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Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.))

Full Document:  

Act current to 2022-06-20 and last amended on 2022-06-09. Previous Versions

PART IIncome Tax (continued)

DIVISION EComputation of Tax (continued)

SUBDIVISION BRules Applicable to Corporations (continued)

Canadian Film or Video Production Tax Credit

Marginal note:Definitions

  •  (1) The definitions in this subsection apply in this section.

    assistance

    assistance means an amount, other than a prescribed amount or an amount deemed under subsection (3) to have been paid, that would be included under paragraph 12(1)(x) in computing a taxpayer’s income for any taxation year if that paragraph were read without reference to

    • (a) subparagraphs 12(1)(x)(v) to (viii), if the amount were received

      • (i) from a person or partnership described in subparagraph 12(1)(x)(ii), or

      • (ii) in circumstances where clause 12(1)(x)(i)(C) applies; and

    • (b) subparagraphs 12(1)(x)(v) to (vii), in any other case. (montant d’aide)

    Canadian film or video production

    Canadian film or video production has the meaning assigned by regulation. (production cinématographique ou magnétoscopique canadienne)

    Canadian film or video production certificate

    Canadian film or video production certificate means a certificate issued in respect of a production by the Minister of Canadian Heritage certifying that the production is a Canadian film or video production in respect of which that Minister is satisfied that, except where the production is a treaty co-production (as defined in subsection 1106(3) of the Income Tax Regulations), an acceptable share of revenues from the exploitation of the production in non-Canadian markets is, under the terms of any agreement, retained by

    • (a) a qualified corporation that owns or owned an interest in, or for civil law a right in, the production;

    • (b) a prescribed taxable Canadian corporation related to the qualified corporation; or

    • (c) any combination of corporations described in paragraph (a) or (b). (certificat de production cinématographique ou magnétoscopique canadienne)

    investor

    investor[Repealed, 2014, c. 39, s. 41]

    labour expenditure

    labour expenditure, of a corporation for a taxation year in respect of a Canadian film or video production, means, in the case of a corporation that is not a qualified corporation for the taxation year, nil, and in the case of a corporation that is a qualified corporation for the taxation year, subject to subsection (2), the total of the following amounts to the extent that they are reasonable in the circumstances and included in the cost to, or in the case of depreciable property the capital cost to, the corporation, or any other person or partnership, of the production:

    • (a) the salary or wages directly attributable to the production that are incurred after 1994 and in the taxation year, or the preceding taxation year, by the corporation for the stages of production of the property, from the production commencement time to the end of the post-production stage, and paid by it in the taxation year or within 60 days after the end of the taxation year (other than amounts incurred in that preceding taxation year that were paid within 60 days after the end of that preceding taxation year),

    • (b) that portion of the remuneration (other than salary or wages and other than remuneration that relates to services rendered in the preceding taxation year and that was paid within 60 days after the end of that preceding taxation year) that is directly attributable to the production of property, that relates to services rendered after 1994 and in the taxation year, or that preceding taxation year, to the corporation for the stages of production, from the production commencement time to the end of the post-production stage, and that is paid by it in the taxation year or within 60 days after the end of the taxation year to

      • (i) an individual who is not an employee of the corporation, to the extent that the amount paid

        • (A) is attributable to services personally rendered by the individual for the production of the property, or

        • (B) is attributable to and does not exceed the salary or wages of the individual’s employees for personally rendering services for the production of the property,

      • (ii) another taxable Canadian corporation, to the extent that the amount paid is attributable to and does not exceed the salary or wages of the other corporation’s employees for personally rendering services for the production of the property,

      • (iii) another taxable Canadian corporation all the issued and outstanding shares of the capital stock of which (except directors’ qualifying shares) belong to an individual and the activities of which consist principally of the provision of the individual’s services, to the extent that the amount paid is attributable to services rendered personally by the individual for the production of the property, or

      • (iv) a partnership that is carrying on business in Canada, to the extent that the amount paid

        • (A) is attributable to services personally rendered by an individual who is a member of the partnership for the production of the property, or

        • (B) is attributable to and does not exceed the salary or wages of the partnership’s employees for personally rendering services for the production of the property, and

    • (c) where

      • (i) the corporation is a subsidiary wholly-owned corporation of another taxable Canadian corporation (in this section referred to as the “parent”), and

      • (ii) the corporation and the parent have agreed that this paragraph apply in respect of the production,

      the reimbursement made by the corporation in the year, or within 60 days after the end of the year, of an expenditure that was incurred by the parent in a particular taxation year of the parent in respect of that production and that would be included in the labour expenditure of the corporation in respect of the property for the particular taxation year because of paragraph (a) or (b) if

      • (iii) the corporation had had such a particular taxation year, and

      • (iv) the expenditure were incurred by the corporation for the same purpose as it was by the parent and were paid at the same time and to the same person or partnership as it was by the parent. (dépense de main-d’oeuvre)

    production commencement time

    production commencement time, in respect of a Canadian film or video production, means the earlier of

    • (a) the time at which principal photography of the production begins, and

    • (b) the latest of

      • (i) the time at which a qualified corporation that has an interest in, or for civil law a right in, the production, or the parent of the corporation, first makes an expenditure for salary or wages or other remuneration for activities, of scriptwriters, that are directly attributable to the development by the corporation of script material of the production,

      • (ii) the time at which the corporation or the parent of the corporation acquires a property, on which the production is based, that is a published literary work, screenplay, play, personal history or all or part of the script material of the production, and

      • (iii) two years before the date on which principal photography of the production begins. (début de la production)

    qualified corporation

    qualified corporation for a taxation year means a corporation that is throughout the year a prescribed taxable Canadian corporation the activities of which in the year are primarily the carrying on through a permanent establishment (as defined by regulation) in Canada of a business that is a Canadian film or video production business. (société admissible)

    qualified labour expenditure

    qualified labour expenditure, of a corporation for a taxation year in respect of a Canadian film or video production, means the lesser of

    • (a) the amount, if any, by which

      • (i) the total of

        • (A) the labour expenditure of the corporation for the year in respect of the production, and

        • (B) the amount by which the total of all amounts each of which is the labour expenditure of the corporation for a preceding taxation year in respect of the production exceeds the total of all amounts each of which is a qualified labour expenditure of the corporation in respect of the production for a preceding taxation year before the end of which the principal filming or taping of the production began

      exceeds

      • (ii) where the corporation is a parent, the total of all amounts each of which is an amount that is the subject of an agreement in respect of the production referred to in paragraph (c) of the definition labour expenditure between the corporation and its wholly-owned corporation, and

    • (b) the amount determined by the formula

      A - B

      where

      A
      is 60% of the amount by which
      • (i) the total of all amounts each of which is an expenditure by the corporation in respect of the production that is included in the cost to, or in the case of depreciable property the capital cost to, the corporation or any other person or partnership of the production at the end of the taxation year,

      exceeds

      • (ii) the total of all amounts each of which is an amount of assistance in respect of that cost that, at the time of the filing of its return of income for the year, the corporation or any other person or partnership has received, is entitled to receive or can reasonably be expected to receive, that has not been repaid before that time pursuant to a legal obligation to do so (and that does not otherwise reduce that cost), and

      B
      is the total of all amounts each of which is the qualified labour expenditure of the corporation in respect of the production for a preceding taxation year before the end of which the principal filming or taping of the production began. (dépense de main-d’oeuvre admissible)
    salary or wages

    salary or wages does not include an amount

    • (a) described in section 7;

    • (b) determined by reference to profits or revenues; or

    • (c) paid to a person in respect of services rendered by the person at a time when the person was non-resident, unless the person was at that time a Canadian citizen. (traitement ou salaire)

    script material

    script material, in respect of a production, means written material describing the story on which the production is based and, for greater certainty, includes a draft script, an original story, a screen story, a narration, a television production concept, an outline or a scene-by-scene schematic, synopsis or treatment. (texte)

  • Marginal note:Rules governing labour expenditure of a corporation

    (2) For the purposes of the definitions labour expenditure and qualified labour expenditure in subsection (1),

    • (a) remuneration does not include remuneration

      • (i) determined by reference to profits or revenues, or

      • (ii) in respect of services rendered by a person at a time when the person was non-resident, unless the person was at that time a Canadian citizen;

    • (b) services referred to in paragraph (b) of that definition that relate to the post-production stage of the production include only the services that are rendered at that stage by a person who performs the duties of animation cameraman, assistant colourist, assistant mixer, assistant sound-effects technician, boom operator, colourist, computer graphics designer, cutter, developing technician, director of post production, dubbing technician, encoding technician, inspection technician — clean up, mixer, optical effects technician, picture editor, printing technician, projectionist, recording technician, senior editor, sound editor, sound-effects technician, special effects editor, subtitle technician, timer, video-film recorder operator, videotape operator or by a person who performs a prescribed duty;

    • (c) that definition does not apply to an amount to which section 37 applies; and

    • (d) an expenditure incurred in respect of a film or video production by a qualified corporation (in this paragraph referred to as the “co-producer”) in respect of goods supplied or services rendered by another qualified corporation to the co-producer in respect of the production is not a labour expenditure to the co-producer or, for the purpose of applying this section to the co-producer, a cost or capital cost of the production.

  • Marginal note:Tax credit

    (3) Where

    • (a) a qualified corporation for a taxation year files with its return of income for the year

      • (i) a Canadian film or video production certificate issued in respect of a Canadian film or video production of the corporation,

      • (ii) a prescribed form containing prescribed information, and

      • (iii) each other document prescribed in respect of the production, and

    • (b) the principal filming or taping of the production began before the end of the year,

    the corporation is deemed to have paid on its balance-due day for the year an amount on account of its tax payable under this Part for the year equal to 25% of its qualified labour expenditure for the year in respect of the production.

  • Marginal note:Exception

    (4) This section does not apply to a Canadian film or video production if the production  — or an interest in a person or partnership that has, directly or indirectly, an interest in, or for civil law a right in, the production  — is a tax shelter investment for the purpose of section 143.2.

  • Marginal note:When assistance received

    (5) For the purposes of this Act other than this section, and for greater certainty, the amount that a corporation is deemed under subsection 125.4(3) to have paid for a taxation year is assistance received by the corporation from a government immediately before the end of the year.

  • Marginal note:Revocation of certificate

    (6) If an omission or incorrect statement was made for the purpose of obtaining a Canadian film or video production certificate in respect of a production, or if the production is not a Canadian film or video production,

    • (a) the Minister of Canadian Heritage may

      • (i) revoke the certificate, or

      • (ii) if the certificate was issued in respect of productions included in an episodic television series, revoke the certificate in respect of one or more episodes in the series;

    • (b) for greater certainty, for the purposes of this section, the expenditures and cost of production in respect of productions included in an episodic television series that relate to an episode in the series in respect of which a certificate has been revoked are not attributable to a Canadian film or video production; and

    • (c) for the purpose of subparagraph (3)(a)(i), a certificate that has been revoked is deemed never to have been issued.

  • Marginal note:Guidelines

    (7) The Minister of Canadian Heritage shall issue guidelines respecting the circumstances under which the conditions in the definition Canadian film or video production certificate in subsection (1) are satisfied. For greater certainty, those guidelines are not statutory instruments as defined in the Statutory Instruments Act.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1996, c. 21, s. 28
  • 1997, c. 25, s. 34
  • 1999, c. 22, s. 46
  • 2001, c. 17, s. 115
  • 2014, c. 39, s. 41
Film or Video Production Services Tax Credit

Marginal note:Definitions

  •  (1) The definitions in this subsection apply in this section.

    accredited film or video production certificate

    accredited film or video production certificate, in respect of a film or video production, means a certificate issued by the Minister of Canadian Heritage certifying that the production is an accredited production. (certificat de production cinématographique ou magnétoscopique agréée)

    accredited production

    accredited production has the meaning assigned by regulation. (production agréée)

    assistance

    assistance means an amount, other than an amount deemed under subsection 125.5(3) to have been paid, that would be included under paragraph 12(1)(x) in computing the income of a taxpayer for any taxation year if that paragraph were read without reference to subparagraphs 12(1)(x)(v) to 12(1)(x)(vii). (montant d’aide)

    Canadian labour expenditure

    Canadian labour expenditure of a corporation for a taxation year in respect of an accredited production means, in the case of a corporation that is not an eligible production corporation in respect of the production for the year, nil, and in any other case, subject to subsection 125.5(2), the total of the following amounts in respect of the production to the extent that they are reasonable in the circumstances:

    • (a) the salary or wages directly attributable to the production that are incurred by the corporation after October 1997, and in the year or the preceding taxation year, and that relate to services rendered in Canada for the stages of production of the production, from the final script stage to the end of the post-production stage, and paid by it in the year or within 60 days after the end of the year to employees of the corporation who were resident in Canada at the time the payments were made (other than amounts incurred in that preceding year that were paid within 60 days after the end of that preceding year),

    • (b) that portion of the remuneration (other than salary or wages and other than remuneration that relates to services rendered in the preceding taxation year and that was paid within 60 days after the end of that preceding year) that is directly attributable to the production, that relates to services rendered in Canada after October 1997 and in the year, or that preceding year, to the corporation for the stages of production of the production, from the final script stage to the end of the post-production stage, and that is paid by it in the year or within 60 days after the end of the year to a person or a partnership, that carries on a business in Canada through a permanent establishment (as defined by regulation), and that is

      • (i) an individual resident in Canada at the time the amount is paid and who is not an employee of the corporation, to the extent that the amount paid

        • (A) is attributable to services personally rendered by the individual in Canada in respect of the accredited production, or

        • (B) is attributable to and does not exceed the salary or wages paid by the individual to the individual’s employees at a time when they were resident in Canada for personally rendering services in Canada in respect of the accredited production,

      • (ii) another corporation that is a taxable Canadian corporation, to the extent that the amount paid is attributable to and does not exceed the salary or wages paid to the other corporation’s employees at a time when they were resident in Canada for personally rendering services in Canada in respect of the accredited production,

      • (iii) another corporation that is a taxable Canadian corporation, all the issued and outstanding shares of the capital stock of which (except directors’ qualifying shares) belong to an individual who was resident in Canada and the activities of which consist principally of the provision of the individual’s services, to the extent that the amount paid is attributable to services rendered personally in Canada by the individual in respect of the accredited production, or

      • (iv) a partnership, to the extent that the amount paid

        • (A) is attributable to services personally rendered in respect of the accredited production by an individual who is resident in Canada and who is a member of the partnership, or

        • (B) is attributable to and does not exceed the salary or wages paid by the partnership to its employees at a time when they were resident in Canada for personally rendering services in Canada in respect of the accredited production, and

    • (c) where

      • (i) the corporation is a subsidiary wholly-owned corporation of another corporation that is a taxable Canadian corporation (in this section referred to as the “parent”), and

      • (ii) the corporation and the parent have filed with the Minister an agreement that this paragraph apply in respect of the production,

      the reimbursement made by the corporation in the year, or within 60 days after the end of the year, of an expenditure that was incurred by the parent in a particular taxation year of the parent in respect of the production and that would be included in the Canadian labour expenditure of the corporation in respect of the production for the particular taxation year because of paragraph (a) or (b) if

      • (iii) the corporation had had such a particular taxation year, and

      • (iv) the expenditure were incurred by the corporation for the same purpose as it was incurred by the parent and were paid at the same time and to the same person or partnership as it was paid by the parent. (dépense de main-d’oeuvre au Canada)

    eligible production corporation

    eligible production corporation, in respect of an accredited production for a taxation year, means a corporation, the activities of which in the year in Canada are primarily the carrying on through a permanent establishment (as defined by regulation) in Canada of a film or video production business or a film or video production services business and that

    • (a) owns the copyright in the accredited production throughout the period during which the production is produced in Canada, or

    • (b) has contracted directly with the owner of the copyright in the accredited production to provide production services in respect of the production, where the owner of the copyright is not an eligible production corporation in respect of the production,except a corporation that is, at any time in the year,

    • (c) a person all or part of whose taxable income is exempt from tax under this Part,

    • (d) controlled directly or indirectly in any manner whatever by one or more persons all or part of whose taxable income is exempt from tax under this Part, or

    • (e) prescribed to be a labour-sponsored venture capital corporation for the purpose of section 127.4. (société de production admissible)

    qualified Canadian labour expenditure

    qualified Canadian labour expenditure of an eligible production corporation for a taxation year in respect of an accredited production means the amount, if any, by which

    • (a) the total of all amounts each of which is the corporation’s Canadian labour expenditure for the year or a preceding taxation year

    exceeds the aggregate of

    • (b) the total of all amounts, each of which is an amount of assistance that can reasonably be considered to be in respect of amounts included in the total determined under paragraph (a) in respect of the corporation for the year that, at the time of filing its return of income for the year, the corporation or any other person or partnership has received, is entitled to receive or can reasonably be expected to receive, that has not been repaid before that time pursuant to a legal obligation to do so (and that does not otherwise reduce that expenditure),

    • (c) the total of all amounts, each of which is the qualified Canadian labour expenditure of the corporation in respect of the accredited production for a preceding taxation year before the end of which the principal filming or taping of the production began, and

    • (d) where the corporation is a parent, the total of all amounts each of which is included in the total determined under paragraph (a) in respect of the corporation for the year and is the subject of an agreement in respect of the accredited production referred to in paragraph (c) of the definition Canadian labour expenditure between the corporation and its subsidiary wholly-owned corporation. (dépense de main-d’oeuvre admissible au Canada)

    salary or wages

    salary or wages does not include an amount described in section 7 or an amount determined by reference to profits or revenues. (traitement ou salaire)

  • Marginal note:Rules governing Canadian labour expenditure of a corporation

    (2) For the purpose of the definition Canadian labour expenditure in subsection 125.5(1),

    • (a) remuneration does not include remuneration determined by reference to profits or revenues;

    • (b) services referred to in paragraph (b) of that definition that relate to the post-production stage of the accredited production include only the services that are rendered at that stage by a person who performs the duties of animation cameraman, assistant colourist, assistant mixer, assistant sound-effects technician, boom operator, colourist, computer graphics designer, cutter, developing technician, director of post production, dubbing technician, encoding technician, inspection technician — clean up, mixer, optical effects technician, picture editor, printing technician, projectionist, recording technician, senior editor, sound editor, sound-effects technician, special effects editor, subtitle technician, timer, video-film recorder operator, videotape operator or by a person who performs a prescribed duty;

    • (c) that definition does not apply to an amount to which section 37 applies; and

    • (d) for greater certainty, that definition does not apply to an amount that is not a production cost including an amount in respect of advertising, marketing, promotion, market research or an amount related in any way to another film or video production.

  • Marginal note:Tax credit

    (3) An eligible production corporation in respect of an accredited production for a taxation year is deemed to have paid on its balance-due day for the year an amount on account of its tax payable under this Part for the year equal to 16% of its qualified Canadian labour expenditure for the year in respect of the production, if

    • (a) the corporation files with its return of income for the year

      • (i) a prescribed form containing prescribed information in respect of the production,

      • (ii) an accredited film or video production certificate in respect of the production, and

      • (iii) each other document prescribed in respect of the production; and

    • (b) the principal filming or taping of the production began before the end of the year.

  • Marginal note:Canadian film or video production

    (4) Subsection 125.5(3) does not apply in respect of a production in respect of which an amount is deemed to have been paid under subsection 125.4(3).

  • Marginal note:When assistance received

    (5) For the purposes of this Act other than this section, and for greater certainty, the amount that a corporation is deemed under subsection 125.5(3) to have paid for a taxation year is assistance received by the corporation from a government immediately before the end of the year.

  • Marginal note:Revocation of certificate

    (6) An accredited film or video production certificate in respect of an accredited production may be revoked by the Minister of Canadian Heritage where

    • (a) an omission or incorrect statement was made for the purpose of obtaining the certificate, or

    • (b) the production is not an accredited production,

    and, for the purpose of subparagraph 125.5(3)(a)(ii), a certificate that has been revoked is deemed never to have been issued.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1998, c. 19, s. 145.1
  • 2001, c. 17, s. 116
  • 2003, c. 15, s. 80
 
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