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.
As of January 1, 2008 the credit rates were increased. Tax credit amounts will now be equal to the lesser of:
- 50 percent of eligible Nova Scotia labour expenditures; or
- 25 percent of total expenditures made in Nova Scotia
A 10 percent geographic area bonus on labour expenditures (5 percent bonus on total expenditures) is available for products developed outside the Halifax Regional Municipality.
| Digital Media Tax Credit Rates |
| Base Tax Credit Rates | Regional Bonus of | Total Potential Tax Credit |
| Qualifying Expenditures | 50% | 10% | 60% |
| Total Expenditures | 25% | 5% | 30% |
Corporations may also be eligible to receive a credit on marketing and distribution expenditures to a maximum of $100,000 per product. These expenditures may be made outside the province.
Eligibility
To be eligible for this credit, a corporation developing an interactive digital media product must satisfy all of the following requirements:
- Be a taxable Canadian corporation
- Corporation must have a “permanent establishment” in Nova Scotia, meaning:
- A fixed place of business in the province
- Assets in the province to develop the product
- Personnel in the province who can contract on behalf of the corporation
- Corporation must not be a prescribed labour-sponsored venture capital corporation under the federal Income Tax Act
To be eligible for this credit, the digital media product:
- Must be interactive
- Primary purpose must be to educate, inform or entertain users
- May be developed for use by either individuals or businesses
- Must achieve its primary purpose by presenting information in at least two of three formats: text, sound or images.
To be eligible for the geographic area bonus, the corporation must:
- Have a permanent establishment outside the Halifax Regional Municipality
- At least 50 per cent of salaries for the development of the product must be paid to employees who work out of a permanent establishment in the eligible geographic area.
Note: There is no requirement for the corporation to own the copyright to the product.
The following products are NOT eligible for the credit:
- Operating system software
- Application software (e.g. database, spreadsheet, word processing)
- Products developed primarily for interpersonal communications (e.g. cellphone, e-mail software)
- Any product that is pornographic or discriminatory
- Any product that is primarily used to advertise or promote a corporation or organization
Eligibility is assessed on a product-by-product basis.
How to ApplyTo get the credit, corporations must apply to the Nova Scotia Department of Finance and meet the eligibility criteria listed above.