Let’s face it, it’s not easy to take an idea and turn it into reality. Being an entrepreneur is hard because it’s all on you! Success is on you. Results are on you. Making the call is on you. Worst of all, doing the things you don’t like to do… also on you.
The truth is that being an entrepreneur will test you in ways you didn’t think possible but we want you to pursue it anyway. We also want you to know, you’re not alone. There are a ton of support services and funding opportunities available to entrepreneurs in the Okanagan ready to take the plunge.
Finances are one of the many problems faced by entrepreneurs on a regular basis. Luckily, there are a variety of government opportunities that can subsidize some of those costs. We caught up with Viet Lê from BDO who has a tip on how the gaming industry can increase their tax credits!
What are some tax credit opportunities available for digital media companies?
The Scientific Research and Experimental Development Tax Incentive Program (SR&ED) is the single largest source of federal government support for industrial research & development. However, SR&ED for the gaming industry is NOT always the best funding source on its own.
While SR&ED will generally get you 64.3% back for every dollar you spend, you could get a whole lot more when you combine SR&ED with BC’s Interactive Digital Media Tax Credits (IDMTC).
What does IDMTC offer that SR&ED doesn’t?
BC’s IDMTC tax credit scope expands beyond the technical team (developer, QA, and first-level supervisor) to include your creative team, as well—artists, producers, UI/UX, and animators. Moreover, you can capture all of their time spent on developing the game, not just the R&D portion.
How big of an impact does that make for the tax credit?
You can claim $184,250 under SR&ED, which translates to $118,500 of refundable tax credits. When you file SR&ED and BC’s IDMTC, the federal amount claimed remains the same; however, for BC’s calculations, you are claiming the full salary amount at $475,000. Combined, this translates to $183,000 in refundable tax credits. That’s an additional 54% above what you would have received from filing SR&ED alone.
Viet illustrated this impact in the example below:
Which products would be considered an Interactive Digital Media product?
- Video games
- Educational software
- Edutainment products
- Augmented and virtual reality products (utilizing a game engine)
How could someone determine whether they were eligible for SR&ED + IDMTC?
To see if you’re eligible for SR&ED, you can refer to Accelerate Okanagan’s previous SR&ED blog.
For IDMTC, your company must be substantially focused on developing interactive digital media products and/or revenue from these products. Moreover, employees must be a resident of BC at the start of your fiscal year.
To learn more about funding and support resources,you can book an appointment with Viet during BDO’s Office Hours on Friday, January 10. He’ll be there from 9:00 am – 3:00 pm!