Canada Digital Media Tax Credits & Incentives Directory
A complete guide to digital media tax credits in Canada: federal and provincial/territorial programs for video games, interactive apps, film/TV digital, and more. Learn eligibility, claim process, and maximize your credits.
Overview: What Are Digital Media Tax Credits?
Canada is a world leader in digital media, video game development, animation, and interactive content. To fuel this sector, governments offer generous tax credits to companies engaged in qualifying digital media production. These credits support the creation of original interactive products, such as:
- Video games (console, PC, mobile)
- Educational and training software
- Interactive websites and apps
- Animation and digital effects for film/TV
- Augmented/virtual reality experiences
Digital media tax credits can significantly reduce development costs, often covering 17%–40% of eligible labour expenses (sometimes more), and are available at both the federal and provincial levels. Many provinces offer refundable credits, meaning you can receive a cash refund even if your company has no taxable income.
Federal Digital Media Tax Credit Options
While most digital media production incentives are provincial, the federal Scientific Research & Experimental Development (SR&ED) tax credit can apply to technical innovation in digital media. If your project involves new or improved technology, SR&ED may cover a portion of qualifying expenditures.
- SR&ED Tax Credit: Up to 35% refundable (CCPC) or 15% non-refundable (other corporations) on eligible expenditures including salaries, subcontractors, and materials for R&D work.
- SR&ED can be stacked with provincial digital media credits in many cases, amplifying benefits.
Major Provincial Digital Media Credits
Most provinces with a significant digital media industry offer specialized refundable tax credits. These typically require that the product is original, interactive, and developed primarily in the province. Below is an overview of key programs:
| Province/Territory | Credit Name | Rate | Main Eligibility | Links |
|---|---|---|---|---|
| Ontario | Ontario Interactive Digital Media Tax Credit (OIDMTC) | Up to 40% refund of eligible Ontario labour; 35% for non-specified products | Corporations developing original interactive digital media products (e.g. games, educational apps) in Ontario | OIDMTC |
| Quebec | Tax Credit for the Production of Multimedia Titles | 26.25–37.5% (refundable) of eligible labour | Corporations producing eligible multimedia (games, e-learning, etc.) in Quebec; enhanced for French language content | Revenu Québec |
| British Columbia | Interactive Digital Media Tax Credit (IDMTC) | 17.5% of eligible BC labour | Corporations developing interactive digital media products (video games, e-learning, etc.) in BC | BC IDMTC |
| Manitoba | Interactive Digital Media Tax Credit | Up to 40% of eligible labour & some marketing | Corporations developing interactive digital media in Manitoba | MB IDMTC |
| Nova Scotia | Digital Media Tax Credit (discontinued – now through Film Incentive Fund) | Was up to 50% of eligible labour (now case-by-case grants) | Eligible digital media projects via NS Film & Television Production Incentive Fund | Film & TV Incentive |
| Newfoundland & Labrador | Interactive Digital Media Tax Credit | 40% of eligible local labour | Corporations producing eligible interactive digital media in NL | NL IDMTC |
| Prince Edward Island | Innovation PEI Interactive Digital Media Tax Credit | 25% of eligible PEI salaries | Corporations developing interactive digital media in PEI | PEI IDMTC |
| Saskatchewan | No dedicated IDM tax credit (general R&D incentives apply) | - | - | SK Business Credits |
| Alberta | New Interactive Digital Media Tax Credit (AIDMTC, since 2019) | 25% of eligible labour | Corporations with eligible digital media projects in Alberta | AB IDMTC |
| Other Territories/Provinces | No dedicated program (SR&ED or general business credits apply) | - | - | National Business Credits |
See more details on each province/territory's business tax credits directory.
Eligibility Criteria
- Corporation residency: Applicant must be a Canadian-controlled corporation (CCPC) for most refundable credits; foreign-owned may qualify in some provinces if permanent establishment.
- Product type: Must be an original interactive digital media product (video game, e-learning, simulation, app, etc.). Websites must be interactive (not just informational).
- Development location: Majority of work and employees must be in the province or territory granting the credit.
- Ineligible products: Most programs exclude gambling, promotion, or content primarily for marketing.
How to Claim: Steps & Documentation
- Register or apply with the province's digital media office or economic development agency (often required before or during production).
- Track eligible expenditures: Maintain detailed payroll records, contracts, and timesheets for staff and contractors.
- Prepare supporting documents: Provide product demos, project descriptions, and proof of interactivity/originality.
- File tax credit claim: Submit required forms with your T2 corporate tax return; attach provincial certificates or approvals.
- Respond to review/audit: Be prepared for follow-up questions or audits; keeping records for at least 6 years is recommended.
Some programs require a two-stage process: first, an eligibility certificate; then, a final claim with supporting financials.
Calculation Example: Ontario OIDMTC
Scenario: An Ontario-based indie game studio spent $500,000 in eligible Ontario salaries on a new educational game. The game meets all OIDMTC requirements.
- OIDMTC claim: 40% × $500,000 = $200,000 refundable tax credit
- If also eligible for SR&ED on $150,000 of technical R&D work, they could claim an additional 35% × $150,000 = $52,500
Note: SR&ED and digital media credits may overlap, but "no double-dipping" on the same expenditures—coordinate filings with a tax specialist.
Internal Links: Related Guides & Directories
FAQ: Digital Media Tax Credits in Canada
Can I stack provincial digital media credits with federal SR&ED?
Often yes, but you can't claim both credits on the same dollar of salary. You must allocate eligible work between programs. Consult a tax professional to optimize your claim.
Are video game companies from outside Canada eligible?
Foreign-owned companies can access many credits if they have a Canadian subsidiary employing local staff and meet residency rules.
Is the credit only for games?
No—many programs include e-learning, training, medical simulation, VR/AR, and interactive storytelling.
What if I contract out work?
Most credits focus on in-house salaries, but some allow a portion of contractor or third-party costs if work is performed in the province.
Can sole proprietors claim these credits?
Generally, no. Credits are for incorporated Canadian companies (CCPCs).
Official Resources
- Federal SR&ED Program (CRA)
- CRA: Provincial and Territorial Corporate Credits
- Canada Media Fund
- See provincial program links in the directory above.