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Offered by several Canadian Provincial Governments, the Interactive Digital Media Tax Credit (IDMTC) allows companies and start-ups to strengthen their position in the digital media market. These programs incentivize various companies to begin innovative projects, similar to the Scientific Research and Experimental Development (SR&ED) program. While SR&ED and IDMTC are vastly different programs in their requirements and refunds, many businesses that do not qualify for SR&ED may often be eligible for the IDMTC. Below, we will walk you through some of the details of the Interactive Digital Media tax credit program. That way, you are better prepared to take advantage of this generous tax credit program. Continue reading to learn more about the IDMTC and Digital Media tax credit financing from Venbridge!
Where is the IDMTC Offered?
Are you a Canadian gaming, animation, or film-making company? Then there’s a good chance you’re eligible for the Interactive Digital Media Tax Credit, thus making you eligible for Digital Media Tax Credit financing from Venbridge, but more on that later. Several provinces across Canada offer tax credits for digital media projects; however, you must be based in an eligible location to file for these credits. The specific requirements and details of the IDMTC are dependent on where your business is based. Provinces that offer this tax credit are as follows:
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- British Columbia
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- Ontario
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- Newfoundland and Labrador
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- Quebec
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- Nova Scotia
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- Manitoba
Remember, each province has unique guidelines, timelines, and requirements that companies must follow to claim this credit. Moreover, the projects eligible for these credits rely on the specifics outlined by each province. However, if your company is developing video games, educational software, or AR/VR products, eligible projects may include those that do the following:
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- Educate, inform, or entertain the user.
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- Present information as a combination of sound, text, and images.
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- Intended to be used interactively by individual users.
Furthermore, these provincial guidelines also include the types of digital media projects excluded from the IDMTC program. That’s why it’s critical to do thorough research on whether or not your proposal is eligible for the Interactive Digital Media Tax Credits offered by your province or reach out to a professional consultant. That way, you can be sure your company is headed in the right direction, leading to a fair refund. At Venbridge, we will work with your company and consultant to ensure you maximize your government funding through the IDMTC and Scientific Research and Experimental Development (SR&ED.)
How Much Funding Could Your Business Receive?
Depending on your project, it may meet eligibility requirements for both SR&ED and IDMTC. However, it’s best if you don’t get your hopes up, as it is unlikely that you’ll receive funding from both programs for the same project. But that doesn’t mean your company should skip out on the IDMTC tax credit in favour of SR&ED. Both programs offer significant tax credit advantages. For the IDMTC, tax credit amounts vary from province to province, and there are specific limitations. A general outline of how these tax credits are calculated per region is as follows:
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- British Columbia: 17.5% of eligible salary and wages incurred in the tax year.
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- Ontario: 40% of expenditures, including marketing and distribution, or 35% of spending for products developed under a fee-for-service arrangement.
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- Newfoundland and Labrador: 40% of qualifying expenses, which include eligible salaries and 65% of eligible remuneration.
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- Quebec: 37.5% of qualified labour expenditures.
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- Nova Scotia: The lesser of 50% of qualifying expenses or 25% of total spending, plus a bonus credit of 10% (qualifying) or 5% (total) expenditures, is also available.
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- Manitoba: 40% of eligible project costs or 35% of eligible labour costs for the year.
Financing for Digital Media Projects with Venbridge!
If your company is creating digital entertainment or educational products in Canada, don’t hesitate to file for your province’s Interactive Digital Media Tax Credit! This capital can fund your subcontractor fees, full-time employee salaries, consumables, and more. That way, you can focus on growing and developing your business. Unfortunately, waiting for these tax credits can take significant time. If your company can’t wait for funding, you need fast access to non-dilutive, founder-friendly Interactive Digital Media Tax Credit financing from Venbridge.
