Interactive Digital Media Tax Credit

Insider Tip

Register with BC Ministry of Finance BEFORE your development employees start working on the qualifying product — registration must be in place before you incur the eligible wages, and retroactive registration is not permitted. The strategic play is to claim BC IDMTC (25%) provincially AND federal SR&ED on the same eligible expenditures — these two programs can be stacked and the combined benefit is significantly higher than either alone. However, you CANNOT also claim BC provincial SR&ED on the same wages as the IDMTC. The 25% rate (up from 17.5%) only applies to wages incurred on or after September 1, 2025 — claims for prior fiscal years use the older rate.

Rejection Pitfalls 10

• Product fails the 'interactive' test — blogs, online magazines, streaming video, social media, slideshows are explicitly excluded
• Product enables gambling with currency (excluded as of September 1, 2024)
• Eligible wages under $100,000 threshold for the tax year

Success Profile

BC corporation (or foreign company with BC permanent establishment) actively developing interactive digital media products: video games, educational software, e-learning platforms, VR/AR applications, or interactive training tools. Must pay BC-resident employees. Total eligible BC salary/wages must exceed $100,000/year. Principal business is IDM development, OR 51%+ of gross revenue comes from IDM development. Studio has documentation systems in place (time-tracking, payroll records). Typically: game development studios, edtech companies, simulation/training software firms, VR/AR developers. Vancouver studios at all stages claim this — from 3-person indie studios to 200+ person AAA studios.

Evaluation Criteria

Two-stage formula-based entitlement. Stage 1: Annual eTaxBC registration — BC Income Taxation Branch verifies that the corporation meets the principal business test (IDM is principal business) or the 51%+ revenue test, and that the products being developed are eligible interactive digital media (not passive content, gambling, or social media). Stage 2: CRA T2 processing — verifies the wage calculation and time-allocation documentation. Not a merit-based competition.

Application Steps

Required Documents 8

Eligible Expenses 3

• Salaries and wages paid to BC-resident employees spending 90%+ of their working time on eligible IDM development activities
• Eligible IDM development activities include: game design and programming, interactive educational software development, VR/AR application development, interactive training tool development
• Employer-paid CPP and EI contributions on eligible wages

Ineligible Expenses 8

• Contract labour from non-employee workers (only employee wages qualify)
• Wages for marketing, promotion, and advertising activities
• Wages for administration and HR activities
• Wages for management activities not directly related to development
• Wages for quality assurance of non-eligible products
• Wages paid to non-BC-resident employees
• Wages for gambling-related product development (as of September 1, 2024)
• Wages below the $100,000 minimum threshold for the tax year

Intake Periods

Annual registration required via eTaxBC for each tax year. No program-level intake windows — program is permanent with no expiry date.

Deadline Notes

Program is now permanent (no expiry date) as of March 2025 announcement. Annual registration must be filed via eTaxBC for each tax year. Credit must be claimed with CRA no later than 18 months after fiscal year-end. Application fee must be paid per year.

Open Application Portal →

Ineligible Organizations

• Corporations whose principal business is not IDM development and which earn less than 51% of gross revenue from IDM development
• Corporations developing primarily passive content (streaming video, blogs, online magazines, slideshows)
• Corporations developing products that enable gambling with real currency
• Corporations developing primarily social media or person-to-person communication products
• Corporations without BC-resident employees or without a BC permanent establishment
• Sole proprietors, partnerships, and individuals (corporations only)

Compatible Programs

Clawback Risk

Low Risk

Low. IDMTC has no clawback provision for post-period relocation or business changes. Risk is limited to annual reassessment if CRA or BC Income Taxation Branch audits the wage allocation methodology. No multi-year clawback exposure.