| This consolidation is unofficial and is for reference only.
For the official version of the regulations, consult the original documents on file with the Office of the Registrar of Regulations, or refer to the Royal Gazette Part II. |
| Regulations are amended frequently.
Please check the list of Regulations by Act to see if there are any recent amendments to these regulations filed with our office that are not yet included in this consolidation. |
| Although every effort has been made to ensure the accuracy of this electronic version, the Office of the Registrar of Regulations assumes no responsibility for any discrepancies that may have resulted from reformatting. |
| This electronic version is copyright ©
, Province of Nova Scotia, all rights reserved. It is for your personal use and may not be copied for the purposes of resale in this or any other form. |
Citation
1 These regulations may be cited as the Digital Media Tax Credit Regulations.
Definitions
2 (1) In these regulations,
(a) “Act” means the Income Tax Act;
(b) “eligible employee” means an employee of an eligible corporation who
(i) was resident in the Province on the last day of the calendar year
immediately before the year in which their eligible salary was earned,
and
(ii) normally reports to a permanent establishment of the eligible corporation
in the Province;
(c) “eligible remuneration” means remuneration that satisfies all the requirements
in subsection 10(1);
(d) “government assistance” means assistance from a government or other public
authority whether as a grant, subsidy, forgivable loan, deduction from tax,
investment allowance or any other form of assistance, but does not include a
tax credit under Section 47A of the Act;
(e) “interactive digital media product” means a combination of 1 or more
application files and 1 or more data files, all in a digital format, that are
integrated and are intended to be operated together with all of the following
characteristics when they are being operated:
(i) their primary purpose is to educate, inform or entertain the user,
(ii) they achieve their primary purpose by presenting information in at least 2
of the following forms:
(A) text,
(B) sound,
(C) images,
(iii) by interacting with them, the user is provided with a personalized
experience in the following ways:
(A) they provide feedback to the user by giving a response tailored to
the user’s specific input,
(B) they allow the user to control or influence their experience in using
the product, and
(C) they have multiple paths that allow them to adapt to the individual
user’s skill level, preferences, decisions, actions, reactions or other
input;
(f) “marketing and distribution expenditure” means an expenditure that meets the
requirements of subsection 8(1).
(2) In Section 47A of the Act and these regulations, “eligible salaries” means salaries or
wages that satisfy all the requirements in subsection 9(1).
Application for a tax credit certificate
3 An application for a tax credit certificate under subsection 47A(3) of the Act must be made
no later than 30 months after the end of the taxation year in which expenditures for an
eligible product were made, in a form acceptable to the Minister of Finance of the
Province, or a person designated by the Minister of Finance of the Province, and must
include all of the following:
(a) statements detailing the qualifying expenditures and total expenditures for the
eligible product;
(b) proof that the eligible corporation is a legally valid, existing, taxable
corporation with its corporate registration status in good standing;
(c) a list of eligible employees, including all of the following for each employee:
(i) name,
(ii) social insurance number,
(iii) eligible salary,
(iv) occupation,
(v) residential address,
(vi) location of the permanent establishment of the eligible corporation to
which they normally report;
(d) for completed products, a copy of the eligible product, or for a website, a copy
of all text, sound and image files comprising the website and the website
address where the eligible product can be accessed;
(e) a list of dates and geographic locations for when and where the development of
the eligible product took place;
(f) the name of the eligible product’s owner and any documentation and
verification requested by the Minister of Finance of the Province, or a person
designated by the Minister of Finance of the Province;
(g) a statement that the information contained in the application is true and correct,
signed by an authorized officer of the eligible corporation;
(h) any information that the Minister of Finance of the Province, or a person
designated by the Minister of Finance of the Province, requires to determine
the eligible corporation’s compliance with the Act and these regulations.
Eligible corporation
4 A corporation must satisfy all of the following conditions to meet the definition of eligible
corporation in clause 47A(1)(a) of the Act:
(a) the corporation must be incorporated under the laws of Canada or a province
of Canada and must be a taxable Canadian corporation;
(b) the corporation must have a permanent establishment in the Province;
(c) the corporation must not be a prescribed labour-sponsored venture capital
corporation as defined in the Income Tax Regulations made under the Income
Tax Act (Canada).
Eligible product
5 A product must meet all of the following conditions to meet the definition of eligible
product in clause 47A(1)(c) of the Act:
(a) the product must be an interactive digital media product;
(b) the product must not be used primarily
(i) to present, promote or sell the products or services of a corporation or an
organization, or
(ii) for interpersonal communication;
(c) the product must not be a combination of application files and data files that is
developed primarily for use as
(i) operating system software, or
(ii) application software;
(d) the product must not be capable of inciting hatred against an identifiable group,
including a section of the public distinguished by colour, race, religion, sex,
sexual orientation or ethnic origin;
(e) the product must not be a product whose dominant characteristic is the undue
exploitation of sex;
(f) the product must not be pornographic in nature.
Qualifying expenditure
6 (1) A qualifying expenditure for an eligible product developed by an eligible
corporation must be the amount determined by adding together all of the following:
(a) eligible salaries;
(b) 65% of eligible remuneration;
(c) marketing and distribution expenditures to a maximum of $100 000 per
eligible product.
(2) An eligible expenditure in subsection 47A(6) must be determined the same as a
qualifying expenditure.
Total expenditure
7 (1) A total expenditure for an eligible product developed by an eligible corporation must
be the amount determined by the following formula:
OEL + MDE - GA
in which
OEL is the total of all outlays, expenses, losses or replacements of capital
incurred by the eligible corporation in the taxation year, except marketing
and distribution expenditures, that are
• directly attributable to the production of an eligible product,
• paid to an arm’s length person or entity with a permanent
establishment in the Province, and
• paid by the eligible corporation in the taxation year, or no later than
60 days after the end of the taxation year;
MDE is the total of all marketing and distribution expenditures, to a maximum
of $100 000 per eligible product;
GA is the total value of government assistance.
(2) The total expenditure must not be an amount for which the eligible corporation may
claim a tax credit under Section 41 or 47 of the Act.
Marketing and distribution expenditure
8 (1) A marketing and distribution expenditure incurred by an eligible corporation is an
expenditure that meets all of the following:
(a) the expenditure is directly attributable to advertising or promoting an eligible
product or distributing an eligible product to customers or potential customers;
(b) the expenditure is incurred by the eligible corporation no earlier than 24
months before the eligible product is completed and no later than 12 months
after the eligible product is completed;
(c) the expenditure is paid by the eligible corporation in the taxation year or no
later than 60 days after the end of the taxation year;
(d) the expenditure is not directly related to processing an order for an eligible
product from a consumer or shipping an eligible product to a consumer.
(2) For the purposes of subsection (1), a marketing and distribution expenditure incurred
for the human consumption of food or beverages or the enjoyment of entertainment
must be equal to 50% of the amount paid for the food, beverages or entertainment.
Eligible salaries
9 (1) A salary or wage paid by an eligible corporation must meet all of the following
requirements to be an eligible salary:
(a) the salary or wage must be paid to an eligible employee;
(b) the salary or wage must be reasonable in the circumstances;
(c) the salary or wage must be included in the cost of an eligible product and be
directly attributable to the production of the eligible product;
(d) the salary or wage must be incurred by the eligible corporation in the taxation
year, after June 30, 2007, and before January 1, 2021;
(e) the salary or wage must be paid by the eligible corporation in the taxation year
or no later than 60 days after the end of the taxation year;
(f) the salary or wage must not include any amount determined by reference to
profits or revenues;
(g) the salary or wage must not be an amount for which the eligible corporation
may claim a tax credit under Section 41 or 47 of the Act.
(2) An eligible salary incurred by an eligible corporation in a taxation year, but not paid
before the 61st day after the end of the taxation year, may be included in eligible
salaries incurred by the eligible corporation in a subsequent taxation year if the
eligible salary is paid no later than 60 days after the end of the subsequent taxation
year.
Eligible remuneration
10 (1) Remuneration paid by an eligible corporation must meet all of the following
requirements to be eligible remuneration:
(a) the remuneration must be reasonable in the circumstances;
(b) the remuneration must be included in the cost of an eligible product and be
directly attributable to the production of the eligible product;
(c) the remuneration must be incurred by the eligible corporation in the taxation
year after June 30, 2007, and before January 1, 2021;
(d) the remuneration must be paid by the eligible corporation in the taxation year
or no later than 60 days after the end of the taxation year;
(e) the remuneration must not be an amount for which the eligible corporation
may claim a tax credit under Section 41 or 47 of the Act;
(f) the remuneration must not be a marketing and distribution expenditure;
(g) the remuneration must be paid to any of the following arm’s length persons or
entities in the circumstances described:
(i) an individual who is not an employee of the eligible corporation, for
services rendered personally by the individual at a permanent
establishment in the Province;
(ii) the employees of an individual described in subclause (i), for services
rendered personally at a permanent establishment in the Province, if the
expenditure does not exceed the salaries or wages of those employees for
personally rendering those services;
(iii) a taxable Canadian corporation, for services rendered personally by an
individual at a permanent establishment in the Province, if all the issued
and outstanding shares of the capital stock of the taxable Canadian
corporation are owned by the individual and the activities of the taxable
Canadian corporation consist principally of providing the individual’s
services;
(iv) a taxable Canadian corporation, for services rendered personally by
employees of the taxable Canadian corporation at a permanent
establishment in the Province, if the expenditure does not exceed the
salaries or wages of those employees for personally rendering those
services;
(v) a partnership that is carrying on business in Canada, for services rendered
personally by any of the following at a permanent establishment in the
Province:
(A) a member of the partnership,
(B) employees of the partnership, if the expenditure does not exceed
the salaries or wages of those employees for personally rendering
those services.
(2) Eligible remuneration incurred by an eligible corporation in a taxation year, but not
paid before the 61st day after the end of the taxation year, may be included in
eligible remuneration incurred by the eligible corporation in a subsequent taxation
year if the eligible remuneration is paid no later than 60 days after the end of the
subsequent taxation year.
(3) In clause (1)(g), “salaries or wages” does not include any amount determined by
reference to profits or revenues.
Eligible geographic area of the Province
11 The area of the Province consisting of all of the Province except the area that is within 30
km driving distance of Halifax City Hall in the Halifax Regional Municipality is
prescribed as an eligible geographic area of the Province for subsection 47A(2) of the Act.
Expenditure incurred in eligible geographic area of the Province
12 An eligible corporation must use all of the following criteria to determine when an
expenditure has been incurred in an eligible geographic area of the Province for subsection
47A(2) of the Act:
(a) the eligible corporation must have a permanent establishment in the eligible
geographic area of the Province;
(b) no less than 50% of eligible salaries for the eligible product must be paid to
eligible employees who normally report to a permanent establishment of the
eligible corporation in the eligible geographic area of the Province.
Revocation of tax certificate
13 The Minister of Finance of the Province, or a person designated by the Minister of Finance
of the Province, may revoke a tax credit certificate issued to an eligible corporation if 1 or
more of the following applies:
(a) in the opinion of the Minister of Finance of the Province, or a person
designated by the Minister of Finance of the Province, the eligible corporation
has not complied with any provision of the Act or these regulations;
(b) the eligible corporation has not completed an eligible product 36 months after
beginning development of the eligible product.
Records kept by eligible corporation
14 (1) An eligible corporation must keep records in the form required by the Minster of
Finance of the Province, or a person designated by the Minister of Finance of the
Province, and containing any information the Minister of Finance of the Province, or
a person designated by the Minister of Finance of the Province, considers necessary
to determine that the eligible corporation is complying with the Act and these
regulations.
(2) An eligible corporation must keep the records at its head office, or at another place
approved by the Minister of Finance of the Province, or a person designated by the
Minister of Finance of the Province.
Legislative History
Reference Tables
Digital Media Tax Credit Regulations |
N.S. Reg. 441/2007 |
Income Tax Act |
Note: The
information in these tables does not form part of the regulations and is
compiled by the Office of the Registrar of Regulations for reference only. |
Source Law
The current consolidation of the Digital Media Tax Credit Regulations made
under the Income Tax Act includes all of the following regulations:
|
|
|
|
441/2007
|
Jul 1,
2007
|
date
specified
|
Dec 7,
2007
|
168/2017 |
Nov
28, 2017
|
date
specified
|
Dec.
8, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
The following regulations are not yet in force and are
not included in the current consolidation:
*See subsection 3(6) of the Regulations Act for
rules about in force dates of regulations.
Amendments by Provision
ad. = added
am. = amended |
fc. = fee change
ra. = reassigned |
rep.=repealed
rs. = repealed and substituted |
|
|
2(1)(e)(iii)......................................... |
rs. 168/2017 |
9(1)(d) .............................................. |
am. 168/2017 |
10(1)(c) ............................................ |
am. 168/2017 |
|
|
Note that changes to headings are not
included in the above table.
Editorial Notes and Corrections:
|
|
|
1 |
References to the Minister of Finance of the Province
should be read as references to the Minister of Finance and Treasury Board in
accordance with O.I.C. 2013-348 under the Public
Service Act, R.S.N.S. 1989, c. 376. |
Oct 22, 2013 |
|
|
|
|
|
|
Repealed and Superseded:
Note: Only
regulations that are specifically repealed and replaced appear in this
table. It may not reflect the entire
history of regulations on this subject matter.