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This Act is current to January 17, 2018
See the Tables of Legislative Changes for this Act’s legislative history, including any changes not in force.

Income Tax Act

[RSBC 1996] CHAPTER 215

Part 10 — Interactive Digital Media Tax Credit

Definitions

132  In this Part:

"eligible activities", in relation to an interactive digital media product, means eligible activities as defined by regulation;

"interactive digital media product" means a product that

(a) consists of a combination of application files and data files, in a digital format, that are integrated and are intended to be operated together,

(b) is designed primarily to educate, inform or entertain the user,

(c) is capable of presenting information in at least 2 of the following forms:

(i) text;

(ii) sound;

(iii) images,

(d) is intended to be used interactively by individuals, and

(e) is developed in British Columbia,

but does not include a prescribed product;

"taxable Canadian corporation" has the same meaning as in the federal Act.

Eligibility for tax credit

133  (1) Subject to subsection (3), a corporation is eligible for a tax credit under this Part for a taxation year if the corporation meets the following criteria:

(a) the corporation is registered under section 136 for the taxation year;

(b) the corporation has a permanent establishment in British Columbia at any time during the taxation year;

(c) the corporation is a taxable Canadian corporation throughout the taxation year;

(d) either of the following applies:

(i) the corporation's eligible salary and wages, as determined under section 134 (2) for the taxation year, is equal to or greater than $2 million;

(ii) the corporation's eligible salary and wages, as determined under section 134 (2) for the taxation year, is greater than $100 000 and less than $2 million and either of the following applies:

(A) the corporation's principal business in the taxation year is the development of interactive digital media products;

(B) all or substantially all of the corporation's business in the taxation year consists of one or both of the following:

(I) the development of interactive digital media products;

(II) the provision of eligible activities to one or more recipient corporations that meet the criteria set out in subsection (1.1) of this section.

(e) [Repealed 2017-12-59.]

(1.1) The criteria for the purposes of subsection (1) (d) (ii) (B) (II) are as follows:

(a) the recipient corporation has a permanent establishment in British Columbia;

(b) in a taxation year of the recipient corporation that includes any part of the taxation year of the corporation that is providing the eligible activities,

(i) the principal business of the recipient corporation is the development of interactive digital media products, or

(ii) the eligible salary and wages of the recipient corporation, as determined under section 134 (2), is equal to or greater than $2 million.

(2) If a corporation has a taxation year of less than 365 days,

(a) the reference in subsection (1) (d) (i) and (ii) to $2 million is to be read in respect of the corporation as a reference to the amount equal to that proportion of $2 million that the number of days in the taxation year bears to 365, and

(b) the reference in subsection (1) (d) (ii) to $100 000 is to be read in respect of the corporation as a reference to the amount equal to that proportion of $100 000 that the number of days in the taxation year bears to 365.

(2.1) If a recipient corporation has a taxation year of less than 365 days, the reference in subsection (1.1) (b) (ii) to $2 million is to be read in respect of the recipient corporation as a reference to the amount equal to that proportion of $2 million that the number of days in the taxation year bears to 365.

(3) A corporation is not eligible for a tax credit under this Part for a taxation year if the corporation claims a tax credit for the taxation year under Part 6 or the corporation, at any time in the taxation year,

(a) is exempt from tax under section 27,

(b) has taxable income that is exempt from tax under Part I of the federal Act,

(c) is prescribed, under the federal Act, to be a labour-sponsored venture capital corporation for the purpose of section 127.4 of that Act,

(d) has an employee share ownership plan registered under section 2 of the Employee Investment Act,

(e) is an employee venture capital corporation registered under section 8 of the Employee Investment Act,

(f) is a small business venture capital corporation registered under section 3 of the Small Business Venture Capital Act,

(g) [Repealed 2017-12-59.]

(h) is controlled directly or indirectly in any manner whatever by one or more corporations described in paragraphs (a) to (f), or

(i) carries on a personal services business, as defined in section 125 (7) of the federal Act.

Interactive digital media tax credit

134  (1) In this section:

"salary or wages" has the same meaning as in section 248 of the federal Act, but does not include

(a) an amount described in section 7 of the federal Act,

(b) in relation to a corporation, remuneration based on profits or a bonus, if the remuneration or bonus is in respect of a specified employee of the corporation, or

(c) in relation to a corporation for a taxation year, expenses incurred by the corporation in the taxation year in respect of salary or wages, as defined in section 248 of the federal Act, of a specified employee of the corporation to the extent that those expenses exceed the amount determined by the formula in section 37 (9.1) of the federal Act for the taxation year;

"specified employee" has the same meaning as in section 248 of the federal Act.

(2) A corporation that is eligible under section 133 may claim a tax credit for a taxation year in the amount equal to 17.5% of the amount determined by the following formula:

amount = eligible salary and wages - designated assistance
where
designated assistance = the total of all amounts that would be included under section 12 (1) (x) of the federal Act in computing the income of the corporation for the taxation year if that section were read without reference to subparagraphs (v) to (vii) of that section and that can reasonably be considered to be in respect of eligible salary and wages, but does not include
(a)a prescribed amount,
(b)an amount deemed to have been paid under section 135 of this Act, or
(c)an amount deducted under section 127 (5) or (6) of the federal Act;
eligible salary and wages = the total salary or wages that
(a)are directly attributable to eligible activities,
(b)are incurred
(i)by the corporation in the taxation year,
(ii)on or after September 1, 2010, and
(iii)before September 1, 2018,
(c)are paid to an individual who was resident in British Columbia at the end of December 31 of the year preceding the end of the taxation year for which a tax credit is claimed under this Part, and
(d)are
(i)included in the cost to, or in the case of depreciable property the capital cost to, the corporation of a property in the taxation year, or
(ii)deductible as an outlay or expense in computing the income of the corporation for the taxation year.

Deemed payment

135  A corporation that has claimed and is eligible for a tax credit under this Part for a taxation year is deemed to have paid, at the time referred to in section 157 (1) (b) of the federal Act, as that section relates to the taxation year, the amount of the credit on account of its tax payable under this Act.

Registration

136  (1) A corporation may apply to the Commissioner of Income Tax to have the corporation registered for the purposes of claiming a tax credit under this Part for a taxation year.

(2) In applying under subsection (1) to be registered, a corporation must provide the following to the Commissioner of Income Tax:

(a) an application in the form, and containing the information, required by the Commissioner of Income Tax;

(b) any other information or records required by the Commissioner of Income Tax;

(c) the prescribed application fee.

(3) On receiving an application under this section, the Commissioner of Income Tax must register the applicant corporation if the Commissioner of Income Tax is satisfied, on the basis of the information provided by the corporation and any other information available to the Commissioner of Income Tax, that the corporation, if registered, is or will be eligible for a tax credit under this Part for the taxation year.

(4) If the Commissioner of Income Tax refuses to register an applicant corporation, the Commissioner of Income Tax must issue a notice of refusal of registration to the corporation.

(5) If the Commissioner of Income Tax is satisfied that a corporation that has been registered is not or will not be eligible for a tax credit under this Part for a taxation year, the Commissioner of Income Tax may cancel the registration of the corporation for the taxation year by issuing a notice of cancellation to the corporation.

(6) A corporation must register under this section for each taxation year for which a tax credit is claimed under this Part.

Reconsiderations and appeals

137  (1) Any decision made under this Part by or on behalf of the Commissioner of Income Tax may be reconsidered and confirmed, reversed or varied by or on behalf of the Commissioner of Income Tax.

(2) Without limiting any provision of this Act or the federal Act, a corporation may appeal, in accordance with subsection (3), any of the following:

(a) a decision of the Commissioner of Income Tax to refuse to register a corporation under section 136;

(b) a decision of the Commissioner of Income Tax to cancel the registration of a corporation under section 136.

(3) An appeal must be brought in the Supreme Court, by way of a petition proceeding, within 120 days after the date of any notice of the decision provided by the Commissioner of Income Tax.

Filing requirements

138  (1) A corporation that wishes to claim a tax credit under this Part in respect of a taxation year must file, with the return of income filed by the corporation under section 29 for that taxation year, an application for the tax credit in the form, and containing the information, required by the Commissioner of Income Tax.

(2) A corporation is not entitled to a tax credit under this Part in respect of a taxation year unless, within 18 months after the end of the taxation year, the corporation files the form containing the information required under subsection (1).

Powers of audit

139  Without limiting any provision of this Act or the federal Act, for the purpose of determining whether a corporation is eligible for a tax credit under this Part, the Commissioner of Income Tax has powers equivalent to the federal minister under sections 230 (3), 231, 231.1 and 233 (1) of the federal Act, and for that purpose those sections apply.

Power to make regulations

140  (1) Without limiting section 48 (1) and (2), the Lieutenant Governor in Council may make regulations as follows:

(a) defining eligible activities;

(b) defining any word or expression used in this Part;

(c) prescribing products not included in the definition of "interactive digital media product" in section 132;

(d) prescribing an amount for the purpose of paragraph (a) of the description of "designated assistance" in section 134 (2);

(e) prescribing an application fee for the purpose of section 136 (2) (c).

(2) In making regulations under subsection (1), the Lieutenant Governor in Council may do one or more of the following:

(a) delegate a matter to a person;

(b) confer a discretion on a person;

(c) define classes of corporations and make different regulations for different classes of corporations.

(3) Regulations made under subsection (1) may be made retroactive to September 1, 2010 or a later date, and if made retroactive are deemed to have come into force on the specified date.

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