Many provinces are jumping on board with new digital media tax incentives!  Claiming for digital tax credits in conjunction with federal SR&ED will allow you to maximize your tax credits.  As often is the case, the provinces all allow for digital tax credits to be claimed in conjunction with federal SR&ED, as long as the same expenses are not double-claimed. 

To follow are the most recent updates (by province) in the digital media sector. 

Quebec Tax Credit for Production of Multimedia Titles

Quebec currently has the most generous incentives for digital media.  To follow are the current offerings by the Quebec government:

- 37.5% for titles that are produced without having been ordered, are intended to be commercialized and are available in French.

- 30% for titles that are produced without having been ordered, are intended to be commercialized and are not available in French.

- 26.25% for other titles.

Ontario Interactive Digital Media Tax Credit (OIDMTC)

OIDMTC offers up to a 40% refundable tax credit based on eligible Ontario labour expenditures and eligible marketing and distribution expenses incurred after March 26, 2009 by any Canadian corporation.   Non-specified projects are refundable for 40%, versus 35% for specified products.  Eligible marketing and distribution expenses are capped at $100,000 per eligible product. Eligible labour expenditures are 100% of salaries and wages for employees and 100% (50% before March 27, 2009) of remuneration paid to arm’s length persons who are not employees. 

BC Interactive Digital Media Tax Credit (BCIDMTC)

The BC Interactive Digital Media Tax Credit (IDMTC) program provides a refundable 17.5% tax credit on eligible salary and wages incurred by eligible corporations to develop interactive digital media products in British Columbia after August 31, 2010 and before September 1, 2015.

If the new BCIDMTC legislation mirrors the credits in other provinces as expected, a taxpayer will be allowed to claim either the BCIDMTC or the B.C. SR&ED tax credit on the same qualifying expenditure, but not both.

Nova Scotia Digital Media Tax Credit

Since January 1, 2008, the digital media tax credit is 50% of eligible salaries, up to 25% of total production costs. In addition, a corporation is eligible for a bonus for producing its products outside the Halifax Regional Municipality area. The bonus is 10% of eligible salaries, up to 5% of total production costs.

Saskatchewan Film Employment Tax Credit

Saskatchewan, through its film employment tax credit program, offers a refundable tax credit equal to 45% of the labour expenditures associated with the production of eligible films, which include multimedia productions. For the purpose of this tax credit, eligible salaries cannot exceed 50% of the total production cost.

Manitoba Interactive Digital Media Tax Credit

This tax credit provides a refundable corporate income tax credit equal to 40% of Manitoba labour costs on eligible projects up to $500,000.

Prince Edward Island’s Video Game Labour Rebate Program

This program provides a 30% rebate on direct payroll costs, payable on a quarterly basis.

Further Information

To find out more about how your company could benefit from digital tax credits, contact Northbridge Consultants.

OIDMTC  is a refundable digital media tax credit that can be filed in addition to SR&ED.  Managed by the Ontario Media Development Corporation (OMDC), the OIDMTC allows up to 35% of eligible expenditures can be refunded to qualifying digital game corporations that incur a minimum of $1 million of Ontario labour costs over a 3-year period.  To be eligible for OIDTC, you must be a Canadian corporation that files an Ontario tax return, and your activities must involve an interactive digital media product.  The primary purpose of this media product must be to educate, inform, or entertain, and it must present information in at least two of: (i)text, (ii)sound and (iii) images.

To find out more about how your company could benefit from OIDTC, contact Northbridge Consultants.

In his recent article, Ken Doctor analyzes the slow disappearance of familiar brands such as Kodak, Sears, and various newspaper companies.   These examples all illustrate the fact that “brands decay” and that “disruption doesn’t happen just once.”

His “lessons learned” include:

- Instead of trumpeting your own horn, spend the time to address future disruptive forces.

- Cutting costs does not equal innovation.

- Constant re-organizations and re-structuring does not mask deeper problems; it just diverts time from consumer focus.

- The old companies are still stuck in an old mindset.

What have you done to address the disruptive technologies that may impact your company?