New Media Manitoba (NMM) is excited to share that the Manitoba Interactive Digital Media Tax Credit (MIDMTC) received enhancements in the 2021 Provincial Budget announced in April.
NMM is thrilled that our Manitoba government recognizes the importance of Manitoba’s IDM industry and is thankful to Minister Ralph Eichler and the Department of Economic Development and Jobs for responding to the needs of the industry. They are serious about driving economic development through innovation.
NMM would also like to thank Economic Development Winnipeg for collaborating with us to champion the proposed changes that further stimulate growth in Manitoba’s IDM sector.
This tax credit — and the new changes to it — help Manitoba’s IDM companies become more competitive in a complex global market for their products and services. By being better attuned to the needs of companies operating in Manitoba, the new look MIDMTC will help our sector grow, commercialize new products, and help establish Manitoba as a hub for IDM activity in Canada and beyond.
MIDMTC can also help IDM companies attract significant amounts of private investment to our province. In turn, this investment (along with more organic company growth) creates full time, permanent, knowledge-based industry jobs.
Broadly speaking, the 2021 changes can be identified in three groups:
- The Manitoba IDM Tax Credit is now permanent with no sunset clause;
- Program guideline changes that allow for a broader range of eligible product development activities;
- Administrative changes that relate to how the MIDMTC is implemented on a practical level.
Key MIDMTC enhancements from Budget 2021:
- MIDMTC is Permanent
By making the tax credit permanent, it allows companies looking to invest in Manitoba’s IDM industry to be more confident about the policy support and business environment into which they are entering. As such, it will contribute to company attraction efforts, while providing an incentive to existing Manitoba companies to invest in multi-year projects with predictable outcomes.
- Expanded Eligible Types of Labour Expenditures
The list of eligible product development activities has expanded. Eligible labour costs can now include the development of downloadable content, IT activities, data management and analysis, and LiveOps product improvements and updates.
This change results in the claimed labour on a project to be closer to the 40% statutory rate stated in the guidelines. As a result, it makes the credit more competitive, while increasing the flexibility of the credit.
- More Flexible Model of Eligible Expenses
MIDMTC now supports labour expenditures for further development of existing eligible products. This change allows for activities such as the post-launch development of additional downloadable content, on‑going product improvements and updates to be supported as the tax credit no longer automatically stops when a product first launches commercially.
- Implemented Continual Structured Knowledge Sharing
The Manitoba government and New Media Manitoba will meet on a semi-regular basis to promote a shared understanding of changes in the industry and emerging changes in the sector.
- Modernized Application Process
Through the Continual Structured Knowledge Sharing, NMM and the Manitoba government will work together on modernizing the application process and reducing the administrative burden to applicants. Including:
- the development of an online portal, which will allow companies to apply to the tax credit more easily (e.g., they would not have to re-enter corporate information). This will make the process more predictable as all interactions are logged and tracked (and so can be extended beyond the tenure of any given administrator); and
- the creation of a “slate” application option, to make the credit more efficient to apply for when an applicant has multiple eligible projects in a given fiscal year.
*All of the above changes will be retroactive to January 1, 2021.
These improvements offer added predictability, efficiency, and flexibility which ultimately make it a much more competitive tax credit. These changes place Manitoba in a very competitive position with respect to IDM tax credit support offered in competing Canadian provinces by helping to reduce the cost of the main source of IDM success: talented people.
They will thereby allow Manitoba’s IDM industry to attract and retain a larger IDM workforce — and thus to capture its fair share of global IDM growth at a time when we are seeing record levels of consumer demand for IDM products. These changes position the industry for several longer term impacts, including growing the local labour pool as more companies will be hiring as a result. Ultimately, we expect these changes to drive Manitoba to being a major IDM hub in Canada. We have all the tools required, and MIDMTC is an integral part of that future.
Finally, it is critical to remember the speed at which the IDM industry changes. The jurisdictions that will capture the most IDM-related growth will be those that adapt their support programs most quickly. By reflecting those industry changes in their review of the MIDMTC, the Manitoba government has begun a conversation (with our industry) to ensure that Manitoba is (and will stay) at the forefront of that growth.
Congratulations and thank you again to the Manitoba government for being bold in implementing these changes and making such a significant investment in our industry.
How does this tax credit work again?
If you haven’t accessed the MIDMTC before, this tax credit supports companies that are developing eligible interactive digital media products — regardless of whether it’s fee-for-service work or the creation of the company’s own intellectual property. The tax credit also applies whether you are undertaking the development of an entire product start to finish, or simply contributing a portion to the overall development of a bigger eligible product.
When you invest your time and resources into development, with Manitoba talent on your payroll or as 3rd party contracted labour, you are able to claim back part of the eligible labour costs which you incurred as a refundable tax credit.
Where can I find more information?
Find more information on the Department of Economic Development and Jobs website:
How can companies ask for guidance through NMM?
If you have any questions, or would like any help, please connect with us via email [email protected]. We’ll help you find answers and connect to the right people