Get to know the DAVE bonus tax credit

The Digital Animation Visual Effects and Post-Production Tax Credit (“DAVE”) is a refundable Film and Television bonus tax credit available under both of B.C.’s motion picture tax credit programs: Film Incentive BC (FIBC) and the Production Services Tax Credit (PSTC). It is equal to 16% of eligible B.C. labour expenditure directly attributable to digital animation, visual effects, or post-production activities paid to B.C.-based individuals and corporations by an eligible production corporation. Under PSTC, the DAVE BC labour expenditure must be for services rendered in B.C. A production corporation must be eligible for and claim the Basic tax credit under FIBC or PSTC on an eligible production in order to claim the DAVE tax credit.

Did you know that live-action productions can claim the “on-set” or “mechanical” B.C. labour under the DAVE tax credit provided it is directly attributable to the creation of the VFX? The legislation requires that the effects are “primarily digital”, which means that more than 50% of the visual effect, animation or post-production activity is created with digital technology. Consequently, the “on-set” or “mechanical” DAVE labour that can be claimed is capped by the digital labour amount. A methodology to explain which DAVE on-set activities are directly attributable to the creation of the visual effect is required. No methodology is required for productions that are 100% digital animation.

For more information check the DAVE Tax Credit Info Bulletin and FAQ here.

This post is intended as a general overview. It is not exhaustive and should not be relied upon to determine eligibility or the final amount of an anticipated tax credit. In case of any discrepancies between this post and the Income Tax Act (BC) and Regulations (the “Act”), the provisions of the Act prevail.