The Best Provinces for Digital Media Tax Credits

By: BeneFACT Marketing in Uncategorized

April 7th, 2015

Canada on a map of North America

Provinces all over Canada have thriving business environments and lucrative tax incentives for the interactive digital media (IDM) industry. Here are some of the best provinces for digital media tax credits that help Canadian companies grow and strengthen their business.

British Columbia (BC) Digital Media

The history of the BC digital media industry dates back to the late 1980’s, when Burnaby-based company Distinctive Software’s release of the ground-breaking video game Evolution; they later became the largest non-console video game publishing company in the world and was acquired by Electronic Arts. Another BC-grown digital media project was ReBoot, the first completely computer-animated  TV series. The BC market has had its share of ups-and-downs in recent years, especially in 2012 when Ubisoft closed and Activision drastically downsized their respective Vancouver development studios.

Regardless, British Columbia is still home to 900 companies in the digital media sector, which generates annual revenues of $1.2 billion. The British Columbia Interactive Digital Media Tax Credit (IDMTC) aims to provide these companies with additional cash flow, allowing them to claim 17.5% of eligible salary and wages incurred in the tax year. The BC digital media industry is also bolstered by the support of groups like DigiBC, Vancouver ACM SIGGRAPH and BC Interactive.

Ontario Digital Media

Ontario is home to global digital gaming giants like Ubisoft, as well as respected independent interactive digital media companies and startups, all of which contribute to a thriving IDM sector in the province. One third of Canada’s IDM companies are housed here, and wherever clusters like this exist, companies will find customers, investment, partnerships, and tax incentives. It’s not just the lure of Toronto’s metropolitan market that brings companies in and encourages them to stay – St. Catherines also has a vibrant and tight-knit community for IDM companies of all shapes and sizes. Universities across the Toronto-Waterloo corridor also provide easy access to the next generation of development and design talent.

To ensure these companies can create jobs in STEM-related fields (science, technology, engineering, and mathematics), the provincial government provides tax incentives like the Ontario Interactive Digital Media Tax Credit (OIDMTC). This tax credit allows companies to claim up to 40% eligible expenditures, including their development labour and up to $100,000 in marketing and distribution costs. Industry associations like Interactive Ontario provide additional support and networking opportunities to further assist companies.

Quebec Digital Media

Montreal has been riding in the wake of the IDM wave that hit British Columbia in the 1980s, and it hasn’t shown signs of slowing down. Quebec is home to many digital gaming companies like Ubisoft, EA, and Gameloft, as well as a thriving digital media startup scene. In 2012, Quebec had an estimated 9000 workers directly employed in Quebec’s video game industry, 12,500 in multimedia, and 8,000 in digital entertainment.

The Production of Multimedia Titles tax credit in Quebec is also lucrative, allowing companies to claim between 30 and 37.5% of labour expenditures for the entire lifecycle of the product.

Nova Scotia Digital Media

Companies like HB Studios and Ubisoft have establishments in Nova Scotia, and the digital industry as a whole contributes $1.5 billion to provincial GDP.

Nova Scotia offers companies a digital media tax credit to claim 25% of total expenditures, or 50% of eligible labour and marketing & distribution expenses. In addition to the tax credit, Nova Scotia companies can also benefit from payroll rebates, R&D tax credits, and training incentives.

Honorable mentions: Manitoba, New Brunswick, and PEI

These provinces foster their interactive digital media economy by providing tax credits to eligible corporations, each with their own set of rates and guidelines. While the networks may be smaller, these provincial governments want entrepreneurs to be able to grow their business without having to relocate.

All over Canada, provinces are focused on strengthening and sustaining this growing industry. At BeneFACT we have a dedicated team who can help provide you with information to see if your company is eligible for these tax credits. To learn more about tax credits in these provinces, call us at 416-360-7733.