Newfoundland and Labrador interactive digital media tax credit

The Newfoundland and Labrador Interactive Digital Media (IDM) Tax Credit provides refundable tax credit opportunities for eligible expenditures related to interactive digital media development. The financial mechanism primarily involves leveraging tax credits against incurred qualifying expenses.

• Refundable tax credit at 40% of qualifying expenditures, including eligible salaries and 65% of eligible remuneration.
• Annual credit cap at $40,000 per eligible employee.
• Cumulative credit cap of $2 million per company, or group of associated companies, per calendar year.
• Adjustments in credit applicability if government assistance is received, ensuring total financial benefit does not exceed project costs.

To be eligible for the Newfoundland and Labrador Interactive Digital Media tax credit, a corporation must meet the following criteria:

• Primarily carry on the business of interactive digital media development.
• Have a permanent establishment in the province of Newfoundland and Labrador.
• Be incorporated under the Corporations Act or an Act of the Parliament of Canada or another Canadian province.
• All or part of its income must not be exempt from taxation under Part I of the federal Income Tax Act.
• Hold a valid registration certificate under the Interactive Digital Media program.

Who is eligible?

Who is not eligible

The IDM tax credit exclusion criteria stipulate that certain products are not eligible, particularly those primarily aimed at communication, promotion, or non-interactive use. Restrictive measures ensure alignment with the grant's focus on interactive educational, informational, or entertainment media.

• Products primarily used for interpersonal communication.
• Products primarily used for marketing or promotional purposes.
• Products likely to receive an "AO" rating by the Entertainment Software Rating Board.
• Products that enable gambling activities with real currency.
• Content aggregators and search engines.
• Products providing content such as news, public affairs, advice, blogs, or financial market reporting.
• Websites, unless primarily hosting digital games, virtual or augmented reality experiences, or educational products.

Eligible expenses

The Newfoundland and Labrador Interactive Digital Media (IDM) Tax Credit supports projects that prioritize interactive digital media development with educational, informative, or entertainment value. Eligible activities encompass the creation of innovative digital platforms and applications that engage users through interactive experiences.

• Development of video games that integrate text, sound, and images for an interactive experience.
• Creation of educational software designed to engage users through feedback, control, and adaptability.
• Design of training simulators intended for use in educational or professional environments, providing interactive user experiences.
• Production of virtual or augmented reality experiences intended for educational or entertainment purposes.

Eligible geographic areas

This tax credit applies to companies with a permanent establishment in Newfoundland and Labrador. It is essential for eligible corporations to have a fixed place of business within this province to qualify.

• Companies with a permanent establishment in Newfoundland and Labrador.

Here are additional relevant details for this grant:

• The tax credit is refundable, offering financial support after accounting for taxes payable.
• Permanent establishment criteria are evaluated based on Regulation 400(2) of the Income Tax Act (Canada).
• Eligible projects must obtain a registration certificate from the Tax Administration Division under the IDM program.
• For government projects, the credit is claimed post-completion and specific conditions apply for expenses incurred before November 8, 2019.
• The Minister of Finance holds the authority to revoke or suspend certificates based on compliance and eligibility factors.