How to Complete the Interactive Digital Media Tax Credit Application for Registration
Part A – Applicant Information
Business Address: The business address is the physical location of the corporation’s permanent establishment in B.C.
Contact Information: Your contact may be a lawyer, an accountant or a person in the corporation that is accountable for the Interactive Digital Media Tax Credit (IDMTC) program. If your contact is a person outside of the corporation, to ensure confidentiality, you must complete and submit an Authorization for the Interactive Digital Media Tax Credit Regulation (FIN 570) (PDF). An authorization may be changed or cancelled by notifying the ministry in writing.
Mailing Address: The mailing address is where all correspondence will be sent. Therefore, if correspondence is to be sent to your contact, provide the contact’s address as the mailing address.
Please check the box provided if you agree to correspond by fax and/or e-mail.
Part B – Registration Information
Question 2: You must advise the Income Taxation Branch in writing of any corporate reorganization that will result in a change to the corporation’s name, business number or tax year end.
Part C - Eligibility
Question 3: Permanent establishment has the same meaning as in the federal Income Tax Act and includes an office, factory or workshop in B.C.
Question 4: Taxable Canadian corporation has the same meaning as in the federal Income Tax Act and includes a corporation incorporated in Canada that has a permanent establishment in B.C. and is not otherwise exempt from tax.
Question 5: Interactive digital media (IDM) products include, but are not limited to, video games. If your principal business is the development of prescribed products, your corporation is not eligible for registration. Prescribed products include:
- Operating system software
- Products designed to be used by individuals for interactive communication
- Products designed for marketing or promoting an entity, product or idea
- Games classified by the Entertainment Software Rating Board as “AO” (Adults only)
- Products that, in the opinion of the minister, are contrary to public policy
Prescribed products are set out in the Interactive Digital Media Tax Credit Regulation.
Question 6: Answer 'yes' to only one of the options for this question.
- Select 'a' if more than 50% of your business is developing complete IDM products
- Select 'b' if:
- At least 90% of your business is providing services, like developing partial IDM products, to other corporations, or
- At least 90% of your business is developing complete IDM products as well as providing services to other corporations
Question 7: You may claim either the interactive digital media tax credit (IDMTC) or the B.C. scientific research & experimental development (SR&ED) tax credit, but not both, for any given tax year.
Question 8: Your corporation is not eligible for the IDMTC for a tax year if, for that tax year, you answer ‘yes’ to any part of Question 8.
Part D – Additional Information
Question 9: Include both IDM products in development and IDM products that can reasonably be expected to be in development during the tax year.
If your corporation provides eligible activities to other corporations in the tax year and does not develop IDM products, enter ‘nil’.
Question 10: The total eligible salaries and wages is the amount paid to B.C. resident employees who are directly engaged in eligible activities or who directly supervise or support employees directly engaged in eligible activities. It is the amount incurred or that can reasonably be expected to be incurred for the year.
Only the portion of an employee’s salary and wages that is directly attributable to eligible activities may be included. For example, if an employee works 70% of the time on non-eligible activities, then only 30% of the employee’s salary and wages would be considered directly attributable to eligible activities. The allocation method used must be reasonable, clearly documented and applied consistently.
Eligible salaries and wages do not include:
- Stock options
- Amounts paid to specified employees (see Question 12 below) that are:
- Based on profits or a bonus, or
- In excess of five times the year’s maximum pensionable earnings
- Amounts paid to employees for performing:
- Marketing services,
- Human resources services, or
- Administrative support or management services, or
- Development of an animated or live action scene or series of scenes, other than a cut scene, over which the user has limited or no control
- Amounts paid to contractors or sub-contractors
Total eligible salaries and wages are not reduced by any assistance received or that can reasonably be expected to be received. If your corporation receives (or expects to receive) assistance, other than federal SR&ED tax credits, you should include a description of that assistance as part of the supporting documents for the tax year.
Total eligible salaries and wages for the year must be greater than $100,000 (pro-rated for short tax years) to be eligible to register for the IDMTC.
Question 11: The number of B.C. resident employees engaged in eligible activities includes full-time and part-time employees of the corporation for the tax year. Contractors or sub-contractors are not included.
A B.C. resident employee is an individual who was a resident of B.C. on December 31 of the year preceding the end of the corporation’s tax year.
Eligible activities do not include marketing, human resource services, administrative support services or management services.
Question 12: A specified employee of a corporation has the same meaning as in the federal Income Tax Act. A specified employee includes an individual who:
- owns, directly or indirectly, 10% or more of the issued shares of any class of the capital stock of the corporation, or
- does not deal at arm’s length with the corporation.
Question 14: The number of employees at the end of the previous taxation year should include both full and part-time employees. If your corporation does not have a previous taxation year, enter ‘nil’.
Part E – Supporting Documentation
Your application can only be processed if all relevant supporting documents are attached.
Application fee: You must include a cheque or money order made payable to the Minister of Finance for the appropriate application fee.
The application fee is prescribed by regulation. The amount of the fee is based on the number of employees at the end of the corporation’s previous taxation year and is set out on the application form. If your corporation has no previous taxation year, the lowest fee will apply.
Specified employees: If you answered ‘yes’ to Question 12, you must attach a list with the names of all specified employees and the percentage of the company's shares they each owned.
Supporting documents: The following are examples of supporting documents that may help to establish your IDMTC eligibility. Acceptable alternative documents may be submitted based on a corporation’s specific circumstances and other supporting documents may be requested.
- Copy of your annual financial statements or interim financial statements for the tax period, including notes to the financial statements
- Short history of the corporation, including a list of previously developed products
- Current business plan (if available)
- List of all current and planned interactive digital media products for the tax year, including IDM product names, descriptions, development cycles, release dates, update release dates, and screenshots
- If you provide IDM services to other corporations, list the corporations associated with the IDM products
- Current organizational chart
- List of specified employees and key employees, including short biographies
- List of eligible salary and wages for all employees, including employee names, job titles, total salaries, and eligible salaries (Social Insurance Numbers aren't required)
- List of salaries and wages attributable to each eligible and non-eligible (if applicable) product developed for the tax period - the sum of this list should reconcile with the total estimated eligible salaries and wages for the claim
- Description of any assistance, other than federal SR&ED tax credits, received by the corporation for the tax year, such as Canada Media Fund, Industrial Research Assistance Program, or student training grants
Part F – Certification
You must have an authorized signing authority certify that all the information provided is true, correct and complete.
By signing, you also agree to notify the ministry of any changes to the information provided after the date of application. Changes to the estimated number of IDM products, salaries and wages, and number of employees are material to this application and could affect your corporation’s eligibility for registration.