B.C. Increases IDMTC to 25% and Makes Program Permanent

The Government of British Columbia has announced a significant change to the Interactive Digital Media Tax Credit (IDMTC) program, increasing the credit rate from 17.5% to 25% and removing the program’s previous expiry date. This change takes effect for eligible salary and wage expenditures incurred on or after September 1, 2025.

The IDMTC is a refundable tax credit available to corporations developing interactive digital media products in B.C., including video games, educational software, and certain types of VR/AR content. To qualify, a company must be developing products that are primarily intended to educate, inform, or entertain users, and that incorporate a combination of text, sound, and images.

Key Changes

1. Increased Credit Rate

The most immediate and impactful change is the increase in the IDMTC rate to 25%. This means that eligible B.C. labour expenditures related to qualifying development work will now generate a larger refundable credit, an increase of 7.5 percentage points over the previous rate. This enhancement directly benefits companies with significant payroll costs tied to interactive development activities.

2. Permanent Extension

Previously set to expire on August 31, 2028, the IDMTC is now a permanent fixture of B.C.’s tax incentive landscape. This change eliminates renewal uncertainty and allows for long-term planning around the credit. Companies investing in multi-year development projects or expanding operations in B.C. will now be able to forecast with greater confidence.

3. Effective Date and Timing Considerations

The new 25% rate applies to salary and wage expenditures incurred on or after September 1, 2025. Expenditures incurred prior to this date will remain eligible for the existing 17.5% rate. Companies with ongoing development work should be aware of this transition period, particularly if payroll timing can be aligned with the rate change.

Implications for R&D-Intensive Companies

This change may affect how companies in the interactive digital media space structure their incentive claims, especially in conjunction with other federal and provincial programs such as SR&ED. As IDMTC and SR&ED cannot be claimed on the same expenditures, many companies may benefit from reviewing their cost allocations and project categorizations to ensure both credits are being used effectively.

The increase may also make the IDMTC more competitive with other provincial programs across Canada. For companies comparing different jurisdictions for their development teams or studios, B.C.’s improved offering, paired with a strong local talent pool and mature technology ecosystem, may influence future decisions about where to grow.

Sector Response

The decision to enhance and solidify the IDMTC has been widely welcomed by the province’s digital media industry, which includes hundreds of studios and thousands of developers. Industry organizations had long advocated for an increase to the rate, pointing to rising labour costs and global competition for talent as key challenges. The government’s move was positioned as a response to these pressures, as well as a broader commitment to supporting innovation and digital exports.

Final Thoughts

For companies currently claiming or considering the IDMTC, the key takeaway is that this program has become materially more generous and more predictable. While coordination with other tax incentives remains important, the increased rate and permanent status provide a stronger foundation for companies planning interactive media R&D in British Columbia.

If you're involved in interactive digital media development in B.C., this is a good time to revisit your project planning and tax strategy for the upcoming fiscal year. Careful attention to timing, eligibility, and documentation will be important to fully benefit from this expanded program.