On Thursday, the Alberta Government announced it would be cutting the Interactive Digital Media Tax Credit, along with four other programs.
Contrary to the government’s statement that Alberta is “Open for Business”, Interactive Arts Alberta believes this decision will directly harm Albertan interactive digital media companies and its industry, cost Albertan jobs, dissuade outside investment, and drive Albertans out of the province in search of more stable work elsewhere.
Alberta’s Interactive Digital Media Tax Credit Increased Alberta’s Competitiveness
Established in 2018, the IDMTC provided a 25% refundable tax credit on labour for eligible companies, with an additional 5% for diverse hires. This improved Alberta’s industry’s competitiveness and brought government support for encouraging growth in the industry into line with other provinces.
- Newfoundland and Labrador: Tax credits for up to 40% of eligible salaries
- Manitoba: Up to 40% of eligible salaries
- Ontario: Up to 40% of eligible salaries
- British Columbia: Up to 17.5% of eligible salaries
- Quebec: Up to 37.5% of eligible salaries
- Nova Scotia: Up to 50% of eligible salaries
Removing Alberta’s digital media tax credit forces Albertan companies to compete on an unfair playing field. Without the credit, Albertan interactive media companies will incur more costs compared to those in other provinces in Canada, and Alberta will be a severely less attractive place for companies to operate in.
What the IDMTC Did For Albertan Business
Speaking to CBC, Trent Oster, CEO of Beamdog, shared that thanks to the tax credit, he was planning to double the number of employees in his studio of 50.
Meanwhile, Aaryn Flynn, general manager of the North American branch of Improbable, cited the tax credit as something relied upon to grow their new Alberta-based branch from 4 employees to 70.
And a widely circulated Facebook post from BC developer East Side Games revealed that they had been actively considering an expansion to Edmonton or Calgary thanks to hard workers, low cost office space, and tax incentives that would help them get set up. But with these programs cut, they say they hear Alberta’s government clearly — and will be looking elsewhere.
Cutting the Credit Also Hurts Small Business and Students
Interactive Arts Alberta heard from many in Alberta’s independent game development scene who are similarly concerned about what this means for the future.
One developer contacted us and explained how after graduating with a masters related to games, they’ve had trouble finding a local job in the industry due to intense competition for few positions. Cutting the tax credit means the increased number of opportunities that were in the process of being opened up as companies signed on to the program means it’s more likely they’ll leave Alberta for a stable job elsewhere.
A student similarly shared that they too would be looking to Ontario or BC to help start their development career rather than Alberta.
Another student had this to say in response to the news:
“Personally, I don’t see much scope for my own growth as a designer/developer in Alberta because the opportunities that I can find or create have become insanely limited.”
Another developer shared that they were projecting hiring two additional employees for their small studio this year. These plans are also cancelled with the tax credit.
Kyle Kulyk, who had been actively using these credits, was disappointed with the minister’s response to questions. Describing the loss as a “blow” to his business, he spoke of how developers had lobbied for a fairer tax credit incentive for Alberta for years, engaging in extensive consultation with the previous NDP government over a year before the program was put in place.
He described feeling as though the decision to cut the tax credit was done “on a whim” in comparison, with no industry consultation.
“The frustration and anger during the call was palatable from others in the industry. They took 5 questions, cutting most of us off before ending the call.”
We Call Upon the Alberta Government to Reinstate the Interactive Digital Media Tax Credit
Interactive Arts Alberta itself has been involved with conversations around how to best implement a digital media tax credit and is disappointed by the decision to eliminate it — and without consulting with the industry.
We believe Alberta to be home to a keen blend of thriving talent and good business sense well-suited to high performance, technical industries capable of employing seasoned professionals and driven graduates alike.
The products of Alberta’s game development industry have proven themselves on a world stage, whether it be through the international renown of BioWare’s Mass Effect or the internet fame of Stick RPG.
We welcome productive discussion between government and the game development industry to allow current businesses to compete fairly with the conditions in other provinces and make Alberta an attractive place for job creating companies to expand into, and for existing companies to grow.
To that end, we strongly urge that the Alberta government reinstate the credit, and meaningfully engage with the industry as a vital part of a commitment to economic diversification and supporting Albertan talent.
If you’d like to learn more about Interactive Arts Alberta or how cutting the tax credit affects game developers in Alberta, please direct inquiries to email@example.com.