Digital Animation Tax Credit
NS, Canada
Tax credit for digital animation in Nova Scotia
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|projectCostPercent
grant_single|deadlines
- grant_single|closingDateMay 21, 2024
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- Information and cultural industries
grant_single|grantors
- Government of Nova Scotia
- Finance and Treasury Board (NS)
grant_single|status
grant_card_status|closed
grant_single_labels|preview
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
This tax credit is designated specifically for eligible corporations with a permanent establishment in Nova Scotia, Canada. Corporations must demonstrate their business operations and establish residency in the region to qualify for the Nova Scotia Digital Animation Tax Credit.
- Nova Scotia
grant_single|admissibleProjectsExample
$110,000
Toronto
Develop an educational animation series to teach elementary mathematics
$82,500
Halifax
Create a 3D animated short film for children focusing on environmental conservation
$160,000
Halifax
Develop a 30-minute animated educational series for children about environmental conservation
$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 considered eligible for the Nova Scotia Digital Animation Tax Credit (DATC), a corporation must meet several specific criteria.
- The corporation must be incorporated in Canada, either federally or in one of the provinces, and must qualify as a taxable Canadian corporation as defined in subsection 89(1) of the Income Tax Act (Canada).
- The corporation must have a permanent establishment in Nova Scotia, determined in accordance with Subsection 400(2) of the Income Tax Regulations and the CRA's Interpretation Bulletin IT-177R2.
- The corporation must be Canadian-controlled and primarily engaged in film or video production, meaning more than 50% of its activities.
- The corporation must not be a labour-sponsored venture capital corporation or registered as 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 applicant corporation must own the property rights of the production, or be authorized by the owner through a Certificate of Election to claim the DATC.
grant_eligibility_criteria|who_can_apply
The Nova Scotia Digital Animation Tax Credit (DATC) is available for eligible digital animation productions undertaken by qualified corporations in Nova Scotia. Eligible organizations must be taxable Canadian corporations with a permanent establishment in Nova Scotia, primarily engaged in film or video production, and must not be a labour-sponsored venture capital corporation or registered as an Equity Tax Credit company or a Community Economic Development Investment Fund under certain sections of the Equity Tax Credit Act.
- Corporations incorporated in Canada with a permanent establishment in Nova Scotia.
- Corporations that are Canadian-controlled and primarily engaged in film or video production.
- Excludes labour-sponsored venture capital corporations and companies registered under specific sections of the Equity Tax Credit Act.
- Corporation must own or be authorized to claim property rights of the eligible digital animation production.
grant_eligibility_criteria|who_cannot_apply
This grant is designed with specific restrictions to exclude certain companies and industries from eligibility based on their primary activities and compliance with other grant-related criteria. These measures ensure that the tax credit supports the intended digital animation sector.
- Labor-sponsored venture capital corporations.
- Companies registered as an Equity Tax Credit company.
- Community Economic Development Investment Funds under subsection 3(2) or 11(2) of the Equity Tax Credit Act.
- Productions related to video games or those using or exhibiting activities prohibited under the Theatres and Amusements Act.
- Companies involved primarily in fundraising, or producing content primarily for industrial, corporate, or institutional purposes.
- Corporations not meeting the Canadian-controlled classification or lacking a permanent establishment in Nova Scotia.
- Productions eligible for grants from the Nova Scotia Film and Television Production Incentive Fund.
- Productions centered on news, current events, public affairs, talk shows, games, questionnaires, contests, sporting events, award shows, reality television, pornography, or advertising.
grant_eligibility_criteria|eligible_expenses
The Nova Scotia Digital Animation Tax Credit (DATC) provides financial support to eligible digital animation productions. To qualify, productions must specifically align with designated activities primarily focused on the creation and completion of digital animation films.
- Productions with a minimum viewing time of 20 minutes.
- Productions that are broadcast, distributed, or available for viewing within 24 months of completion.
- Productions engaged in with a production services agreement or a written agreement for distribution at fair market value.
grant_eligibility_criteria|zone
Eligible expenses for the Nova Scotia Digital Animation Tax Credit include specific costs directly tied to the production of digital animations.
- NS labour expenditures including salaries or wages incurred and paid to NS eligible employees.
- Eligible NS Animation Labour expenditures for technical activities such as designing, modeling, rendering, lighting, painting, animating, rigging, storyboarding, and compositing.
- Eligible remuneration which involves salaries or wages of third party employees or owners for services provided, paid to arm's length entities or individuals.
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
Here are the steps to apply for the Nova Scotia Digital Animation Tax Credit (DATC):
- Step 1: Part A Application - Obtain an Eligibility Certificate
- Submit a Part A application before the start of principal photography or key animation.
- Email a completed Part A application form to the Taxation and Federal Fiscal Relations Division (TFFRD).
- Include supporting documents such as synopsis & script, detailed locked budget, Certificate of Incorporation, Shareholder Registers, and any applicable agreements.
- Step 2: Receive Eligibility Certificate
- Upon approval, receive an Eligibility Certificate indicating preliminary production eligibility and estimated DATC amount.
- Step 3: Part B Application - Obtain a Tax Credit Certificate
- Submit a Part B application no later than 30 months after the end of the taxation year in which expenditures were made.
- Email a completed Part B application form, including detailed expenditure reports like the Producers Affidavit, Review Engagement Report, or Audit Report, depending on production costs.
- Provide supporting documentation such as Production Service agreements, Eligibility Certificate, and any other applicable agreements.
- Step 4: Claim the Tax Credit
- Receive a Tax Credit Certificate confirming eligibility and credit value.
- File a T2 and Schedule 5 with the Canada Revenue Agency (CRA), attaching the Tax Credit Certificate.
- CRA will assess the T2 return, apply the credit to reduce tax payable, and refund 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
Enhancing Digital Animation Projects with Nova Scotia Tax Credit
The Nova Scotia Digital Animation Tax Credit offers financial incentives to corporations developing eligible digital animation productions in the province. This refundable tax credit is designed to support qualifying labour expenditures, reducing corporate income tax and offering financial relief to boost the local animation industry.
The Comprehensive Guide to the Nova Scotia Digital Animation Tax Credit
The Nova Scotia Digital Animation Tax Credit (DATC) serves as a valuable financial tool for companies engaged in digital animation productions in Nova Scotia. This refundable tax credit plays a pivotal role in alleviating the financial burdens of production companies, thereby nurturing the province's burgeoning animation industry. Specifically targeting eligible labour expenditures, the DATC seeks to create a conducive environment for digital animation endeavors by providing financial backing that reduces income tax liabilities for qualifying corporations.
This tax credit integrates two components: the basic tax credit and the animation bonus. The basic tax credit offers financial benefits by calculating the lesser amount of either 50% of the eligible Nova Scotia labour expenditures subtracting any assistance received or a detailed calculation involving labour expenditures, overhead, and remuneration. Furthermore, an animation bonus of 17.5% is applied to eligible Nova Scotia animation labour expenditures, providing an additional financial advantage.
The eligibility criteria for this tax credit are structured to ensure that only corporations with a substantial presence in Nova Scotia and a commitment to film and video production can participate. This includes requirements for incorporation, establishment of a permanent business location in the province, and ownership of production rights unless authorized otherwise. Productions qualifying for this credit must meet specific viewing time, distribution timelines, and contractual agreements to demonstrate full compliance with the credit's requirements.
Eligible labour expenditures covered under the DATC are strictly defined to include salaries and wages paid to Nova Scotia residents directly involved in the animation production. These expenditures must adhere to industry standards and exclude costs unrelated to direct production efforts. The defined period for these expenses and specific conditions under which they qualify underscores the structured approach of the tax credit.
The application process is meticulously organized into two stages—Part A for obtaining an Eligibility Certificate and Part B for the Tax Credit Certificate. Each stage requires comprehensive documentation, including detailed budgets and production agreements, highlighting the need for transparency and accountability to ensure funds are allocated effectively. By facilitating access to this credit, the Nova Scotia Department of Finance and Treasury Board ensures that corporations maintain rigorous records and are prepared for potential audits to confirm compliance with the credit's parameters.
This program promotes the growth of the local animation sector by attracting and supporting productions that align with provincial economic goals. By offering this tax credit, Nova Scotia not only incentivizes domestic productions but also positions itself as an attractive location for international projects, thereby enhancing its competitive position in the global animation industry.
