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Posted: Sun., Nov. 16, 2003, 2:41pm PT
Canucks up local prod'n tax credits
Gov't aims to bolster domestic film, TV

MONTREAL -- In a bid to boost homegrown film and TV production, the Canadian government announced Friday that it is increasing the tax credit available for producers shooting Canuck films and TV shows.

Finance Minister John Manley and Heritage Minister Sheila Copps jointly released amendments to the Income Tax Act that will significant up the tax credits for Canadian-content production.

Move comes nine months after the Canadian government increased the tax credit for Hollywood producers shooting in Canada from 11% to 16% of labor expenditures in the country. At the time, Canuck producers complained vociferously, arguing that local productions should also get a tax break.

The tax credit for Canadian productions will now be based on labor expenditures up to a limit of 60% of the total cost of the production. Under the former system, the credit was applied on labor expenses to a limit of 48% of the total budget. It is estimated that the new tax credit will cover roughly 10% of the overall budget, compared to around 8% with the former tax credit.

The tax-credit system has also been simplified.

"While foreign location shooting is important, we can't have the domestic industry at a disadvantage," said Guy Mayson, acting prexy of the Canadian Film and Television Production Assn. "This is going to help a lot of producers, and it's exactly what the industry needs right now. Making Canadian shows and films is tough in the current international markets. While financing is never easy, this is what the doctor ordered."

The new rules reflect many of the suggestions presented to the government by the producers association.

Changes would loosen rules on co-productions, making all productions where a Candian entity holds copyright eligible for the credit.

The only producer demand not included in the new rules is the request for a higher rate for the tax credit, but Mayson said producers have been promised a higher rate will be incorporated into the next federal budget.

Move by the feds is designed to appease the domestic film industry, hurt by a C$25 million ($19.25 million) cut to the Canadian Television Fund in Ottawa's budget last February.

The tax credit changes announced Friday came on the eve of the ruling Liberal Party's official inauguration on the weekend of Paul Martin as the new Liberal leader. Martin is set to take over shortly as prime minister fror from Jean Chretien. Timing of the announcement had nothing to do with the leadership change, per industry insiders.

Hollywood and other foreign-owned productions, which account for most of the film and TV work in Vancouver, but far less in Toronto and Montreal, are not affected by the changes. They will continue to get a 16% tax credit on Canadian labor costs.


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