Nova Scotia Innovation & Digital Media Tax Credits (2025 Guide)

Nova Scotia businesses in technology, innovation, and digital media can access a suite of valuable tax credits and incentives that encourage investment, commercialization, and the creation of high-tech jobs. Provincial credits are fully stackable with generous federal programs such as SR&ED, allowing companies to multiply their after-tax savings and accelerate growth. This guide provides an in-depth look at the most important Nova Scotia innovation and digital media tax credits, eligibility requirements, claim process, key tips, and strategic advice for maximizing your claim.

1. Innovation Equity Tax Credit (IEQC)

  • What is it? The IEQC is a refundable tax credit to encourage investment in eligible Nova Scotia-based innovation companies, including early-stage tech, life sciences, and clean tech startups.
  • Who Can Claim? Investors (individuals and corporations) who purchase eligible shares in qualifying Nova Scotia innovation companies may claim the credit.
  • Credit Amount: Up to 35% (or 45% for CEDIFs) of eligible investment, with annual and lifetime maximums. Refundable against Nova Scotia taxes.
  • Eligibility & Process: Company must be pre-approved by Nova Scotia Department of Finance. Investors receive a T2C slip and file with their Nova Scotia tax return. Minimum holding period applies.
  • Stacking: Can combine with federal and other provincial incentives but not with the Nova Scotia Equity Tax Credit for the same investment.

2. Digital Media Tax Credit

  • What is it? A refundable tax credit for eligible corporations developing interactive digital media products—such as video games, educational software, apps, and e-learning—in Nova Scotia.
  • Who Can Claim? Corporations (not individuals or partnerships) with a permanent establishment in Nova Scotia, incurring eligible Nova Scotia labour expenses on digital media projects.
  • Credit Amount: Up to 50% of eligible Nova Scotia labour (plus 10% bonus for projects developed outside Halifax Regional Municipality). Credit is refundable against provincial taxes.
  • Eligibility & Process: Projects must meet criteria for interactivity and Nova Scotia content. Application and pre-approval required. Claim on NS479 with your T2 return after product completion.
  • Stacking: Eligible expenditures can also be used for the federal SR&ED credit, but cannot be double-claimed for the same expense under both programs.

3. Federal SR&ED (Scientific Research & Experimental Development)

  • What is it? The SR&ED program is Canada’s largest R&D tax incentive, offering refundable and non-refundable credits for eligible research, development, and experimental activities performed in Nova Scotia.
  • Who Can Claim? Incorporated businesses performing qualifying R&D work in Nova Scotia, including startups, SMEs, and large firms.
  • Credit Amount: Up to 35% federal (refundable for CCPCs) plus 15% Nova Scotia provincial (see below). Can be combined with the Digital Media Credit for distinct eligible expenditures.
  • Claim Process: File T661 (SR&ED claim) with your T2 return and include NS428 and NS479 for Nova Scotia credits. Keep project records, technical descriptions, and expense documentation.

4. Nova Scotia Research & Development Tax Credit

  • What is it? A 15% non-refundable provincial tax credit on eligible SR&ED expenditures performed in Nova Scotia and claimed on your federal T661.
  • Who Can Claim? Corporations with a permanent establishment in Nova Scotia that incur SR&ED expenses in the province.
  • Stacking: Provincial credit is claimed in addition to the federal SR&ED credit, but expenditures must meet both federal and provincial requirements.
  • Claim Process: File NS428 and NS479 schedules with your T2 corporate tax return.

5. Stacking Strategies & Maximization Tips

  • Plan project expenditures to maximize eligibility for all available credits. For example, allocate eligible employee time between digital media, SR&ED, and innovation activities with careful recordkeeping.
  • Apply for pre-approval where required (especially for IEQC and Digital Media Credit) before incurring major costs.
  • Maintain detailed records and documentation for all employees, contractors, and eligible expenditures. CRA and Nova Scotia Finance may request evidence during audit.
  • Consult a Nova Scotia tax specialist for complex claims or if you wish to combine multiple incentives.
Tip: Many Nova Scotia credits require the use of specific forms and schedules (e.g., NS479, NS428, T661). Always keep copies of pre-approval letters, technical/project documentation, and payroll records. Claim deadlines are strict and late claims are rarely accepted.

Related Nova Scotia Business Tax Pages

For more, return to the Nova Scotia Business Credits Directory.