Interactive digital media products are designed to be used interactively to educate, inform or entertain the user. Examples include video games and educational software. The interactive digital media tax credit is for eligible corporations that develop these products in BC between August 31, 2010 and September 1, 2023. It is a refundable tax credit equal to 17.5% of eligible salary and wages paid during the tax year.
BC IDMTC eligibility
Companies must be taxable Canadian corporations with a permanent establishment in BC in order to be eligible for the interactive digital media tax credit. They must also pay over $100,000 in eligible salary and wages over the course of the tax year.
In order to be eligible, companies must be primarily engaged in developing interactive media products, provide services to a corporation that develops interactive media products, or pay eligible salary and wages of $2 million or more.
Corporations that claim the BC scientific research and experimental development tax credit may not claim the IDMTC for the same tax year.
How to claim the interactive digital media tax credit
Corporations that want to claim the IDMTC must first register with the Ministry of Finance through the eTaxBC platform for each tax year they want to claim. They must also pay an application fee, which can be done through the platform.
To submit the claim, fill out Schedule 429, British Columbia Interactive Digital Media Tax Credit, enter the amount claimed on line 680 of Schedule 5, Tax Calculation Supplementary – Corporations, and submit both along with the T2 Income Tax Return.
The credit must be claimed no later than 18 months after the end of the tax year during which the eligible salaries and wages were paid. It is refundable, but must first be applied against the total amount of income tax payable. It cannot be carried back or carried forward.
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The government offers tax credits for all kinds of business activities. With such a wide variety of tax credits available, it’s all too easy for companies to be unaware of all of the credits they’re eligible for. A corporate tax specialist can help you take full advantage of everything your company is entitled to and make it much easier for you to file your tax returns.