How to Claim Eligible Costs Under the Manitoba Interactive Digital Media Tax Credit

How to Claim Eligible Costs Under the Manitoba Interactive Digital Media Tax Credit

If you build games, apps, or other interactive digital products in Manitoba, the Manitoba Interactive Digital Media Tax Credit can return a large share of your project costs. Many applicants wonder which costs are eligible to claim—and how to document them properly. This credit offers up to 40% back on eligible Manitoba labour, plus support for certain marketing and distribution costs.

This guide breaks down eligible costs, common pitfalls, and what you need to claim with confidence.

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What Is Considered an Eligible Cost Under the Manitoba Interactive Digital Media Tax Credit?

The Manitoba Interactive Digital Media Tax Credit (MIDMTC) is a refundable corporate tax credit for eligible interactive digital media projects developed in Manitoba. Refundable means you can receive the credit even if your company owes no corporate tax.

Eligible Labour Costs (Core of the Credit)

Most claims focus on qualified Manitoba labour expenditures, which form the base of the credit.

Eligible labour costs include:

• Salaries and wages paid to Manitoba-resident employees
• Work directly tied to developing the interactive digital media product
• Employees working in roles such as:
  • Programming and engineering
  • Game design and level design
  • Animation, art, and audio production
  • Quality assurance and testing
  • Project management directly related to development

To qualify:

• Employees must be Manitoba residents
• Work must be performed in Manitoba
• Labour must be incurred after receiving a Certificate of Eligibility

The credit rate is:

• 40% of eligible labour if you meet the higher Manitoba wage threshold
• 35% if you meet the alternative labour-spend requirement

Tools like GrantHub’s eligibility matcher can help you quickly sort programs by province and industry when you’re checking if your payroll qualifies.

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Eligible Marketing and Distribution Costs

Unlike many tax credits, MIDMTC allows limited non-labour costs tied to commercialization.

Eligible costs may include:

• Marketing strategy development
• Digital advertising tied to product launch
• Distribution platform setup costs
• User acquisition expenses directly linked to market entry

These costs must:

• Relate to an eligible interactive digital media product
• Be reasonable and directly connected to bringing the product to market
• Be included in your approved project budget

General corporate marketing or brand advertising is not eligible.

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What Is Not an Eligible Cost?

Some expenses are commonly misunderstood and often rejected.

Ineligible costs include:

• Work done before your Certificate of Eligibility is approved
• Contractor fees paid to non-Manitoba residents
• Corporate overhead (rent, utilities, legal fees)
• Hardware purchases and office equipment
• Financing costs and interest
• Internal admin or HR time not tied to development

It’s important to keep development labour separate from general business operations.

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How the Claim Process Works

Claiming eligible costs under the Manitoba Interactive Digital Media Tax Credit happens in two stages.

Step 1: Apply for a Certificate of Eligibility

You must apply before starting project work.

Required documents include:

• Product description
• Commercialization plan
• Detailed project budget
• Manitoba residency declarations

No retroactive approval is allowed.

Step 2: File Your Tax Credit Claim

Once costs are incurred:

• File the tax credit with your Manitoba corporate tax return
• Submit labour schedules and supporting payroll records
• Keep documentation for audit purposes

The credit is refundable and paid after assessment.

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Common Mistakes to Avoid

1. Claiming pre-approval costs
   Any work done before your Certificate of Eligibility is issued will be denied.

2. Including non-Manitoba contractors
   Only Manitoba-resident labour counts, even if the contractor worked on the project.

3. Blending admin and development payroll
   Vague job descriptions make it hard to justify eligible labour.

4. Overstating marketing expenses
   Only product-specific commercialization costs qualify.

GrantHub lists current grant and tax credit programs across Canada so you can see which ones fit your business.

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Frequently Asked Questions

Q: What qualifies as an interactive digital media product?
Eligible products are interactive and created for market, such as video games, educational software, and interactive web or mobile applications.

Q: Can startups claim the Manitoba Interactive Digital Media Tax Credit?
Yes. Startups can qualify if they are taxable Canadian corporations with a permanent establishment in Manitoba.

Q: Is the credit refundable if my company has no tax payable?
Yes. MIDMTC is fully refundable, meaning you can receive a cash refund even if no corporate tax is owed.

Q: Do freelancers count as eligible labour?
Only if they are Manitoba residents and their work meets the program’s labour eligibility rules. Out-of-province contractors are excluded.

Q: How do I qualify for the 40% credit rate?
You must meet the higher Manitoba wage threshold or the alternative $1 million eligible labour expenditure requirement.

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Next Steps

Claiming eligible costs under the Manitoba Interactive Digital Media Tax Credit depends on early planning and careful tracking. Approval timing, residency, and documentation matter just as much as the work itself. GrantHub helps Manitoba studios stay up to date on tax credits and related funding so you can focus on building your product.

See also:

• Tax Credits vs Grants for Employee Training in British Columbia
• Journalism Tax Credits vs Grants in Canada: What Media Businesses Should Know
• BC Regional Production Services Tax Credit: Eligibility Explained