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Part II .

Regulations are amended frequently.

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Digital Animation Tax Credit Regulations

made under

Section 47B of the

Income Tax Act

R.S.N.S. 1989, c. 217

O.I.C. 2015-212 (June 16, 2015), N.S. Reg. 269/2015

amended by O.I.C. 2025-53 (effective July 1, 2020), N.S. Reg. 41/2025

Table of Contents

Please note: this table of contents is provided for convenience of reference and does not form part of the regulations.

Click here to go to the text of the regulations .

Citation

Definitions

Eligibility certificate

Application for tax-credit certificate

Eligible corporations

Eligible digital-animation productions

Tax-credit rates

Eligible NS labour expenditure

Eligible NS animation labour expenditure

Eligible remuneration

Eligible overhead expenditure

Qualifying labour expenditure

Assistance

Records kept by eligible corporation

Citation

1 These regulations may be cited as the Digital Animation Tax Credit Regulations .

Definitions

(1) In these regulations,

“Act” means the Income Tax Act ;

“digital-animation production” means a film or video production created primarily

with the use of digital technology in which all, or substantially all, of the

production consists of the sequencing of a series of 2-D, 3-D or stop-motion

animation images rendered to create artificial moving images;

“eligibility certificate” means a certificate issued under

Section 3 in respect of a

digital-animation production that is determined to be eligible to apply for a tax-credit certificate;

“NS 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 taxation year for which a tax credit is claimed

for an eligible digital-animation production, and

(ii) normally reports to a permanent establishment of the eligible

corporation in the Province;

“tax-credit certificate” means a tax-credit certificate issued under subsection

47B(6) of the Act in respect of a tax credit for an eligible digital-animation

production.

(2) A reference in these regulations to the Minister of Finance and Treasury Board of

the Province includes a person designated by the Minister of Finance and Treasury

Board of the Province as referred to in subsections 47B(5) and (6) of the Act.

Eligibility certificate

(1) A corporation must receive an eligibility certificate before applying for a tax-credit

certificate.

(2) An application for an eligibility certificate must be made to the Minister of Finance

and Treasury Board for [of] the Province before principal photography or key

animation of the digital-animation production begins.

(3) An application for an eligibility certificate must include any information and

records that the Minister of Finance and Treasury Board for [of] the Province

requires about the corporation and the digital-animation production to determine

whether the corporation qualifies for a certificate under subsection (4).

(4) The Minister of Finance and Treasury Board of the Province must issue an

eligibility certificate to an eligible corporation if they are satisfied, based on the

information provided by the corporation and any other information available to

them, that the corporation will be entitled to receive a tax-credit certificate in

respect of its digital-animation production once the production is completed.

Application for tax-credit certificate

(1) An application for a tax-credit certificate must be made no later than 30 months

after the end of the taxation year in which expenditures for any eligible

digital-animation productions covered by the certificate were made.

(2) An application for a tax-credit certificate must be in a form acceptable to the

Minister of Finance and Treasury Board of the Province, and must include all of

the following:

(

a) a copy of the eligibility certificate for all eligible digital-animation

productions covered by the certificate;

(

b) any information and records that they require about the eligible corporation

and all eligible digital-animation productions covered by the certificate to

determine whether the corporation and productions meet the criteria set out

in the Act and regulations for issuance of the certificate.

Eligible corporations

5 A corporation that satisfies all of the following conditions is an eligible corporation:

(

a) it is incorporated under the laws of Canada or a province of Canada and is a

taxable Canadian corporation;

(

b) it has a permanent establishment in the Province;

(

c) it is not a prescribed labour-sponsored venture capital corporation as defined

in the Income Tax Regulations made under the Income Tax Act (Canada);

(

d) it is a Canadian-controlled corporation primarily carrying on business that is

a film or video production business;

(

e) it is not be registered as an eligible business under subsection 3(2) or 11(2)

of the Equity Tax Credit Act .

Eligible digital-animation productions

6 A digital-animation production that satisfies all of the following conditions is an eligible

digital-animation production:

(

a) it has a minimum viewing time of 20 minutes;

(

b) it will be broadcast, distributed or available for viewing no later than 24

months after it is completed, and a production services agreement for this

exists, or a written agreement for this exists between the production’s

eligible corporation and 1 of the following for consideration at fair market

value:

(

i) a corporation that is a distributor of film or video productions,

(ii) a broadcaster that is not associated, within the meaning of

Section

256 of the Federal Act, with the eligible corporation;

(

c) it is not any of the following:

(

i) a film or video production that has been prohibited for use or

exhibition under the Theatres and Amusements Act ,

(ii) a film or video production that is eligible to receive a grant from the

Nova Scotia Film and Television Production Incentive Fund,

(iii) a film or video production produced to solicit funds,

(iv) a film or video production produced primarily for industrial,

corporate or institutional purposes,

(

v) a film or video production for which public financial support would

be contrary to public policy, in the opinion of the Minister of Finance

and Treasury Board of the Province,

(vi) an animated scene, or series of scenes, relating to a video game that

is not original animation, whether included in or distributed with the

video game or distributed separately, that meets all of the following

criteria:

(

A) the user of the video game has limited or no control over it,

(

B) it is used to advance the plot or provide character development,

background information, a story line, context or clues;

(

d) it does not consist of any of the following types of programming:

(

i) news, current events or public affairs programming, or a program that

includes weather or market reports,

(ii) talk show,

(iii) programming of a game, questionnaire or contest, other than a

production directed primarily at minors,

(iv) sports event or activity,

(

v) gala presentation or awards show,

(vi) reality television,

(vii) pornography,

(viii) advertising.

Tax-credit rates

7 The following rates are prescribed for the purposes of calculating the amount of a tax

credit under subsection 47B(7) of the Act:

(

a) the basic tax-credit rate is 50%; and

(

b) the digital-animation tax-credit rate is 17.5%.

Eligible NS labour expenditure

(1) Subject to subsection (2), a salary or wage paid by an eligible corporation is an

eligible NS labour expenditure for a taxation year if it meets all of the following

criteria:

(

a) it is paid to a NS eligible employee;

(

b) it is reasonable in the circumstances;

(

c) it is included in the cost of an eligible digital-animation production and is

directly attributable to the production of the digital-animation production;

(

d) it is incurred by the eligible corporation in the taxation year and between the

dates specified in subsection 47B(7) of the Act;

(

e) it is paid by the eligible corporation in the taxation year or no later than 60

days after the end of the taxation year;

(

f) it does not form part of the eligible corporation’s eligible NS labour

expenditure claimed for a preceding taxation year;

(

g) it does not include any amount determined by reference to profits or

revenues;

(

h) it is not an amount for which the eligible corporation may claim a tax credit

under

Section 41 of the Act;

(

i) it is not an amount related in any way to another film or video production;

(

j) it does not include an amount for advertising, marketing, promotion or

market research.

(2) If a salary or wage that meets the criteria in subsection (1) is equal to or greater

than $150,000, only $149,999.99 may be included in eligible NS labour

expenditure.

(3) An eligible NS labour expenditure 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 NS labour expenditure incurred by the eligible corporation in a

subsequent taxation year if the eligible NS labour expenditure is paid no later than

60 days after the end of the subsequent taxation year.

Eligible NS animation labour expenditure

(1) A salary or wage paid by an eligible corporation is an eligible NS animation labour

expenditure for a taxation year if it meets all of the following criteria:

(

a) it is an eligible NS labour expenditure;

(

b) it is an amount paid for activities undertaken to produce digital animation,

including designing, modeling, rendering, lighting, painting, animating,

rigging, storyboarding and compositing;

(

c) it is not an amount paid for animation created

(

i) by post-production activities, or

(ii) primarily for use in promotional material for the eligible

digital-animation production.

(2) An eligible NS animation labour expenditure 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 NS animation labour expenditure incurred by the

eligible corporation in a subsequent taxation year if the eligible NS animation

labour expenditure is paid no later than 60 days after the end of the subsequent

taxation year.

Eligible remuneration

(1) Remuneration paid by an eligible corporation is eligible remuneration, for the

purposes of determining the qualifying labour expenditure in

Section 12, if it meets

all of the following criteria:

(

a) it is reasonable in the circumstances;

(

b) it is included in the cost of an eligible digital-animation production and is

directly attributable to the production of the digital-animation production;

(

c) it is incurred by the eligible corporation in the taxation year and between the

dates specified in subsection 47B(7) of the Act;

(

d) it is paid by the eligible corporation in the taxation year or no later than 60

days after the end of the taxation year;

(

e) it does not form part of the eligible corporation’s eligible remuneration

claimed for a preceding taxation year;

(

f) it is not an amount for which the eligible corporation may claim a tax credit

under

Section 41 of the Act;

(

g) it is not an amount related in any way to another film or video production;

(

h) it does not include an amount for advertising, marketing, promotion or

market research;

(

i) it is paid to any of the following arm’s length persons or entities for services

rendered personally at a permanent establishment in the Province in the

circumstances described:

(

i) an individual who is not an employee of the eligible corporation, for

services they rendered personally,

(ii) the employees of an individual described in subclause (i), other than

any amount that exceeds the salaries or wages of those employees for

personally rendering those services,

(iii) a taxable Canadian corporation, for services rendered personally by

an individual who owns all of the issued and outstanding shares of

the capital stock of the taxable Canadian corporation if 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

its employees, other than any amount that exceeds 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:

(

A) a member of the partnership,

(

B) employees of the partnership, other than any amount that

exceeds 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.

Eligible overhead expenditure

11 The eligible overhead expenditure for an eligible digital-animation production, for the

purpose of determining the qualifying labour expenditure in

Section 12, is the amount

determined by the following formula:

65% x NSLE

where

NSLE = eligible NS labour expenditure.

Qualifying labour expenditure

12 The qualifying labour expenditure for an eligible digital-animation production is the

amount equal to the lesser of the following:

(

a) the eligible NS labour expenditure;

(

b) the amount determined by the following formula:

50% x (NSLE + EO + (65% x ER))

where

NSLE = eligible NS labour expenditure,

EO = eligible overhead expenditure, and

ER = eligible remuneration.

Assistance

13 Financial assistance received from any of the following is assistance for a taxation year:

(

a) a government or other public authority, whether in the form of a grant,

subsidy, forgivable loan, deduction from tax or investment allowance, other

than a film or video tax credit under the Federal Act or a tax credit under

Section 47B of the Act;

(

b) a corporation registered as an eligible business under subsection 3(2) or

11(2) of the Equity Tax Credit Act that made a specified issue under the

Equity Tax Credit Act after April 9, 2015.

Records kept by eligible corporation

(1) An eligible corporation must keep records in the form required by the Minister of

Finance and Treasury Board of the Province, and containing any information that

the Minister of Finance and Treasury Board for [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 required by subsection (1) at its head

office or at another place approved by the Minister of Finance and Treasury Board

of the Province.

Legislative History

Reference Tables

Digital Animation Tax Credit Regulations

N.S. Reg.

269/2015

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 Animation Tax Credit Regulations made

under the Income Tax Act includes all of the

following regulations:

N.S.

Regulation

In force

date*

How in force

Royal Gazette

Part II Issue

269/2015

Jul 1,

date

specified

Jul

10, 2015

41/2025

Jul 1, 2020

date specified

Mar 21, 2025

The following regulations are not

yet in force and are not included in the current consolidation:

N.S.

Regulation

In force

date*

How in force

Royal Gazette

Part II Issue

*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

Provision affected

How affected

2(2) ...................................................

am. 41/2025

8(1)(d) ...............................................

am. 41/2025

10(1)(c) .............................................

am. 41/2025

Note that changes to headings are not

included in the above table.

Editorial Notes and Corrections

Note

Effective

date

Repealed and Superseded

N.S.

Regulation

Title

In force

date

Repealed

date

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.