Registered corporations that develop interactive digital media products in B.C., like video games, simulators, and educational products, may be eligible for the interactive digital media tax credit (IDMTC). Through this credit, we can help you qualify for a 17.5% of eligible salary and wages incurred per year tax year.
See the chart below for the requirements and exclusions of salaries and wages that can be claimed:
||Not Eligible, if the salaries and wages are paid to:
- Incurred on or after September 1, 2010 and before September 1, 2023
- Directly attributable to eligible activities, and
- Paid to individuals who were resident in B.C. on December 31 of the year preceding the end of the corporation’s tax year.
- Stock options
- Specified employees that are based on profits or a bonus, or in excess of five times the year’s maximum pensionable earnings
- Employees performing marketing services, human resource services, administrative support or management services
- Contractors or sub-contractors
As long as your IDMPs are developed between August 21, 2010 and September 1, 2023, you can register with the Ministry of Finance to claim the IDMTC no later than 18 months after the eligible costs were incurred.
What is an Interactive Digital Media Product?
Interactive digital media products are designed to be used interactively by an individual. “Used interactively” means used by an individual and a computer, which can mean anything from using menus and cursors, to verbally communicating with a computer.
Remember, for it to be an IDMP, the user must be a participant, not a spectator!
Here are some examples of products that are considered IDMPs, and some that aren’t:
- Video games
- Educational software
- Edutainment products
- Online magazines or newspapers
- PowerPoint presentations
- Video streaming products
What characteristics of a product are evaluated to determine if it’s intended to be used interactively by individuals?
- Feedback is the response given by the program to the user. I.e. educational software commenting on the user’s test results, or pointing our a wrong answer
- Control is the degree of influence that a user can have in the way the program unfolds. I.e. the user can make choices, use reasoning, or modify an image
- Adaptation is the ability of a program to adapt to a user’s needs. I.e. a program could offer several scenarios, but take a user’s ability into account before selecting a scenario.
Who can register for the IDMTC?
|Eligible, if the corporation:
||Not Eligible, if the corporation:
- Is a taxable Canadian corporation
- Eligible salary and wages are:
At least $2,000,000 if the tax year ends on or after February 22, 2017, or
- Eligible salary and wages are:
between $100,000 and $2,000,000 and either one or both of the following applies:
- Its principal business is developing interactive digital media products
- All or mostly all of its business consists of providing eligible activities to a corporation that has a permanent establishment in B.C. and whose principal business is developing interactive
- Has a registered employee shared ownership plan
- Is a registered employee venture capital corporation, or is controlled indirectly or directly by one
- Is a registered small business venture capital corporation, or is controlled indirectly or directly by one
- Claims a B.C. scientific research and experimental development (SR&ED) tax credit (you cannot claim both in one tax year)
- Carries on a personal services business