It is becoming well known that you don’t have to wear a lab coat in order to be eligible for the Scientific Research and Experimental Development Tax Credit Program. However, there are still industries where the program is not as prevalent as it should be given that many aspects of their related development projects may be SR&ED eligible. This includes the gaming industry. Developers are looking for ways to get financing and funding, but how does SR&ED fit in with the plan?
SR&ED TAX PROGRAM FOR GAMING COMPANIES
Canada has become 1 of 3 major centres for the gaming industry, with Ontario and British Columbia being the two main hotspots. The Ontario Technology Corridor (London to Ottawa) alone includes 18,000 companies. In fact, growth in the industry is expected to be 17%, up from 11% in past years. As the industry grows, so does the further need to seek out government subsidies.
One of the programs gaming companies can take advantage of is the SR&ED Tax Program. Through this program the Canadian Government offers over $3 billion to companies involved in R&D and innovation activities in Canada.
SR&ED eligibility in the gaming industry may include:
- Algorithm design
- Improving system performance
- Inter-operability with 3rd party products
- Rendering: Frame rates improvements & physics simulations (smoke, fog, rain, etc.)
- Overcoming memory and framework limitations
OTHER GOVERNMENT FUNDING AVAILABLE
In addition to SR&ED, gaming companies can possibly receive funding from the following programs:
- Ontario Computer Animation and Special Effects Tax Credit
- Ontario Interactive Digital Media Tax Credit
- BC Interactive Digital Media Credit
FUTURE OF SR&ED IN GAMING
The Entertainment Software Association of Canada (ESAC) recently held a survey about the gaming industry. It hopes to give a more accurate picture about the effect of the industry on the Canadian Economy and how important tax credits are to running a gaming business in Canada. In 2011, the survey revealed that financing challenges and government support was a concern. BeneFACT Consulting Group will provide an update once the 2012 results are available.
In Game On, Canada! Playing to Win in the Digital Economy, ESAC speaks more in depth on the SR&ED program in relation to gaming in Canada. One of the main points is that they, “support CATA’s recommendation that the current definition of SR&ED be broadened to better support the full commercialization process for advanced technologies and build the digital economy”.
*The information above is meant for informational purposes only, and not to be used as financial or legal advice.
