A video gaming company will receive a tax credit equal to 17.5% of qualified expenses (minus $5,000 registration fee) if its primary business is the development of interactive digital media. But to get the credit you need to go through a two stage process. First you need to register. Then you can make the claim.
Registration is a lengthy process. It will take a week to complete the application form. Then the Ministry of Finance will determine whether your principle business is the development of interactive digital media. If you’re in the business of developing serious video games this process is not lengthy. But if you are not a serious game developer and you think that your primary business is the development of interactive digital media be prepared to be strip searched. As you can image a thorough search in a side room takes longer than walking through a metal detector. Much longer. So you need to figure for another few weeks of interaction with the Ministry, it could run to months depending on your and their timeliness of response.
Only once you’ve been through the vetting process can you make a claim. More time. And your primary business is re-evaluated yearly. That’s why we’re wondering. Is the BC IDMTC worth the effort? Remember that if you claim SR&ED, the IDMTC is worth only the increment between the IDMTC what you would have received from SR&ED.
If you’re not a serious game developer, you need to do the math. You may eventually receive dollars/you may not. Either way it’ll cost you time. For more of our view contact Ruth.Spink@RevenueServices.ca
One strike and you're out. Proving that your primary business is interactive digital media development.
A company can receive a registration number for the BC IDMTC only if it’s “principle business” is developing interactive digital media products.
It all comes down to the “I”. It used to be that Interactive meant any software that responds to user’s activity. The Ministry of Finance on their FAQ for BC IDMTC webpage defines an interactive digital media product as “an interactive product designed for use by an individual, the primary purpose of which is to educate, inform or entertain, and must include at least two of the following forms: text, sound and images. This may include, but is not limited to video games.” But really they don’t mean educate or inform and there’s a gratuitous ‘not’ in the last sentence.
The Ministry has clarified, in person but not yet in writing, that in order to meet the definition of “Interactive” Digital Media, companies need to be developing video games. However, being a game developer is a necessary but not sufficient requirement. It’s not enough to develop a video game. It has to be a specific type of game. The Ministry of Finance has clarified. In order to be considered an interactive game the user must be able to influence the ultimate outcome based on inputs. And there should be a large number of possible outcomes for the game to be considered interactive. So learning software – no; Simple children’s games – no; Social Media – no Seems odd that the Ministry’s information packages say that “This may include, but is not limited to video games.” when in fact, it is.
For more information on life inside the BC IDMTC please contact Ruth.Spink@RevenueServices.ca
British Columbia’s new interactive digital media tax credit was introduced in the province’s March 2010 budget. The new refundable credit applies to interactive digital media products developed in British Columbia between September 1, 2010 until September 1, 2015. The credit is a refundable credit equal to 17.5% of eligible salaries and wages incurred by qualifying corporations in the development of interactive digital media products, i.e., those designed for use by an individual to educate, inform or entertain, and capable of presenting information in at a minimum of two of the following formats: text, sound and images. Qualifying corporations are companies whose principal business is the development of interactive digital media products or the provision of eligible activites to such a business. Read more »
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ADDITIONAL NET INCOMEFunding & Tax Credits