Alberta seeks to implement tax credit for video game and digital media companies
On November 10, 2022, Alberta Premier Danielle Smith issued a government mandate letter to the Ministry of Technology and Innovation, instructing Minister Nate Glubish to develop a new tax credit for video game and digital media companies. Premier Smith has introduced the credit in an effort to keep Alberta competitive with Ontario, Quebec, and British Columbia with respect to attracting new investment and employment opportunities. While there is no detail on what the credit might yet entail, its potential is welcomed by Alberta’s video game industry.
This tax credit is intended to replace the former Digital Media Tax Credit, which was put in place by Rachel Notley’s New Democratic Party (NDP) government in 2018 and repealed in 2019 by Jason Kenney as part of his first provincial budget. The former Digital Media Tax Credit covered 25 percent of staff salaries and bonuses, with additional diversity incentives.
Alberta’s video game industry is booming, with the number of participants growing from 25 to 88 between 2017 and 2021. The new entrants consist primarily of small and medium-sized companies. The purpose of the tax credit is to help existing industry participants and encourage new ones to invest in Alberta.
While there is some political uncertainty in Alberta leading up to the provincial election in May 2023, the video game industry in Alberta appears set to benefit regardless of the result. Although the election may result in a change of government, it is unlikely that such a change would affect the proposed tax credit, given that a second Notley NDP government would likely re-introduce the same credit or something similar. It is now hard to imagine a scenario where the Albertan video game industry won’t have some form of a tax credit in the near future.