia. Here, we dive deep into the details of the DATC, including eligibility, application processes, and much more.

Purpose of the DATC

Established under Section 47B of the Income Tax Act (Nova Scotia) and bolstered by Digital Animation Tax Credit Regulations, the DATC aims to make digital animation productions financially viable. The primary goal is to encourage high-quality digital animation projects by providing financial relief through tax reductions for eligible expenditures. By offsetting production costs, the DATC seeks to create job opportunities, foster creativity, and stimulate the local economy.

Tax Credit Structure

The DATC consists of two main components: the basic tax credit and the animation bonus. The basic tax credit is calculated as the lesser of:

50% of the eligible Nova Scotia (NS) labor expenditure minus any assistance received.
25% of the eligible NS labor expenditure plus eligible overhead expenditure (calculated as 65% of the eligible NS labor expenditure) plus 65% of eligible remuneration minus twice the value of any assistance.

In addition to the basic tax credit, an animation bonus of 17.5% is added to eligible NS animation labor expenditures.

Eligibility Criteria

To benefit from the DATC, corporations must meet specific eligibility criteria:

Incorporated in Canada, either federally or provincially, and classified as a taxable Canadian corporation.
Maintain a permanent establishment in Nova Scotia, which includes a fixed place of business, assets, and personnel capable of entering contracts on behalf of the corporation.
Canadian-controlled and primarily engaged in film or video production (more than 50%).
Not registered as a labour-sponsored venture capital corporation or under Equity Tax Credit company or Community Economic Development Investment Fund provisions.

Additionally, the corporation must own the property rights of the production. If it does not, the owner must authorize the corporation to claim the DATC via a Certificate of Election form.

Eligible Productions

Eligible productions must fulfill the following requirements:

Minimum viewing time of 20 minutes.
Broadcast, distributed, or available for viewing no later than 24 months post-completion.
Have a production services agreement or written agreement with a recognized distributor or broadcaster, available at fair market value.

However, the following productions are considered ineligible:

Prohibited under the Theatres and Amusements Act.
Eligible for a grant from the Nova Scotia Film and Television Production Incentive Fund.
Designed for fundraising or primarily for industrial, corporate, or institutional purposes.
Contrary to public policy.
Related to video game production.
News, current events, public affairs programming, talk shows, games or questionnaires, contests, sports events, award shows, reality TV, pornography, or advertising.

Eligible NS Labor Expenditures

Eligible NS labor expenditures include salaries or wages paid to eligible NS employees, provided these conditions are met:

The employee is a resident of Nova Scotia at the end of the previous calendar year.
Directly attributable to the production of the digital animation film.
Incurred between June 30, 2015, and July 1, 2020.
Paid within the company’s tax year or no later than 60 days following the end of the subsequent tax year.
Not part of expenditures claimed for a preceding tax year or under the Research and Development Tax Credit.

Salaries and wages considered include:

Regular salaries.
Vacation pay, statutory holiday pay, sick leave pay.
Taxable benefits, such as a corporation’s contributions to RRSP, group insurance plan, or meals.

Note that dividends, stock options, and employer contributions to pensions, employment insurance, and worker’s compensation are not eligible.

Eligible Remuneration

Eligible remuneration refers to salaries or wages paid to third-party employees or owners who provide services for the eligible production. It must be:

Reasonable and conform to general industry standards.
Directly attributable to the production and essential for its completion.
Incurred and paid within the designated time frame.
Not part of expenditures claimed previously or under competing tax credits.

In the case where the exact amount of salaries or wages is unknown, a general acceptance of 65% of the invoiced labor by third-party employees and 100% by third-party individuals might be used.

Assistance

Assistance from government or public authorities reduces the calculation of the basic tax credit. This includes:

Grants, subsidies, forgivable loans, tax deductions, investment allowances, or other forms of assistance besides federal film tax credits or DATC.
Funds from specific issues made by equity tax credit companies.

Eligible NS Animation Labor Expenditures

Eligible NS animation labor expenses, qualifying for the animation bonus, are specific to technical animation activities, including:

Designing, storyboarding, modeling, rigging, rendering, painting, lighting, animating, and compositing.

These must be paid and incurred within the outlined timeframe, directly linked to hands-on roles. Supervisory roles typically do not qualify.

Application Process

The DATC application process is a two-stage approach: obtaining an Eligibility Certificate (Part A) and a Tax Credit Certificate (Part B).

Part A: Eligibility Certificate

Applicants should submit a Part A application before starting principal photography or key animation. The application must include comprehensive details, such as completed forms, signed documentation, production synopsis, script, detailed budgets, and incorporation and shareholder registers, among others.

Part B: Tax Credit Certificate

Submit a Part B application no later than 30 months post-taxation year-end of the related expenditures. This stage requires further documentation, including affidavits, engagement reports, production agreements, and previously obtained certificates.

Following approval, a Tax Credit Certificate is issued. Applicants then file it along with a T2 and Schedule 5 to the Canada Revenue Agency.

Reporting and Compliance

Corporations must maintain detailed records for auditing purposes. If false or misleading information is provided, the Minister of Finance and Treasury Board can revoke the Tax Credit Certificate, recovering any improperly awarded amounts.

The Nova Scotia Digital Animation Tax Credit is a strategic incentive for fostering innovation and growth in the digital animation industry within the province, supporting local talents and productions to thrive in a competitive global market.

Digital Animation Tax Credit

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