The interactive digital media tax credit (IDMTC) is for eligible registered corporations that develop interactive digital media products in B.C. after August 31, 2010 and before September 1, 2023. Your corporation must register with the Ministry of Finance and pay the application fee for each tax year that it wants to claim the IDMTC.
The credit is calculated as 17.5% of eligible salary and wages incurred in the tax year.
Budget 2017 Update amended the IDMTC program to:
Allow eligible business corporations participating in the Small Business Venture Capital Program to claim the credit for tax years that end on or after February 22, 2017.
Allow corporations whose annual qualifying B.C. labour expenses exceed $2 million to claim the credit, even if their principal business is not the development of interactive digital media products, for tax years that end on or after February 22, 2017.
What is an Interactive Digital Media Product?
An interactive digital media product (IDM product) is designed to be used interactively by an individual and:
- Consists of a combination of application files and data files, in a digital format, that are integrated and are intended to be operated together,
- Is designed primarily to educate, inform or entertain the user,
- Is capable of presenting information in at least two of the following forms:
- Is intended to be used interactively by individuals, and
- Is developed in British Columbia
but does not include a prescribed product.
Some examples of IDM products are:
- Video games
- Educational software
- Edutainment products
For the purpose of the IDMTC, products that are not intended to be used interactively, such as blogs, online magazines or newspapers, slide shows, videos or PowerPoint presentations, video streaming applications, and social media products are not IDM products.
- Learn more about the IDMTC and the IDMTC for augmented reality and virtual reality products
Claiming the Credit
Claim the credit no later than 18 months after the end of the tax year in which the eligible salaries and wages are incurred. The credit is fully refundable, but is first applied against total income tax payable. There are no carry-back or carry-forward provisions.
Claim the credit by completing Schedule 429, British Columbia Interactive Digital Media Tax Credit and then entering the amount of the credit on line 680 of Schedule 5, Tax Calculation Supplementary – Corporations. You’ll need to submit both schedules with your T2 Corporation Income Tax Return.
The following legislation applies to the interactive digital media tax credit program:
- Income Tax Act (B.C.) Part 10
- Interactive Digital Media Tax Credit Regulation