Digital Media Tax Credit
NS, Canada
Tax credit for interactive digital media production in Nova Scotia
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|projectCostPercent
grant_single|deadlines
- grant_single|timelineUnspecified
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- Information and cultural industries
grant_single|grantors
- Government of Nova Scotia
- Finance and Treasury Board (NB)
grant_single|status
grant_card_status|closed
grant_single_labels|preview
Refundable tax credit of 50% for local labour costs or 25% of total funds spent in Nova Scotia in the development of an interactive digital media product.
grant_single_labels|projects
The eligible projects for this grant include the development of interactive digital media products whose primary purpose is to educate, inform, or entertain the user. These products must be interactive and allow for user participation.
- Video games
- Educational products
- Informational products
grant_single|admissibleProjectsExample
$140,000
Halifax
Development of an interactive educational app for high school students focusing on environmental science.
$125,000
Toronto
Creation of a mobile game to promote energy conservation through engaging gameplay and challenges.
$95,000
Vancouver
Development of an interactive informational website on local wildlife conservation efforts.
$150,000
Montreal
Design and development of an interactive platform for virtual art exhibitions.
$75,000
Quebec City
Implementation of an interactive digital guide for tourists visiting historical sites.
$87,500
Ottawa
Creation and maintenance of a virtual interactive museum tour platform.
grant_single_labels|admissibility
The eligibility criteria for the Nova Scotia Digital Media Tax Credit require that an eligible corporation must be a taxable Canadian corporation with a permanent establishment in Nova Scotia, owning the property rights of the developed digital media product or being authorized by the property owner to claim the credit.
- It is a taxable Canadian corporation.
- The corporation must have a permanent establishment in Nova Scotia.
- The corporation must not be a prescribed labour-sponsored venture capital corporation.
- The corporation may be controlled by foreign or Canadian owners.
- Applicants must demonstrate ownership of the property rights of the product or be authorized by the product owner to claim the tax credit.
grant_eligibility_criteria|who_can_apply
Yes, the Nova Scotia Digital Media Tax Credit (DMTC) is available to eligible corporations. An eligible corporation must meet specific criteria to qualify.
- It must be a taxable Canadian corporation incorporated in Canada (either federally or provincially).
- It must have a permanent establishment in Nova Scotia.
- It must not be a prescribed labour-sponsored venture capital corporation under the Income Tax Act (Canada).
- It must be developing an interactive digital media product that meets the eligibility requirements.
grant_eligibility_criteria|who_cannot_apply
Companies that are prescribed labour-sponsored venture capital corporations under the Income Tax Act (Canada) are not eligible for the Nova Scotia Digital Media Tax Credit. Additionally, companies that develop products for which public financial support would be contrary to public policy are also ineligible.
- Prescribed labour-sponsored venture capital corporations
- Companies that develop products contrary to public policy (e.g., pornographic in nature, exploit sex, incite hatred)
grant_eligibility_criteria|eligible_expenses
Yes, there are eligible expenses for the Nova Scotia Digital Media Tax Credit. These include eligible salaries, eligible remuneration, and marketing and distribution expenditures up to a certain limit.
- Eligible salaries
- 65 percent of eligible remuneration
- Marketing and distribution expenditures up to $100,000 per eligible product
- Expenses incurred directly related to advertising and promoting the eligible product
- Development of branding, logos, and promotional products
- Direct mail and telemarketing expenses
- Salaries related to the marketing and distributing of the product
grant_eligibility_criteria|zone
The eligible geographic zones for this grant include all areas in Nova Scotia except for the area within a thirty-kilometer driving distance from Halifax City Hall in the Halifax Regional Municipality.
- All of Nova Scotia except the area within thirty kilometers from Halifax City Hall, Halifax Regional Municipality
grant_single_labels|criteria
The evaluation and selection criteria for the Nova Scotia Digital Media Tax Credit (DMTC) ensure that the corporation and product meet specific eligibility requirements related to corporate status, product type, expenditures, and geographic location. These criteria help determine whether a corporation qualifies for the tax credit and the applicable amount.
- The corporation must be 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.
- The corporation must not be a prescribed labour-sponsored venture capital corporation under the Income Tax Act (Canada).
- The product must be an "interactive digital media product" whose primary purpose is to educate, inform, or entertain the user.
- The product must allow the user to interact meaningfully with the content.
- Qualifying expenditures must be directly attributable to the development of the eligible interactive digital media product and incurred and paid in Nova Scotia.
- For an additional regional bonus, the product development must occur within an "eligible geographic area of the Province".
- The corporation must demonstrate ownership of the property rights of the product, or be authorized by the product owner through a Certificate of Election.
- All applicable documentation, including expenditure reports, residency declarations, invoices, and certification reports, must be submitted as part of the application process.
grant_single_labels|register
- Step 1: Application & Expenditure Report
- Complete and sign the application form found in the first tab of the provided spreadsheet, including the entire expenditure report.
- Submit the spreadsheet via email to the Taxation and Federal Fiscal Relations Division (TFFRD) and send a signed paper copy as well.
- Step 2: Declaration of Residency Forms
- Provide a completed Declaration of Residency form for each employee listed in the expenditure report.
- Step 3: Invoices
- Submit invoices for all third-party work completed that correspond to expenditures. Ensure invoices meet specified requirements.
- Step 4: Statements of Eligible Remuneration
- Include Statements of Eligible Remuneration for all invoices to demonstrate the labor component performed in Nova Scotia.
- Step 5: Affidavit, Review Engagement Report or Audit Report
- Provide documentation detailing qualifying and total expenditures based on project budget criteria.
- This documentation must be signed by a qualified officer and, if necessary, an arm’s length business.
- Step 6: Articles of Incorporation and Memorandum of Association
- If not previously submitted, include the Articles of Incorporation and Memorandum of Association.
- Step 7: Shareholders Registry
- Submit the Shareholders Registry if it has not been submitted in a previous application.
- Step 8: Corporate Chart
- Submit a corporate chart outlining the structure/organization of the applicant corporation.
- Step 9: Gantt Chart
- Provide a Gantt chart showing the project schedule and timeline.
- Step 10: Completed Digital Media Product
- If available, include a copy of the completed product or a video demonstration of the product.
- For websites, provide a URL and any necessary login credentials.
- Step 11: Chain of Title Documentation
- Provide a Certificate of Election form if the applicant does not retain principal ownership of the eligible product.
- Step 12: Exchange of Information Form
- Include an Exchange of Information form to allow TFFRD to verify and audit the application information.
grant_single_labels|otherInfo
The Nova Scotia Digital Media Tax Credit offers a refundable tax credit for eligible corporations developing interactive digital media products within Nova Scotia. It includes eligibility criteria, applications processes, and restrictions on product types and expenditures that qualify for the credit.
- The DMTC is not available for products primarily used as an operating system, application software, or for interpersonal communications.
- Products used primarily to present, promote, or sell goods or services are not eligible for the tax credit.
- Expenditures that can be claimed for Scientific Research and Experimental Development Tax Credit or Film Industry Tax Credit are not eligible for the DMTC.
- The eligible geographic area excludes areas within thirty kilometres driving distance from Halifax City Hall in the Halifax Regional Municipality.
- Part A applications provide an advanced ruling on eligibility but do not guarantee final approval.
- Applications must be submitted within thirty months of the end of the taxation year in which expenses were incurred.
- There are no administration fees required for processing DMTC applications.
- The Minister of Finance and Treasury Board may revoke tax credit certificates if the product is not completed within 36 months or if compliance issues arise.
- Corporations may recognize provincial contribution using "Produced with the assistance of the Nova Scotia Digital Media Tax Credit".
Apply to this program
Nova Scotia Digital Media Tax Credit (DMTC)
The Nova Scotia Digital Media Tax Credit (DMTC) is a refundable tax credit available to eligible corporations to support the development of interactive digital media products in Nova Scotia. The credit is calculated as the lesser of 50% of qualifying expenditures or 25% of total expenditures, with additional bonuses available for development within specific geographic areas.
Understanding the Nova Scotia Digital Media Tax Credit
The Nova Scotia Digital Media Tax Credit (DMTC) is a compelling incentive offered by the Nova Scotia Department of Finance and Treasury Board to foster the growth of the digital media sector within the province. Designed to support corporations engaged in the development of interactive digital media products, the DMTC is a refundable tax credit aimed at reducing the financial burden associated with these ventures.
Eligibility Criteria
To qualify for the DMTC, a corporation must meet the following criteria:
- Canadian Corporation: The corporation must be a taxable Canadian corporation, as defined under subsection 89(1) of the Income Tax Act (Canada), indicating its incorporation either federally or provincially within Canada.
- Permanent Establishment: The corporation must maintain a permanent establishment in Nova Scotia, characterized by a fixed place of business, assets within the province for developing the product, and personnel authorized to contract on the corporation’s behalf.
- Exclusions: The corporation must not be a prescribed labour-sponsored venture capital corporation under the Income Tax Act (Canada).
Ownership and size of the corporation do not restrict eligibility. Companies controlled by either Canadian or foreign owners and of any size are welcome to apply.
Calculating the Tax Credit
The amount of the DMTC is calculated based on qualifying or total expenditures:
- Qualifying Expenditures: 50% of qualifying expenditures incurred outside the eligible geographic area or 60% of those incurred within the eligible geographic area.
- Total Expenditures: 25% of total expenditures incurred outside the eligible geographic area or 30% of those within the eligible geographic area.
The credit is calculated as the lesser of these two amounts.
Additional bonuses can be applied if the development occurs within an eligible geographic area, resulting in higher tax credit rates of 10% on qualifying expenditures or 5% on total expenditures.
Eligible Products
To be eligible for the DMTC, a product must classify as an "interactive digital media product" aimed primarily at educating, informing, or entertaining users. The product should integrate application files and data files in a digital format, presenting information in text, sound, or images and must be interactive, allowing user involvement beyond mere observation or reading.
Eligible products typically include video games, educational software, and informational products. The distribution method of the product does not impact its eligibility; it can be distributed through various mediums, such as Read Only Medium (ROM) or websites.
Ineligible Products
Certain products are explicitly excluded from eligibility:
- Products primarily used as operating systems or application software, such as word processors and spreadsheets.
- Products meant for interpersonal communication, including cell phone and email software.
- Products primarily aimed at promoting, presenting, or selling goods or services of a corporation or an organization.
- Any product whose public financial support would contravene public policy, including pornographic content, or content inciting hatred against identifiable groups.
Eligible and Total Expenditures
The DMTC is calculated as a percentage of qualifying expenditures (50%) or total expenditures (25%), whichever is less. Both terms are defined as follows:
Qualifying Expenditures
The sum of:
- Eligible Salaries: Salaries and wages paid to employees residing in Nova Scotia and employed directly in the product's development.
- Eligible Remuneration: 65% of labor costs paid to third-party entities or individuals with a permanent establishment in Nova Scotia for services related to the product's development.
- Marketing and Distribution Expenses: Expenses directly attributable to advertising, promoting, or distributing the product, capped at $100,000 per product.
Total Expenditures
Total expenditures encompass the sum of all eligible salaries, eligible remuneration, all other product-related expenses paid within Nova Scotia, and marketing and distribution expenses (capped at $100,000), less any government assistance received.
Eligible Geographic Area
A boost to the DMTC is available for products developed in specific geographic areas, defined as any area within Nova Scotia beyond a 30 kilometers driving distance from Halifax City Hall in Halifax Regional Municipality. Eligible corporations must have a permanent establishment in this area, and at least 50% of eligible salaries must be paid to employees reporting to this establishment.
Application Process
The Taxation and Federal Fiscal Relations Division (TFFRD) administers the DMTC, responsible for issuing tax certificates utilized for income tax filings. Applications are accepted either on project completion or at the end of each taxation year for incurred expenditures. The application process includes:
- Completed application and expenditure report
- Declaration of residency forms for employees
- Invoices and statements for third-party work
- Affidavit, Review Engagement Report, or Audit Report, depending on the project budget
- Supporting documentation such as Articles of Incorporation, Shareholders Registry, Gantt Chart, and completed product
Applications must be submitted within 30 months of the tax year end in which the eligible expenditures were incurred, even if the product is incomplete. The TFFRD may require additional documentation to issue the credit, ensuring all information provided remains confidential.
Frequently Asked Questions
1. What is a Part A Application?
Part A applications serve as an optional preliminary ruling on a project’s eligibility, providing an estimate of the potential tax credit. These are not guarantees and do not require a formal application.
2. Does a product have to be completed before applying?
No, companies can apply at the end of each tax year for incurred expenses, even if the product is not yet completed.
3. Is there an application fee?
No, there are no administration fees for processing DMTC applications.
4. Revocation of Certificates
The Minister of Finance and Treasury Board may revoke the tax credit certificate if the product is not completed within 36 months or if there’s non-compliance with the regulations or Act's spirit and intent.
5. Recognition of Provincial Contribution
Corporations may acknowledge the province’s financial support with the following credit: “Produced with the assistance of the Nova Scotia Digital Media Tax Credit.”
