Canucks give U.S. a break

Scout & About: Canada 2012

Incentives for film and TV production continue to be a major priority for the Canadian government.


Earlier this year, Prime Minister Stephen Harper’s government unveiled a federal budget that slashed funding to some of the country’s cultural institutions such as Telefilm Canada and the National Film Board. However, the government remained steadfast on production tax credits, which helped build the total film production to about $2 billion in 2011.

A minor shakeup did occur on the local level in 2012 as two provinces made changes that either axed or reduced the savings of shooting in their regions — but the federal Conservative government has stuck to its existing incentives for nearly a decade.

“We’ve been able to count on the federal tax credits,” says Joanne Deer, director of public policy at ACTRA, the guild repping performers in English-language media. “We think they’re critical to increasing production in Canada.”

The rules for the federal incentives are complex, broken into two categories, and a production can only qualify for one of them. The more “Canadian” a production, the more favorable rebates it can receive.

Most foreign productions can apply for the Film or Video Production Services Tax Credit, the smaller of the two rebates, which is structured for Canadian shoots that are less interested in hiring mostly domestic talent. Productions can be returned up to 16% of their total Canadian labor costs. Feature films under this credit must have a budget above $1 million.

To qualify, a production must operate more than 50% of its activities through a permanent film or video production business in Canada. The applicant must also own the copyright of the production, or have contracted directly with the copyright owner for production services.

If the project has a significant number of Canadians in leadership roles, it may qualify for the stricter Canadian Film or Video Production Tax Credit, which offers a deeper savings of up to 25% on labor costs. Before receiving any rebates, a production must be certified as Canadian by the Canadian Audio-Visual Certification Office.

A long list of rules must be adhered to for the redemption, and the project’s producer must be a Canadian citizen or permanent resident, and the international copyright held by a Canadian corporation for at least 25 years. The project must also qualify under a “points” test for other key production members.


Quebec has, along with Ontario, the most lucrative film tax-credit program in the country. Foreign filmmakers shooting in Quebec are eligible to receive a tax credit for 25% of all the spending they do in the province. In addition, Quebec has a 20% bonus credit on labor expenses for all vfx, greenscreen and animation work done in Quebec. When you add the 16% federal tax credit on labor expenses, it makes for some serious savings for non-Canadians shooting in Quebec.

These new credits were brought in by Premier Jean Charest’s film-friendly Liberal government back in 2009, at the time virtually doubling the available tax credits. “The (Charest) government is totally supportive,” says Quebec film commissioner Hans Fraikin. “And the result of that support is three consecutive record-breaking years.”

Fraikin doesn’t believe a government run by the Parti Quebecois — the other leading party in the province — would be any less enthused about the tax credits. “You can’t go against the virtues of economic development,” he says.

Michel Trudel — partner with Mel Hoppenheim in Montreal’s largest studio, Mel’s Cite du Cinema — agrees that PQ leader Pauline Marois wouldn’t mess with the credits. “They create a lot of employment,” he says.


In June 2009, Ontario sweetened its 25% production services tax credit to an all-spend incentive, stackable on related provincial and federal credits, and later that year passed it into law — with no sunset clause. The enhancement came hot on the heels of a similar move in Quebec, which Ontario stakeholders said could have drained around $200 million to that province. The effect was immediate, with the province seeing an uptick in both domestic and foreign production levels with no sign of abating; unions and guilds say seasonal slowdowns haven’t occurred the past couple years.

It’s no secret the provinces — particularly the three big production centers — compete for foreign business; there’s long history of one incentive “boost” causing a chain reaction. But Ontario’s 2009 move was more than a political knee-jerk reaction.

In the mid-2000s, the province began to lag behind more competitive incentives in other places. Not just foreign but even Ontario producers started taking their business elsewhere. Individuals, guilds, unions and groups such as FilmOntario (an industry-funded consortium aimed at boosting Ontario’s edge) and the Toronto Film Board (an industry committee founded by then-mayor David Miller) lobbied hard. Premier Dalton McGuinty’s majority Liberal government (elected in 2003) recognized the sector needed policies to support greater stability and worked with interested parties to turn the ship around.

Cut to 2012. The Liberals lead a minority government. But nobody — at least not in Ontario — is making noise about changing production incentives. Last year Ontario’s production industry set a record for $1.26 billion total spend.


British Columbia’s provincial tax credit on foreign film production is steady at 33% on local labor cost, but a looming concern is the phasing out of the harmonized sales tax (HST), a tax credit that helped reduce production costs by 7%. It’s skedded to end on April 1. The industry is lobbying to reclassify the B.C. film and TV industry as a manufacturer to make it exempt from the goods and services sales tax (PST).

While the New Democratic Party is more union-friendly and generally believes in government intervention in order to assist certain industries, the Liberal party tends be less keen on subsidies. With film and TV amounting to a billion-dollar business, however, decisions are less predictable.

According to Peter Leitch of the B.C. Motion Picture Prodn. Industry Assn., historically both major political parties have been supportive of the business. He says the industry is in ongoing discussions with government about the tax credit, and the PST is a big part of that.

Politicians such as finance minister Kevin Falcon “get” the industry and its value, he adds, “but we don’t want to continue increasing the credits and all of the sudden we decrease them. That sends a bad message.” Ultimately, he says, tax credits have to be at a level where they are both consistently competitive and sustainable.

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