In many Canadian provinces, special tax credit programs exist that are similar to, and often supplement, the federal Scientific Research and Experimental Development (SR&ED) tax incentive program. These provinces recognize that multimedia will form much larger industries within their borders in the future, so they are encouraging digital media growth in various ways.
For that reason, Espresso has created a financial product around these Digital Media Tax Credits that can be used to finance working capital for digital media companies and agencies. This bridge financing, which is backed by approved digital media tax applications, improves cash flow significantly.
Digital Media Tax Credits support the creation of multimedia whose primary purpose is to educate, inform or entertain. These tax credit programs have been growing in both scope and size for some time and now provide substantial financial assistance to small and medium digital media companies. Each province has its own process, which usually takes 12 to 24 months from the date the expense is incurred to issue the refund. Obviously, this puts a large dent in some companies’ cash flow and, as a result, Espresso’s digital media tax credit financing product is becoming more popular every day.
So far, Digital Media Tax Credits exist in the provinces of British Columbia, Ontario, Nova Scotia, Manitoba, PEI and Quebec. These provinces provide an incentive based on in-province labour expenditure. Some also provide incentives for marketing and distribution expenses. Each province has different restrictions, with the most common being:
- Canadian taxable corporation with permanent operations in province
- Wages and salaries to provincial residents
- Labour incentive applies to employees, freelancers and contractors
Contact us to discuss how these tax credits can help your business.
|BC||17.5% of labour||BC Ministry of Finance|
|ON||40% of labour (no max.), marketing and distribution (max $100,000 per product)
Fee for service products: 35% of labour
|Ontario Media Development Corporation|
|NS||Lesser of 50% of labour (+ 10% if outside of Halifax) or 25% of total expenditure (+ 5% if outside of Halifax)
Marketing and distribution (max $100,000 per product)
|Nova Scotia Ministry of Finance|
|MB||40% (max $500,00 per project) of labour||Manitoba Government|
|PEI||37.5% of labour||Innovation PEI|
|PQ||30% of labour + 7.5% if in French for multimedia produced without receiving an order
26.25% of labour for multimedia produced with a specified order