Newfoundland and Labrador interactive digital media tax credit
At a glance
- Max. $2,000,000
- Up to 40% of project cost
- Open Date : January 1, 2015
- Closing date : December 31, 2024
- Information and cultural industries
Overview
Get a refundable tax credit of 40% for costs of labour related to producing interactive digital media in Newfoundland and Labrador.
Financing terms and conditions
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.
Activities funded
The Newfoundland and Labrador Interactive Digital Media (IDM) Tax Credit supports projects centered around the development of interactive digital media products. These products must be designed to educate, inform, or entertain users by engaging them through interactive experiences.
- Development of video games that incorporate interactive user experiences.
- Creation of educational software aimed at providing learning tools through interactive content.
- Design of training simulators that engage users in hands-on, interactive learning.
- Production of virtual or augmented reality experiences that provide immersive storytelling and interaction.
Eligibility
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?
Eligible applicants for the Newfoundland and Labrador Interactive Digital Media (IDM) Tax Credit include corporations that primarily carry on the business of interactive digital media development. Specifically, the applicant must:- Be an eligible corporation, meaning it primarily carries on the business of interactive digital media development.- Have a permanent establishment in the province of Newfoundland and Labrador (NL).- Be incorporated under the Corporations Act or an Act of the Parliament of Canada or another Canadian province.- Ensure that all or part of its income is not exempt from taxation under Part I of the federal Income Tax Act.- Hold a valid registration certificate under the IDM program. Eligible corporations are those with a fixed place of business in NL, as determined by Regulation 400(2) of the Income Tax Act (Canada). The presence of a permanent establishment will be evaluated by the Department of Finance.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.
Selection criteria
How to apply
Obtain Registration Certificate
- Submit an application for registration under the IDM program through the NL Film Development Corporation.
- Receive preliminary feedback on the potential eligibility of the project.
- Enhance application based on provided feedback to increase approval chances.
- Await approval from the Minister of Finance, who has the final decision on project eligibility.
Apply for Tax Credit Certificate
- Submit an application to the Minister of Finance for a tax credit certificate within 18 months after the end of each taxation year.
- Complete the application using the required form and ensure it is signed by an authorized company officer.
Claim Tax Credit
- Receive the tax credit receipt upon approval, indicating that all requirements have been met.
- Claim the tax credit on the designated line of the T2 return for the relevant year using the information from the receipt.
Additional information
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.