Income Tax Regulations (C.R.C., c. 945)

DIVISION VIClasses Prescribed

1105 The classes of property provided in this Part and in Schedule II are hereby prescribed for the purposes of the Act.

DIVISION VIICertificates Issued by the Minister of Canadian Heritage

Interpretation

• 1106 (1) The following definitions apply in this Division and in paragraph (x) of Class 10 in Schedule II.

  application for a certificate of completion

  application for a certificate of completion, in respect of a film or video production, means an application by a prescribed taxable Canadian corporation in respect of the production, filed with the Minister of Canadian Heritage before the day (in this Division referred to as “the production’s application deadline”) that is the later of

  • (a) the day that is 24 months after the end of the corporation’s taxation year in which the production’s principal photography began, or

  • (b) the day that is 18 months after the day referred to in paragraph (a), if the corporation has filed, with the Canada Revenue Agency, and provided to the Minister of Canadian Heritage a copy of, a waiver described in subparagraph 152(4)(a)(ii) of the Act, within the normal reassessment period for the corporation in respect of the first and second taxation years ending after the production’s principal photography began. (demande de certificat d’achèvement)

  Canadian

  Canadian means a person that is

  • (a) an individual who is

    • (i) a citizen, as defined in subsection 2(1) of the Citizenship Act, of Canada, or

    • (ii) a permanent resident, as defined in subsection 2(1) of the Immigration and Refugee Protection Act, or

  • (b) a corporation that is a Canadian-controlled entity, as determined under sections 26 to 28 of the Investment Canada Act. (Canadien)

  Canadian government film agency

  Canadian government film agency means a federal or provincial government agency whose mandate is related to the provision of assistance to film productions in Canada. (agence cinématographique d’État)

  certificate of completion

  certificate of completion, in respect of a film or video production of a corporation, means a certificate certifying that the production has been completed, issued by the Minister of Canadian Heritage before the day (in this Division referred to as “the production’s certification deadline”) that is six months after the production’s application deadline. (certificat d’achèvement)

  copyright owner

  copyright owner, of a film or video production, at any time means

  • (a) the maker, as defined in section 2 of the Copyright Act, who at that time owns copyright, in relation to the production, within the meaning of section 3 of that Act; or

  • (b) a person to whom that copyright has been assigned, under an assignment described in section 13 of the Copyright Act, either wholly or partially, by the maker or by another owner to whom this paragraph applied before the assignment. (titulaire du droit d’auteur)

  excluded production

  excluded production means a film or video production, of a particular corporation that is a prescribed taxable Canadian corporation,

  • (a) in respect of which

    • (i) the particular corporation has not filed an application for a certificate of completion before the production’s application deadline,

    • (ii) a certificate of completion has not been issued before the production’s certification deadline,

    • (iii) if the production is not a treaty co-production, a person (other than the particular corporation or a prescribed person)

      • (A) is a copyright owner of the production for any commercial exploitation purposes at any time during the 25-year period that begins at the earliest time after the production was completed that it is commercially exploitable, or

      • (B) controls the initial licensing of commercial exploitation,

    • (iv) there is not an agreement in writing, for consideration at fair market value, to have the production shown in Canada within the 2-year period that begins at the earliest time after the production was completed that it is commercially exploitable,

      • (A) with a corporation that is a Canadian and is a distributor of film or video productions, or

      • (B) with a corporation that holds a broadcasting license issued by the Canadian Radio-television and Telecommunications Commission for television markets, or

    • (v) distribution is made in Canada within the 2-year period that begins at the earliest time after the production was completed that it is commercially exploitable by a person that is not a Canadian, or

  • (b) that is

    • (i) news, current events or public affairs programming, or a programme that includes weather or market reports,

    • (ii) [Repealed, SOR/2016-262, s. 1]

    • (iii) a production in respect of a game, questionnaire or contest (other than a production directed primarily at minors),

    • (iv) a sports event or activity,

    • (v) a gala presentation or an awards show,

    • (vi) a production that solicits funds,

    • (vii) reality television,

    • (viii) pornography,

    • (ix) advertising,

    • (x) a production produced primarily for industrial, corporate or institutional purposes, or

    • (xi) a production, other than a documentary, all or substantially all of which consists of stock footage. (production exclue)

  producer

  producer means a producer of a film or video production, except that it does not include a person unless the person is the individual who

  • (a) controls and is the central decision maker in respect of the production;

  • (b) is directly responsible for the acquisition of the production story or screenplay and the development, creative and financial control and exploitation of the production; and

  • (c) is identified in the production as being the producer of the production. (producteur)

  remuneration

  remuneration means remuneration other than an amount determined by reference to profits or revenues. (rémunération)

  twinning arrangement

  twinning arrangement means the pairing of two distinct film or video productions, one of which is a Canadian film or video production and the other of which is a foreign film or video production. (convention de jumelage)

COVID-19 — Application for a Certificate of Completion

• (1.1) In respect of applications filed with the Minister of Canadian Heritage in respect of film or video productions for which the labour expenditure of the corporation in respect of the production for the taxation years ending in 2020 or 2021 was greater than nil, the definition application for a certificate of completion in subsection (1) is to be read as follows:

  application for a certificate of completion

  application for a certificate of completion, in respect of a film or video production, means an application by a prescribed taxable Canadian corporation in respect of the production, filed with the Minister of Canadian Heritage before the day (in this Division referred to as “the production’s application deadline”) that is the later of

  • (a) the day that is 24 months after the end of the corporation’s taxation year in which the production’s principal photography began,

  • (b) the day that is 18 months after the day referred to in paragraph (a), if the corporation has filed, with the Canada Revenue Agency, and provided to the Minister of Canadian Heritage a copy of, a waiver described in subparagraph 152(4)(a)(ii) of the Act, within the normal reassessment period for the corporation in respect of the first and second taxation years ending after the production’s principal photography began, or

  • (c) the day that is 12 months after the day referred to in paragraph (b), if the corporation has filed, with the Canada Revenue Agency, and provided to the Minister of Canadian Heritage a copy of, a waiver described in subparagraph 152(4)(a)(ii) of the Act, within the normal reassessment period for the corporation in respect of the first, second and third taxation years ending after the production’s principal photography began. (demande de certificat d’achèvement)

COVID-19 — Excluded Production

• (1.2) The reference to “2-year period” in subparagraph (a)(iv) of the definition excluded production in subsection (1) is to be read as a reference to “three-year period” in respect of film or video productions for which the labour expenditure of the corporation in respect of the production for the taxation years ending in 2020 or 2021 was greater than nil.

Prescribed Taxable Canadian Corporation

• (2) For the purposes of section 125.4 of the Act and this Division, prescribed taxable Canadian corporation means a taxable Canadian corporation that is a Canadian, other than a corporation that is

  • (a) 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 Part I of the Act; or

  • (b) a prescribed labour-sponsored venture capital corporation, as defined in section 6701.

Treaty Co-production

• (3) For the purpose of this Division, treaty co-production means a film or video production whose production is contemplated under any of the following instruments, and to which the instrument applies:

  • (a) a co-production treaty entered into between Canada and another State;

  • (b) the Memorandum of Understanding between the Government of Canada and the Government of the Hong Kong Special Administrative Region of the People’s Republic of China on Film and Television Co-Production;

  • (c) the Common Statement of Policy on Film, Television and Video Co-Productions between Japan and Canada;

  • (d) the Memorandum of Understanding between the Government of Canada and the Government of the Republic of Korea on Television Co-Production;

  • (e) the Memorandum of Understanding between the Government of Canada and the Government of the Republic of Malta on Audio-Visual Relations; and

  • (f) the Memorandum of Understanding between the Government of Canada and the Respective Governments of the Flemish, French and German-Speaking Communities of the Kingdom of Belgium concerning Audiovisual Coproduction.

Canadian Film or Video Production

• (4) Subject to subsections (6) to (9), for the purposes of section 125.4 of the Act, this Part and Schedule II, Canadian film or video production means a film or video production, other than an excluded production, of a prescribed taxable Canadian corporation in respect of which the Minister of Canadian Heritage has issued a certificate (other than a certificate that has been revoked under subsection 125.4(6) of the Act) and that is

  • (a) a treaty co-production; or

  • (b) a film or video production

    • (i) whose producer is a Canadian at all times during its production,

    • (ii) in respect of which the Minister of Canadian Heritage has allotted not less than six points in accordance with subsection (5),

    • (iii) in respect of which not less than 75% of the total of all costs for services provided in respect of producing the production (other than excluded costs) was payable in respect of services provided to or by individuals who are Canadians, and for the purpose of this subparagraph, excluded costs are

      • (A) costs determined by reference to the amount of income from the production,

      • (B) remuneration payable to, or in respect of, the producer or individuals described in any of subparagraphs (5)(a)(i) to (viii) and (b)(i) to (vi) and paragraph (5)(c) (including any individuals that would be described in paragraph (5)(c) if they were Canadians),

      • (C) amounts payable in respect of insurance, financing, brokerage, legal and accounting fees, and similar amounts, and

      • (D) costs described in subparagraph (iv), and

    • (iv) in respect of which not less than 75% of the total of all costs incurred for the post-production of the production, including laboratory work, sound re-recording, sound editing and picture editing, (other than costs that are determined by reference to the amount of income from the production and remuneration that is payable to, or in respect of, the producer or individuals described in any of subparagraphs (5)(a)(i) to (viii) and (b)(i) to (vi) and paragraph (5)(c), including any individuals that would be described in paragraph (5)(c) if they were Canadians) was incurred in respect of services provided in Canada.

• (5) For the purposes of this Division, the Minister of Canadian Heritage shall allot, in respect of a film or video production

  • (a) that is not an animation production, in respect of each of the following persons if that person is an individual who is a Canadian,

    • (i) for the director, two points,

    • (ii) for the screenwriter, two points,

    • (iii) for the lead performer for whose services the highest remuneration was payable, one point,

    • (iv) for the lead performer for whose services the second highest remuneration was payable, one point,

    • (v) for the art director, one point,

    • (vi) for the director of photography, one point,

    • (vii) for the music composer, one point, and

    • (viii) for the picture editor, one point;

  • (b) that is an animation production, in respect of each of the following persons if that person is an individual who is a Canadian,

    • (i) for the director, one point,

    • (ii) for the lead voice for which the highest or second highest remuneration was payable, one point,

    • (iii) for the design supervisor, one point,

    • (iv) for the camera operator where the camera operation is done in Canada, one point,

    • (v) for the music composer, one point, and

    • (vi) for the picture editor, one point;

  • (c) that is an animation production, one point if both the principal screenwriter and the storyboard supervisor are individuals who are Canadians; and

  • (d) that is an animation production, in respect of each of the following places if that place is in Canada,

    • (i) for the place where the layout and background work is done, one point,

    • (ii) for the place where the key animation is done, one point, and

    • (iii) for the place where the assistant animation and in-betweening is done, one point.

• (6) A production (other than a production that is an animation production or a treaty co-production) is a Canadian film or video production only if there is allotted in respect of the production two points under subparagraph (5)(a)(i) or (ii) and one point under subparagraph (5)(a)(iii) or (iv).

• (7) An animation production (other than a production that is a treaty co-production) is a Canadian film or video production only if there is allotted, in respect of the production,

  • (a) one point under subparagraph (5)(b)(i) or paragraph (5)(c);

  • (b) one point under subparagraph (5)(b)(ii); and

  • (c) one point under subparagraph (5)(d)(ii).

Lead performer/screenwriter

• (8) For the purposes of this Division,

  • (a) a lead performer in respect of a production is an actor or actress who has a leading role in the production having regard to the performer’s remuneration, billing and time on screen;

  • (b) a lead voice in respect of an animation production is the voice of the individual who has a leading role in the production having regard to the length of time that the individual’s voice is heard in the production and the individual’s remuneration; and

  • (c) where a person who is not a Canadian participates in the writing and preparation of the screenplay for a production, the screenwriter is not a Canadian unless the principal screenwriter is an individual who is otherwise a Canadian, the screenplay for the production is based upon a work authored by a Canadian, and the work is published in Canada.

Documentary Production

• (9) A documentary production that is not an excluded production, and that is allotted less than six points because one or more of the positions referred to in paragraph (5)(a) is unoccupied, is a Canadian film or video production if all of the positions described in that paragraph that are occupied in respect of the production are occupied by individuals who are Canadians.

Prescribed Person

• (10) For the purpose of section 125.4 of the Act and this Division, prescribed person means any of the following:

  • (a) a corporation that holds a television, specialty or pay-television broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

  • (b) a corporation that holds a broadcast undertaking licence and that provides production funding as a result of a “significant benefits” commitment given to the Canadian Radio-television and Telecommunications Commission;

  • (c) a person to which paragraph 149(1)(l) of the Act applies and that has a fund that is used to finance Canadian film or video productions;

  • (d) a Canadian government film agency;

  • (e) in respect of a film or video production, a non-resident person that does not carry on a business in Canada through a permanent establishment in Canada and whose interest (or, for civil law, right) in the production is acquired to comply with the certification requirements of a treaty co-production twinning arrangement;

  • (f) a person

    • (i) to which paragraph 149(1)(f) of the Act applies,

    • (ii) that has a fund that is used to finance Canadian film or video productions, all or substantially all of which financing is provided by way of a direct ownership interest (or, for civil law, right) in those productions, and

    • (iii) that, after 1996, has received donations only from persons described in any of paragraphs (a) to (e);

  • (g) a prescribed taxable Canadian corporation;

  • (h) an individual who is a Canadian; and

  • (i) a partnership, each member of which is described in any of paragraphs (a) to (h).

Prescribed Amount

• (11) For the purpose of the definition assistance in subsection 125.4(1) of the Act, prescribed amount means an amount paid or payable to a taxpayer under the License Fee Program of the Canadian Television Fund or as a licence-fee top-up contribution from the Canada Media Fund.

Copyright Owner

• (12) For the purpose of the definition copyright owner in subsection (1),

  • (a) the right of a person to share in the revenues from or proceeds of disposition of an interest or, for civil law, a right, in a film or video production is not, in and by itself, an interest or right as a copyright owner of the production; and

  • (b) for greater certainty, a grant of an exclusive licence, within the meaning assigned by the Copyright Act, is not an assignment of a copyright.