Digital Media Tax Credit
The Digital Media Tax Credit is a refundable tax credit for costs directly related to the development of interactive digital media products in Nova Scotia.
The Digital Media Tax Credit (DMTC) encourages the development of interactive digital media products in Nova Scotia.
Tax credit amount
Tax credit amounts are equal to the lesser of:
- 50% of qualifying expenditures
- 25% of total expenditures
A 10% geographic area bonus on qualifying expenditures (5% bonus on total expenditures) is available for products developed outside Halifax Regional Municipality.
Corporations may also be eligible to receive a credit on marketing and distribution expenditures to a maximum of $100,000 per product. These expenditures may be made outside the province.
Tax credit rates
| Base tax credit rates | Regional bonus | Total potential tax credit | |
|---|---|---|---|
| Qualifying expenditures | 50% | 10% | 60% |
| Total expenditures | 25% | 5% | 30% |
Application for Tax Credit Certificates
Submit an optional Part A application to confirm if your project is eligible for the credit.
Submit a mandatory Part B application to apply for a Tax Credit Certificate. Part B applications can be submitted once you have completed your production or at the end of each taxation year for which qualifying expenditures are incurred. This must be submitted no later than 30 months after the end of the tax year in which expenditures for any eligible digital animation productions were made.
You may need to provide additional supporting documents (including statement of eligible remuneration, product affidavit, certificate of election and declarations of residency).
Eligibility
To be eligible for this credit, a corporation developing an interactive digital media product must meet all the following requirements:
- be a taxable Canadian corporation
- have a “permanent establishment” in Nova Scotia, meaning:
- a fixed place of business in the province
- assets in the province to develop the product
- personnel in the province who can contract on behalf of the corporation
- must not be a prescribed labour-sponsored venture capital corporation under the federal Income Tax Act
To be eligible for this credit, the digital media product:
- must be interactive
- primary purpose must be to educate, inform or entertain users
- must achieve its primary purpose by presenting information in at least 2 formats: text, sound or images
To be eligible for the geographic area bonus, the corporation must:
- have a permanent establishment outside Halifax Regional Municipality
- at least 50% of salaries for the development of the product must be paid to employees who work out of a permanent establishment in the eligible geographic area
There is no requirement for the corporation to own the copyright to the product.
The following products are not eligible for the credit:
- operating system software
- application software (for example, database, spreadsheet, word processing)
- products developed primarily for interpersonal communications (for example, email software)
- any product that is pornographic or discriminatory
- any product that is primarily used to advertise or promote a corporation or organization
Before you start
Make sure you review detailed criteria in the Digital Media Tax Credit Guidelines (PDF).