The Quebec tax credit for multimedia titles can provide a refund of between 26.25% – 37.5% on labour costs for eligible multimedia producers.
This credit is primarily aimed at video game developers, but other multimedia titles can qualify if they meet the criteria that they are interactive and contain at least three of the following four types of data: text, sound, still images, moving images. Video is counted as one data type, and not two (i.e., sound and moving images). Some examples of eligible titles include video games, simulators and educational software.
What’s an Eligible Multimedia Title?
Eligible titles fall into two categories. The first category (Category 1) is defined as being a multimedia title that was produced without an order (i.e., not commissioned) and that is intended to be marketed to a wide audience using a structured marketing plan. Category 1 titles are eligible for a 30% refund on eligible labour expenditures.
An example of a category 1 title could be a video game development company that develops a new game on its own, without receiving an order for it from a third party.
Startups working in mobile gaming or online/casual gaming should not overlook this tax credit. You can fund some expenditures not covered in SR&ED for example. It’s true that this program was created back in the day when companies were publishing CD-ROM games (remember those?) but with the right application you should be receiving this tax credit.
Category 2 titles include other types of multimedia that don’t fall into Category 1. These titles are eligible for a 26.25% refund on eligible labour expenditures.
Some examples of a category 2 title include a title that was developed with an order (e.g., a movie producer hires a development company to produce a video game based on the movie), or a title that was developed for a specific purpose and that is meant to be marketed to a smaller or targeted audience (e.g., a company hires a developer to create a multimedia title for educational purposes within the company or for its clients).
So if you do contract work for clients that involves building a game or a multimedia educational training tool, you should be eligible for this tax credit. As with all client work, make sure it is clear whether you or the client has the right to apply.
Note that multimedia titles intended to promote a company’s products or services are ineligible in either categories, as are any titles that encourage violence, sexism and discrimination.
French Version Bonus
Category 1 titles can benefit from an additional 7.5% bonus on labour expenses if a French version of the multimedia title is produced. This can bring the total refund for a Category 1 title to 37.5%.
In our next post, we’ll elaborate on what labour expenditures are eligible. In the meantime, you can learn more about the Quebec tax credit for multimedia titles by visiting the Investissement Quebec website.