Manitoba Interactive Digital Media Tax Credit

Where the applicant owns and retains the intellectual property for an eligible product, certain marketing and distribution activities, up to a maximum of $100,000 in eligible expenses, may also be eligible for a tax credit.

(A) Development labour costs The following development labour costs related to an eligible project may be submitted for assessment:

 100% of qualifying salaries, wages, project related bonuses and employee benefits paid to

Manitoba employees of the applicant corporation that are incurred, paid, and directly attributable to the development of an eligible product;

 65% of the eligible Manitoba labour component of fees paid to a qualifying third–party contractor

for work that is directly attributable to an eligible project;

 the qualifying portion of salaries and wages paid to a pre-approved Skills Transfer Allowance

recipient. This is a deeming provision for individuals who work and provide mentorship in Manitoba during the project period but file their taxes elsewhere. Deemed work must be pre-approved before it is incurred.

To be eligible, a development labour expense must

1. be directly attributable to an eligible project. For example, directly attributable expenses may

include developmental activities such as (but not necessarily limited to) interactive content development and programming, creation of downloadable content, LiveOps work, and project- related IT and data analysis labour;

1. be incurred by a qualifying corporation during an eligible project period, and after an application

for a Certificate of Eligibility is submitted and received by the department;

1. represent an eligible labour expense paid to a Manitoba resident (taxpayer), a qualifying third-

party contractor, or a pre-approved Skills Transfer Allowance recipient;

1. be reasonable in the circumstances in relation to industry standards;
2. not be an expense that is already covered by another form of government assistance or tax credit

(federal, provincial, municipal, or public body) – see page 8 for some exceptions;

1. not have been claimed as an expense pertaining to any other eligible project;
2. be incurred and paid prior to requesting a tax certificate (i.e. is not a payable or deferred expense);
3. have been incurred and paid in the current corporate taxation claim year, or the preceding two

taxation years.

Eligible Manitoba Resident Labour To qualify as an eligible Manitoba resident, an individual must live in Manitoba during the time that labour expenses are incurred; must normally report to a permanent establishment of the eligible corporation in Manitoba; and must subsequently file their taxes pertaining to that income as a Manitoban for the related tax year (except in the case of the Skills Transfer Allowance).

Note for claimants: A qualifying corporation will be required to collect, and provide on request, a Declaration of Residency completed by each employee for whom eligible salaries/wages are being claimed.

Qualifying third-party contractor fees An applicant corporation may claim 65% of eligible Manitoba labour fees paid to a qualifying third-party contractor.

To be eligible, a third-party contractor fee must represent a labour expense paid to a Manitoba resident for work performed directly on an eligible project on behalf of the qualifying third-party contractor. A qualifying third-party contractor can be an individual Manitoba resident, a taxable Canadian corporation with a permanent establishment in Manitoba, or a partnership carrying on business in Canada.

All qualifying contractor invoices must be accompanied by a Third-party Contractor Declaration. Invoices should indicate the Manitoba labour portion, and include a description of the services or activities performed by Manitoba residents.

Note: It is recommended that an applicant company confirm in advance that they have engaged a qualifying third–party company and that the contractor is employing eligible Manitoba resident labour.

Skills Transfer Allowance In certain circumstances, an applicant corporation can seek pre-approval through the Skills Transfer Allowance to hire or contract an individual who is not a Manitoban taxpayer and be eligible to receive a tax credit for a qualifying portion of their eligible wages. There are a number of terms and conditions pertaining to selection of an eligible Skills Transfer individual, including a requirement that the recipient live and work in Manitoba during the project period and mentor Manitobans during the project. Please contact a provincial representative for further details regarding the criteria and requirements of this allowance.

(B) Marketing and distribution costs A qualifying corporation that owns and retains the intellectual property rights to an eligible product may be eligible to claim a tax credit on certain marketing and distribution costs directly attributable to the advertising, promoting or distributing of its eligible interactive digital media product. Activities and expenses related to general promotion of the company will not qualify.

A maximum of $100,000 in eligible marketing and distribution expenses may be submitted per product.

The following marketing and development expenses may be submitted for assessment:

 100% of qualifying marketing and distribution expenses directly attributable to an eligible product

 50% of expenditures for food, non-alcoholic beverages and entertainment directly related to the

marketing and distribution of the eligible product To be eligible, a marketing and distribution cost must

1. be directly attributable to the advertising, promoting or distributing of an eligible interactive digital

media product. General advertising, promotion or networking of a company is not eligible;

1. be reasonable in the circumstances in relation to industry standards;
2. not be directly related to processing a customer’s order, or shipping or streaming an eligible

product directly to a consumer;

1. not include GST;
2. represent an expense greater than $50.00;
3. not be an expense that is already covered by another form of federal, provincial or municipal

government, or public body assistance;

1. not have been claimed previously;
2. not have been already claimed as a development labour expense;
3. not be claimed as an expense pertaining to any other eligible project;
4. be incurred and paid prior to requesting a tax certificate (i.e. is not a pending or deferred expense);
5. have been incurred and paid within a project period relating to a Certificate of Eligibility; and
6. have been incurred and paid during the current corporate taxation claim year, or the preceding two

taxation years.

Marketing and distribution expenditures may include expenses for labour, or non-labour, activities.

Eligible marketing and distribution expenditures may be paid to individuals and entities that do not have a permanent establishment in Manitoba and can be for goods and services provided outside Manitoba.

In the case of an expense related to multiple products, the expense may be proportionately divided among products. Only the portions directly attributable to an eligible product, during a time period made eligible by a Certificate of Eligibility, will qualify. No portion may be claimed more than once.

Examples of potential marketing and distribution expenditures are as follows:

1. Expenses associated with attending trade • Product displays, demonstrations and

shows where the eligible product is being in-store promotions promoted • Direct mail and telemarketing expenses

1. Advertising costs (including design) for • News releases and media kits

promoting the eligible product in print • Salaries related to the marketing and and other forms of media distributing of the product

1. Market research and focus group testing • Development of a visual identity

(branding) Are products that are developed partly in Manitoba and partly in other locations eligible?

Yes. If an eligible product is developed partly in Manitoba and partly in other locations, developmental labour expenses for the work undertaken in Manitoba can potentially qualify for an IDMTC if all other requirements are met. Please contact a provincial representative for further details regarding criteria and requirements for products that are developed partially in Manitoba.

Claimed through the Canada Revenue Agency on your corporate tax return.