Nova Scotia Digital Media Tax Credit (NSDMTC)

Insider Tip

The 10% rural bonus for development outside Halifax is a significant differentiator — studios in Dartmouth, Truro, or other non-Halifax locations get up to 60% effective rate. Nova Scotia's lower cost of living combined with this credit makes it increasingly attractive for remote-friendly game studios. The $100K marketing allowance per product is often overlooked but valuable for indie studios launching on Steam or console platforms.

Success Profile

Video game studios and interactive media developers operating in Nova Scotia. Growing cluster of indie studios in Halifax and surrounding areas. Companies with 5+ Nova Scotia developers typically see meaningful credit amounts. Studios developing original IP benefit most from the higher rate tiers.

Evaluation Criteria

Entitlement credit — no scoring or competitive evaluation. Eligibility assessed against three criteria: (1) corporation has permanent establishment in Nova Scotia, (2) product qualifies as an interactive digital media product under the regulations, and (3) expenditures are eligible NS labour or total expenditures. The key determination is whether the product meets the interactivity requirements — it must primarily function to educate, inform, or entertain through user interaction.

Application Steps

Required Documents 6

Eligible Expenses 5

• Nova Scotia labour expenditures directly related to developing an eligible interactive digital media product
• Total expenditures incurred in Nova Scotia associated with product development (up to 30% rate)
• Marketing and distribution expenditures up to $100,000 per product (including outside-province expenses)
• Salaries and wages of NS-based developers, artists, and technical staff
• Costs of contracting eligible services from NS-resident individuals

Ineligible Expenses 6

• Expenses claimed under other NS tax credits (Section 41 or 47 of the NS Income Tax Act)
• Labour expenditures for employees outside Nova Scotia
• Administrative and overhead costs not directly related to development
• Marketing expenses exceeding $100,000 per product
• Expenses for products that are primarily passive content (video, audio not meeting interactivity test)
• Costs for products primarily used for gambling or pornographic content

Claim timing

Year-round. No application deadlines. Part A submissions accepted anytime. Part B claims filed with annual corporate tax return.

Deadline Notes

Ongoing entitlement program. Applications processed year-round. Claims filed with annual corporate tax return after obtaining eligibility certificate.

Open Application Portal →

Ineligible Organizations

• Labour-sponsored venture capital corporations prescribed under the federal Income Tax Act
• Corporations without a permanent establishment in Nova Scotia
• Non-Canadian corporations (must be a taxable Canadian corporation)
• Tax-exempt organizations
• Corporations developing products that are primarily passive content or fail the interactivity test

Compatible Programs

Clawback Risk

Low Risk

Low. Entitlement credit with no clawback provisions once certificate is issued and credit is claimed on a valid tax return. Risk of reassessment if CRA determines product did not meet eligibility criteria or expenditures were overstated.