Digital Media Tax Credit (DMTC)

By mmuise
Description:

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.


Comments on Funding:

Funding will be the lesser of 50% of qualifying expenditures, or 25% of total expenditures made in Nova Scotia.
A 10% geographic area bonus on qualifying expenditures (5% bonus on total expenditures) is available for products developed outside the area that is within a radius of 30 kilometers driving distance from Halifax City Hall.

Deadline: Rolling deadline
Eligibility:

The applicant must:

  • 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 and personnel in the province who can contract on behalf of the corporation,
  • be developing an interactive digital media product,
  • not be a prescribed labor-sponsored venture capital corporation under the federal Income Tax Act.
    To be eligible for the geographic area bonus, the corporation must:
  • have a permanent establishment in the eligible geographic area,
  • pay at least 50% of eligible salaries for the development of the eligible product to employees who work out of a permanent establishment in the eligible geographic area.
Application Steps:

The applicant must submit the completed, dated and signed application forms to the Nova Scotia Department of Finance and Treasury Board.

Documentation Needed:

The applicant must submit the following documentation:
1. the application and expenditure report,
2. declaration of Residency Forms for all employees listed in the expenditure report,
3. invoices for all third party work completed,
4. statements of eligible remuneration for all invoices,
5. statements detailing the qualifying expenditures and total expenditures of the “eligible product” (Affidavit, Review Engagement Report or Audit Report),
6. Articles of Incorporation and Memorandum of Association,
7. Shareholders Registry,
8. Corporate chart,
9. Gantt Chart,
10. the completed Digital Media Product,
11. the chain of title documentation - if the applicant does not retain principle ownership of the “eligible product”, he must provide a Certificate of Election form signed by the entity who owns the property rights,
12. Exchange of Information Form, which permits the Taxation and Federal Fiscal Relations Division (TFFRD) to exchange information related to the application for audit and verification purposes.

Other Things to Note:

Marketing and distribution expenditures to a maximum of $100,000 per eligible product became part of Qualifying Expenditures.

About the author
mmuise