This consolidation is unofficial and is for reference only.

For the official version of the regulations, consult the original documents on file with the Office of the Registrar of Regulations , or refer to the Royal Gazette

Part II .

Regulations are amended frequently.

Please check the list of Regulations by Act to see if there are any recent amendments to these regulations filed with our office that are not yet included in this consolidation.

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Digital Media Tax Credit Regulations

made under

Section 47A of the

Income Tax Act

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

O.I.C. 2007-601 (effective July 1, 2007), N.S. Reg. 441/2007

as amended to O.I.C. 2025-52 (effective January 1, 2021), N.S. Reg. 40/2025

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

Application for a tax credit certificate

Eligible corporation

Eligible product

Qualifying expenditure

Total expenditure

Marketing and distribution expenditure

Eligible salaries

Eligible remuneration

Eligible geographic area of the Province

Expenditure incurred in eligible geographic area of the Province

Revocation of tax certificate

Records kept by eligible corporation

Citation

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

Definitions

(1) In these regulations,

(a) “Act” means the Income Tax Act ;

(b) “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 year in which their eligible salary was earned,

and

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

in the Province;

(c) “eligible remuneration” means remuneration that satisfies all the requirements

in subsection 10(1);

(d) “government assistance” means assistance from a government or other public

authority whether as a grant, subsidy, forgivable loan, deduction from tax,

investment allowance or any other form of assistance, but does not include a

tax credit under

Section 47A of the Act;

(e) “interactive digital media product” means a combination of 1 or more

application files and 1 or more data files, all in a digital format, that are

integrated and are intended to be operated together with all of the following

characteristics when they are being operated:

(

i) their primary purpose is to educate, inform or entertain the user,

(ii) they achieve their primary purpose by presenting information in at least 2

of the following forms:

(

A) text,

(

B) sound,

(

C) images,

(iii) by interacting with them, the user is provided with a personalized

experience in the following ways:

(

A) they provide feedback to the user by giving a response tailored to

the user’s specific input,

(

B) they allow the user to control or influence their experience in using

the product, and

(

C) they have multiple paths that allow them to adapt to the individual

user’s skill level, preferences, decisions, actions, reactions or other

input;

(f) “marketing and distribution expenditure” means an expenditure that meets the

requirements of subsection 8(1).

(2) In

Section 47A of the Act and these regulations, “eligible salaries” means salaries or

wages that satisfy all the requirements in subsection 9(1).

Application for a tax credit certificate

3 An application for a tax credit certificate under subsection 47A(3) of the Act must be made

no later than 30 months after the end of the taxation year in which expenditures for an

eligible product were made, in a form acceptable to the Minister of Finance of the

Province, or a person designated by the Minister of Finance of the Province, and must

include all of the following:

(

a) statements detailing the qualifying expenditures and total expenditures for the

eligible product;

(

b) proof that the eligible corporation is a legally valid, existing, taxable

corporation with its corporate registration status in good standing;

(

c) a list of eligible employees, including all of the following for each employee:

(

i) name,

(ii) social insurance number,

(iii) eligible salary,

(iv) occupation,

(

v) residential address,

(vi) location of the permanent establishment of the eligible corporation to

which they normally report;

(

d) for completed products, a copy of the eligible product, or for a website, a copy

of all text, sound and image files comprising the website and the website

address where the eligible product can be accessed;

(

e) a list of dates and geographic locations for when and where the development of

the eligible product took place;

(

f) the name of the eligible product’s owner and any documentation and

verification requested by the Minister of Finance of the Province, or a person

designated by the Minister of Finance of the Province;

(

g) a statement that the information contained in the application is true and correct,

signed by an authorized officer of the eligible corporation;

(

h) any information that the Minister of Finance of the Province, or a person

designated by the Minister of Finance of the Province, requires to determine

the eligible corporation’s compliance with the Act and these regulations.

Eligible corporation

4 A corporation must satisfy all of the following conditions to meet the definition of eligible

corporation in clause 47A(1)(

a) of the Act:

(

a) the corporation must be incorporated under the laws of Canada or a province

of Canada and must be a taxable Canadian corporation;

(

b) the corporation must have a permanent establishment in the Province;

(

c) the corporation must not be a prescribed labour-sponsored venture capital

corporation as defined in the Income Tax Regulations made under the Income

Tax Act (Canada).

Eligible product

5 A product must meet all of the following conditions to meet the definition of eligible

product in clause 47A(1)(

c) of the Act:

(

a) the product must be an interactive digital media product;

(

b) the product must not be used primarily

(

i) to present, promote or sell the products or services of a corporation or an

organization, or

(ii) for interpersonal communication;

(

c) the product must not be a combination of application files and data files that is

developed primarily for use as

(

i) operating system software, or

(ii) application software;

(

d) the product must not be capable of inciting hatred against an identifiable group,

including a

section of the public distinguished by colour, race, religion, sex,

sexual orientation or ethnic origin;

(

e) the product must not be a product whose dominant characteristic is the undue

exploitation of sex;

(

f) the product must not be pornographic in nature.

Qualifying expenditure

(1) A qualifying expenditure for an eligible product developed by an eligible

corporation must be the amount determined by adding together all of the following:

(

a) eligible salaries;

(b) 65% of eligible remuneration;

(

c) marketing and distribution expenditures to a maximum of $100 000 per

eligible product.

(2) An eligible expenditure in subsection 47A(6) must be determined the same as a

qualifying expenditure.

Total expenditure

(1) A total expenditure for an eligible product developed by an eligible corporation must

be the amount determined by the following formula:

OEL + MDE - GA

in which

OEL is the total of all outlays, expenses, losses or replacements of capital

incurred by the eligible corporation in the taxation year, except marketing

and distribution expenditures, that are

• directly attributable to the production of an eligible product,

• paid to an arm’s length person or entity with a permanent

establishment in the Province, and

• paid by the eligible corporation in the taxation year, or no later than

60 days after the end of the taxation year;

MDE is the total of all marketing and distribution expenditures, to a maximum

of $100 000 per eligible product;

GA is the total value of government assistance.

(2) The total expenditure must not be an amount for which the eligible corporation may

claim a tax credit under

Section 41 or 47 of the Act.

Marketing and distribution expenditure

(1) A marketing and distribution expenditure incurred by an eligible corporation is an

expenditure that meets all of the following:

(

a) the expenditure is directly attributable to advertising or promoting an eligible

product or distributing an eligible product to customers or potential customers;

(

b) the expenditure is incurred by the eligible corporation no earlier than 24

months before the eligible product is completed and no later than 12 months

after the eligible product is completed;

(

c) the expenditure is paid by the eligible corporation in the taxation year or no

later than 60 days after the end of the taxation year;

(

d) the expenditure is not directly related to processing an order for an eligible

product from a consumer or shipping an eligible product to a consumer.

(2) For the purposes of subsection (1), a marketing and distribution expenditure incurred

for the human consumption of food or beverages or the enjoyment of entertainment

must be equal to 50% of the amount paid for the food, beverages or entertainment.

Eligible salaries

(1) A salary or wage paid by an eligible corporation must meet all of the following

requirements to be an eligible salary:

(

a) the salary or wage must be paid to an eligible employee;

(

b) the salary or wage must be reasonable in the circumstances;

(

c) the salary or wage must be included in the cost of an eligible product and be

directly attributable to the production of the eligible product;

(

d) the salary or wage must be incurred by the eligible corporation in the taxation

year;

(

e) the salary or wage must be paid by the eligible corporation in the taxation year

or no later than 60 days after the end of the taxation year;

(

f) the salary or wage must not include any amount determined by reference to

profits or revenues;

(

g) the salary or wage must not be an amount for which the eligible corporation

may claim a tax credit under

Section 41 or 47 of the Act.

(2) An eligible salary 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

salaries incurred by the eligible corporation in a subsequent taxation year if the

eligible salary is paid no later than 60 days after the end of the subsequent taxation

year.

Eligible remuneration

(1) Remuneration paid by an eligible corporation must meet all of the following

requirements to be eligible remuneration:

(

a) the remuneration must be reasonable in the circumstances;

(

b) the remuneration must be included in the cost of an eligible product and be

directly attributable to the production of the eligible product;

(

c) the remuneration must be incurred by the eligible corporation in the taxation

year;

(

d) the remuneration must be paid by the eligible corporation in the taxation year

or no later than 60 days after the end of the taxation year;

(

e) the remuneration must not be an amount for which the eligible corporation

may claim a tax credit under

Section 41 or 47 of the Act;

(

f) the remuneration must not be a marketing and distribution expenditure;

(

g) the remuneration must be paid to any of the following arm’s length persons or

entities in the circumstances described:

(

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

services rendered personally by the individual at a permanent

establishment in the Province;

(ii) the employees of an individual described in subclause (i), for services

rendered personally at a permanent establishment in the Province, if the

expenditure does not exceed the salaries or wages of those employees for

personally rendering those services;

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

individual at a permanent establishment in the Province, if all the issued

and outstanding shares of the capital stock of the taxable Canadian

corporation are owned by the individual and 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

employees of the taxable Canadian corporation at a permanent

establishment in the Province, if the expenditure does not exceed 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 at a permanent establishment in the

Province:

(

A) a member of the partnership,

(

B) employees of the partnership, if the expenditure does not exceed

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.

(3) In clause (1)(g), “salaries or wages” does not include any amount determined by

reference to profits or revenues.

Eligible geographic area of the Province

11 The area of the Province consisting of all of the Province except the area that is within 30

km driving distance of Halifax City Hall in the Halifax Regional Municipality is

prescribed as an eligible geographic area of the Province for subsection 47A(2) of the Act.

Expenditure incurred in eligible geographic area of the Province

12 An eligible corporation must use all of the following criteria to determine when an

expenditure has been incurred in an eligible geographic area of the Province for subsection

47A(2) of the Act:

(

a) the eligible corporation must have a permanent establishment in the eligible

geographic area of the Province;

(

b) no less than 50% of eligible salaries for the eligible product must be paid to

eligible employees who normally report to a permanent establishment of the

eligible corporation in the eligible geographic area of the Province.

Revocation of tax certificate

13 The Minister of Finance of the Province, or a person designated by the Minister of Finance

of the Province, may revoke a tax credit certificate issued to an eligible corporation if 1 or

more of the following applies:

(

a) in the opinion of the Minister of Finance of the Province, or a person

designated by the Minister of Finance of the Province, the eligible corporation

has not complied with any provision of the Act or these regulations;

(

b) the eligible corporation has not completed an eligible product 36 months after

beginning development of the eligible product.

Records kept by eligible corporation

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

Finance of the Province, or a person designated by the Minister of Finance of the

Province, and containing any information the Minister of Finance of the Province, or

a person designated by the Minister of Finance 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 at its head office, or at another place

approved by the Minister of Finance of the Province, or a person designated by the

Minister of Finance of the Province.

Legislative History

Reference Tables

Digital Media Tax Credit Regulations

N.S. Reg.

441/2007

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 Media 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

441/2007

Jul 1,

date

specified

Dec 7,

168/2017

Nov

28, 2017

date

specified

Dec.

8, 2017

40/2025

Jan 1,

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(1)(e)(iii) .........................................

rs . 168/2017

9(1)(d) ..............................................

am. 168/2017, 40/2025 2

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

am. 168/2017, 40/2025 3

Note that changes to headings are not

included in the above table.

Editorial Notes and Corrections:

Note

Effective

date

References to the Minister of Finance of the Province

should be read as references to the Minister of Finance and Treasury Board in

accordance with O.I.C. 2013-348 under the Public

Service Act , R.S.N.S. 1989, c. 376.

Oct 22, 2013

Amending instruction in N.S. Reg. 40/2025 specifies

amendment to s. 9(d), which does not exist; amendment made to s. 9(1)(

d) for

the purposes of this consolidation.

Amending instruction in N.S. Reg. 40/2025 specifies

amendment to s. 10(c), which does not exist; amendment made to s. 10(1)(

c) for the purposes of this consolidation.

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.