'It's a priority': Alberta government looks to bring back tax credit for gaming, digital media sector

Three years after getting rid of a tax credit benefiting video game developers and digital media companies in Alberta, the UCP government is looking to bring it back.

In one of Premier Danielle Smith's recently released mandate letters, she directs the minister of technology and innovation, Nate Glubish, "to develop a tax credit proposal for the video game/digital media industry," outlining how to make the province more attractive to new investment and jobs.

Glubish says the credit's inclusion in his letter illustrates how important it is to the government to create a proposal, but he stopped short of calling the credit a sure thing.

"It's a priority, and you know, the digital media and video game industry is a fast-growing, job-creating machine," he said.

"The one thing that some other provinces have that Alberta doesn't today is a digital media tax credit. So I'm looking forward to working with industry to explore what that would need to look like."

The NDP brought in the former Interactive Digital Media Tax Credit in 2018. It was available to companies creating primarily interactive digital media and gaming products, covering 25 per cent of qualifying labour expenditures, along with an additional five per cent on the salary and wages of under-represented employees.

In 2019, the UCP government removed the credit from the budget. Glubish says the decision was made as part of the government's efforts to get the province's finances in order.

"We have done just that," he said. "That puts us in a position where we have more options, and I'm looking forward to exploring this option to make Alberta as competitive as possible on the national stage."

NDP economic development and innovation critic Deron Bilous says he's glad to hear the credit may be back, but he says he's concerned about the reason why.

"These kinds of programs need to be designed and implemented and carried forward for decades to come … it gives stability and predictability," he said. 

"In the future, if the price of oil drops and the province struggles to balance their budget, are programs like this on the chopping block again?"

In response, Glubish said in a statement: "A firm financial foundation will ensure we are in a strong position to implement and maintain policies that encourage more job creation and investment in Alberta's interactive digital media sector."

Bilous says the province has also missed out on more than three years of growth in the industry, with some companies redirecting their efforts to provinces with more competitive incentives.

"If they had left it in place, we would have been that much further ahead," he said.

'It factored tremendously'

In British Columbia, a similar credit covers 17.5 per cent of eligible salaries and wages. 

Ontario and Quebec boast some of the highest rates, with between 35 and 40 per cent of qualifying labour expenditures covered in Ontario, and 37.5 per cent in Quebec — if certain conditions are met and up to a specified limit.

Video game developer New World Interactive brought its headquarters to Calgary when the previous tax credit was in place.

CEO Keith Warner says despite the Alberta credit being smaller than some other provinces, they decided the quality-of-life warranted the move. 

"There is a relative lack of game sector talent in Alberta … compared to other places like, for instance, Montreal and Quebec," he said in an interview on the Calgary Eyeopener. 

"So it factored tremendously, and then when it was repealed … we decided we were going to focus our growth in other provinces."

He says introducing a new credit would reignite interest in hiring and recruiting in the province. It doesn't necessarily have to be as high as other provinces, he says, but it needs to be competitive.

"I view a tax credit in Canada in particular as an investment.... The entire ecosystem would grow, the number of jobs would grow, that would increase the payroll substantially, that would increase the tax base."

LISTEN | Video game developer reacts to possibility of an Alberta tax credit for the sector:

Inflexion Games, a game development studio, used to have its whole team based out of its Edmonton office. When the credit was removed, they focused on hiring elsewhere, said Scott Nye, the company's chief operating officer. 

"That's just the nature of the business cycle, where if it's going to be easier for us to create jobs and attract talent in B.C., in Quebec, in Ontario, then that's where those jobs will go," said Nye, who is also the chair of Digital Alberta, a not-for-profit organization promoting the province's digital talent.

"We would be very interested in continuing to create jobs here in the province with the right incentives brought in."

Alberta's tech talent

While both game developers say the tax credit is key to creating gaming jobs in Alberta, they also note that more needs to be done to produce the local talent to fill them.

Earlier this year, the province announced the creation of nearly 10,000 new seats in the most high demand post-secondary programs in Alberta, including 1,945 in technology. 

It also announced investments in micro-credentialing, including in some game design and animation programs.

Nye says digital media is the biggest missing piece to the province's technology industry, which attracted nearly $500 million in investment through the first half of 2022, according to briefed.in.

There are also opportunities for collaboration in the sector, he says.

Red Iron Labs, a Calgary game developer, is also working with local universities to use virtual reality to solve health-care problems. One program through the University of Calgary uses VR games to promote neuro-recovery in patients.

"If we can create the right incentives for job creation and investment to come to the province, you'll continue to see more and more of that happening."

Terry Rock is the president and CEO of Platform Calgary — a non-profit organization supporting tech startups. He says the gaming industry requires a lot of upfront investment, and a tax credit would go a long way in boosting game developers' confidence. 

"We're going through a transition to add really tech, digital entertainment, these kinds of things, to become much stronger pillars of our economy," Rock said.

"I do think that every tool we can use to increase activity now has a long-term return on investment as we build critical mass."

Minister Glubish says he is speaking with local video game and digital media developers to figure out what a potential tax credit could look like.