Following recent changes to the film and TV tax credit and a warning from the head of the Canada Media Fund, the government of Nova Scotia has announced a new stream in the Digital Media Tax Credit for the animation industry.

“The animation industry was included in the old tax credit but didn’t fit well into the new fund. After consultations with industry, it was decided to move government support for the animation sector to the existing Digital Media Tax Credit,” a spokesperson for the Nova Scotia Department of Finance told Playback Daily via email.

The new animation incentive will provide animated productions an additional 25% tax credit on eligible labour on top of the existing digital media tax credit, which is capped at 25% of eligible Nova Scotia production costs. Companies may also qualify for an additional credit of 2% if the production is done by a Nova Scotia firm. The tax credit will also include a maximum of individual salary levels that are eligible for the credit.

The government in a release noted adding animation to the digital media tax credit would not affect the interactive media streams of the credit.

While details are still being developed, regulations should be in place by July 1. Until then, animators will still have access to the Film Industry Tax Credit which currently allows up to 65% refund on eligible (primarily labour-based) costs. The Film Industry tax credit will be replaced by the Nova Scotia Film & Television Production Incentive Fund.

The new incentive fund will have two streams, one for indigenous and coproductions which will offset 25% of eligible production costs, while the second will be made available for foreign and service productions with base funding for 25% of eligible Nova Scotia costs, which under certain conditions can reach 30%.

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