If you are a Manitoba New Media freelancer or company your future is looking very bright.
The Manitoba Interactive Digital Media Tax Credit (MIDMTC) just received a significant boost in the recently announced 2013 provincial budget.
The MIDMTC has been around since 2008 but many New Media Producers found its qualifying criteria restrictive, and as a result, many interactive digital media projects did not benefit. Corrections to the tax credit have been a key priority for us over the past two years and Tuesday's 2013 budget announcement translates into a significant achievement for the New Media community in Manitoba.
For those of you unfamiliar with the MIDMTC you can download a copy of the former guidelines here. In a nutshell, the tax credit supports New Media companies doing fee-for-service work and creating their own intellectual property (eg. mobile apps, games, web apps, etc.) to the tune of a 40% labour tax credit. This means that all hired Manitoba labour related to your project could add up to a significant savings for you.
Below is a list of all the improvements announced in the Manitoba 2013 Budget that we have been working on with the Province that will result in notable benefits for interactive digital media companies:
- The tax credit is equal to 40% of qualifying labour costs related to the production of eligible interactive digital media projects. The maximum tax credit for a project is $500,000.
Nothing new to note here. These amounts correspond to what was available to our industry previously.
- The Interactive Digital Media Tax Credit, which was set to expire December 31, 2013, is extended to December 31, 2016.
This was the first task: ensuring the MIDMTC was renewed (check).
- Companies may claim up to $100,000 in eligible marketing and distribution expenses that are directly attributable to that eligible project;
HUGE improvement! This puts the MIDMTC on par with other provinces like Ontario and Nova Scotia, and ensures that when you’re developing a product you can maximize the promotion and distribution to help it sell successfully. Many will argue that Marketing is as important as (if not more important than) the product itself!
- Financial support from the Canada Media Fund that is recoupable or repayable will not be treated as “government assistance;”
This is another significant improvement. Previously, if you received money from the Canada Media Fund (a resource that 3 New Media companies in Manitoba accessed last year to the tune of 1.5 million dollars) your labour tax credit would get clawed back. Now you can benefit from both the CMF and MIDMTC!
- An eligible product that is developed under contract for an arm’s-length purchaser does not need to demonstrate the product will be resold or licensed by that arm’s-length purchaser
This was a huge sticking point for us before Tuesday. This new wording means that if you do fee-for-service work for another company, the end product does NOT need to be sold by your client. In other words, a client could come to you to develop an in-house interactive training tool for their staff, and you would still be able to apply the 40% tax credit to the labour expenses in your company.
- A broader interpretation of the sale requirement will provide the province with added flexibility in determining which types of commercialization projects will be eligible.
This is also an important modification and compliments the update previously mentioned. It leaves open the possibility for existing and future business models that were previously undefined in the MIDMTC to be eligible. It's a recognition that our industry is creating new and innovative ways to generate business and the tax credit will be able to adapt and apply to these new models!
The above modifications put us on par with some of the tax credits offered in other provinces and greatly incentivize clients looking to do work with Manitoba New Media companies. It also gives a prod to those of you developing your own products to "put a wiggle on it".
I also want to add that our meetings related to the tax credit with the Premier, and the Department of Innovation, Energy and Mines, have been extremely encouraging over the last year. The Province of Manitoba has shown they believe in this industry through both words and action. We're so grateful for the wonderful industry support we've received not only through this 2013 Budget, but for the past 7-years from all the Federal/Provincial departments like Innovation, Energy and Mines, Entrepreneurship, Training and Trade, Western Diversification, NRC IRAP, Manitoba Trade, and of course all of you!
Just a quick note that there will be an email in the next few weeks with an event date to explain the Manitoba Interactive Digital Media Tax Credit and new updates in more detail once the budget and guidelines are officially approved.
In the meantime pour yourself a cold beverage and relish the fact that you're doing work that Manitoba and the world values. It's a great time to be working with New Media!