Location Canada - Welcome to Goodmans LLP Website Canada August...In 2012-13, the film and...

Location Canada:A Guide to Producing in Canada

and Doing Business with Canadians

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Location Canada: A Guide to Producing in Canada

and Doing Business with Canadians

August 2014

If you are considering producing in Canada, this guide may assist you.

Please note that the discussion in this guide is confined to the laws of Canada as of August 2014. Tax credit rules and government incentives are subject to constant change and therefore it is always

advisable to check the applicable websites for the latest information.

The guide is very general and should not be relied upon as legal advice. We encourage you to consult us directly with specific problems or questions.

© 2014 Goodmans LLP. All rights reserved.

Section

Goodmans LLP: Canada’s Leading Entertainment Law Firm ....................... 1

The Canadian Film and Television Industry .................................................. 2

Financing Structures in Canada .................................................................... 5

Canadian Financial Assistance ................................................................... 10

Federal Credits and Incentives ................................................................... 18

Provincial Tax Credit Programs and Other Incentives ............................... 23

Direct Federal Assistance ........................................................................... 50

Direct Provincial Assistance ....................................................................... 60

Private Assistance ....................................................................................... 61

Important Information About Producing in Canada ................................... 64

The Goodmans Entertainment Team ........................................................... 70

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Goodmans LLP: Canada’s Leading Entertainment Law Firm Goodmans is recognized as one of Canada’s leading full-service law firms offering expertise in entertainment, mergers and acquisitions, corporate finance, securities, banking and finance, private equity, tax planning, restructurings, litigation and commercial real estate. Our lawyers are consistently recognized by leading industry arbiters, and in various client and peer surveys conducted by Lexpert, Lexpert/American Lawyer Media, Chambers and Partners, Euromoney, International Financial Law Review, Law Business Research and Best Lawyers in Canada.

We have lawyers exclusively practising entertainment law, specializing in film and television, digital media and book publishing. By blending this expertise with the regulatory work of our communications practice group within the Canadian Radio-television and Telecommunications Commission, we distinguish ourselves from other Canadian law firms with comparable practice areas.

Goodmans represents a large cross-section of major North American film, television, digital media and publishing companies, and many individual directors, authors and screenwriters, actors and film and television personalities. Our foreign clients include NBC Universal, Random House, Fox, Ted Rogers Company, Tornante, Little Airplane, BBC America, AMC, Universal Pictures International, Lagardère, Live Nation, Key Brand, Comcast, Black Bear Pictures, CORE Media Group, CBS, Original Productions, Argonon, Participant Media Endemol, TNT, Out of the Blue, Paramount, Showtime, Smithsonian Channel, Disney ABC Cable, Working Title, Discovery, Nickelodeon, VH1, Dreamworks, Starz, Cartoon Network, Classic Media, RH1, Spike TV, Scholastic, MTV Networks, Comerica Bank, HSBC, Natexis Banques Populaires, Imperial Capital Bank, US Bank, CIT Financial, Bank of Ireland, Citi National Bank and New Bridge Film Capital.

Our domestic clients include CTV, Cineplex, Insight Productions, Frantic Films, Shaftesbury, Nelson Education, EntertainmentOne, The Stratford Festival, Canadian Film Centre, The Historica-Dominion Institute, Urban Post, Temple Street Productions, SFA Productions, Arc Productions, Toonbox Entertainment, 90th Parallel, Export Development Canada, Numedia Pictures, Rogers Telefund, Royal Bank, OMERS, CIBC, Independent Film Financing, Canadian Screenwriters Collection Society, Westwood Creative Artists and the Writers Guild of Canada. In the sports field, Goodmans represents Maple Leaf Sports and Entertainment (which owns the Toronto Maple Leafs, Toronto Raptors and Toronto FC), Insight Sports and the NHL Players Association among others.

We advise our foreign clients producing in Canada on Canadian tax and legal issues such as film tax credits and Canadian withholding tax, preparing talent contracts, dealing with Canadian guilds and unions and advising on Canadian foreign investment rules and domestic regulatory requirements. For our Canadian clients, we also assist with government funding applications, negotiating international co-productions and CRTC co-ventures, arranging Canadian content tax credit applications and assisting in sales to distributors and broadcasters in Canada and abroad.

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The Canadian Film and Television Industry The Canadian film and television industry has quickly grown to represent $5.82 billion of business annually. In 2012-13, the film and television production sector alone accounted for 127,700 full-time jobs, including 77,500 full-time jobs directly in the industry.1 Only a few years ago, Canada’s largest film and television companies were small privately held corporations relying heavily on government financing and subsidy programs to finance production. Since 1993, however, many of Canada’s most prominent film and television companies have, through a combination of public offerings, private equity financings and consolidations, grown to become commercially successful integrated entertainment corporations often with significant broadcasting assets.

At the same time as the domestic industry has grown, Canada has become a key location for internationally originated productions. Hollywood studios, European Film Companies, American television networks and US cable services have all come to Canada to film their productions, attracted by stable and lucrative Canadian film incentives and first-class Canadian casts and crews, locations and facilities. Major U.S. film studios such as Warner Bros., Paramount, Walt Disney, Fox, and Universal, leading U.S. TV studios such as ABC, NBC, CBS and Fox, American cable services such as NBCU, CABLE, AMC, BBC America, Showtime, TNT, Discovery, Disney ABC Cable and HBO and film companies such as Lionsgate and Media Rights Capital, have a strong presence in Canada. European producers such as BBC Worldwide, Endemol, Working Title, Atlantique, Lagardere and Universal International have also found Canada to be an attractive location and have taken advantage of Canada’s numerous international film and television co-production treaties to access Canadian benefits. The majority of foreign location and service production is made by producers based in the United States. Foreign location and service production accounted for over $1.74 billion in production volume in 2012-13.2

There are a number of factors accounting for this continuing interest in Canadian film and television production.

Geographic Proximity

Canada’s geographic proximity to the United States and shared North American values and interests have led to the establishment of close professional contacts between Canadian and American studios, independent producers, distributors and buyers. Toronto is a short flight away from New York and Vancouver is just up the coast from Los Angeles. American television is readily accessible and widely disseminated throughout Canada.

1 “Profile 2013: Economic Report on the Canadian Film and Television Production Industry,” a report produced by The Canadian Film and Television Production Association and l'Association des producteurs de films et de télévision du Québec, in conjunction with the Department of Canadian Heritage with production facts and figures provided by Nordicity Group Ltd.

2 Ibid.

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Lower Production Costs

Production costs in Canada are generally lower than in the U.S. and other countries, and therefore attract U.S. and other foreign productions. In addition, generally lower guild and union minimums encourage production in Canada by non-Canadian producers.

First-Class Canadian Performers

Popular Canadian performers include Ellen Page, Michael Cera, William Shatner, Jim Carrey, Keanu Reeves, Sarah Polley, Mike Myers, Tom Green, Kim Cattrall, Eric McCormack, Carrie-Anne Moss, Hayden Christenson, Neve Campbell, Brendan Fraser, Jill Hennessy, Will Arnett, Matthew Perry, Christopher Plummer, David James Elliot, Rachel McAdams, Colm Feore, Scott Speedman, Kate Nelligan, Donald and Kiefer Sutherland, Catherine O’Hara, Eugene Levy, Tatiana Maslany, Ryan Gosling, Ryan Reynolds, Sandra Oh, Jay Baruchel, Michael J. Fox, Evangeline Lilly, and Seth Rogen. For Canadian productions, performers are commonly represented by guilds whose collective agreements are often more favourable to the producer than non-Canadian collective agreements.

First-Class Canadian Crews

Canada now boasts a very large number of highly trained and professional crews, technicians and production personnel. In Toronto, the Canadian Film Centre established by Norman Jewison, provides intensive training for Canadian directors, writers and producers. In addition, Canadian trade unions are often more flexible and insist on less onerous requirements than their non-Canadian counterparts.

New and Varied Canadian Locations

With its wide-ranging topography (3,400 miles from coast to coast) and small population (approx. 33 million), Canada is ideally suited for location shooting. Urban centres such as Toronto, Vancouver and Montreal have been disguised as London, Paris, New York and Chicago. Many Canadian cities and several provinces offer free location assistance to film and television producers.

First-Class Canadian Facilities

Studio facilities and post-production laboratories in Toronto, Montreal and Vancouver rival those in Hollywood. Canada’s largest film and television studio, Lions Gate Studios, a $25 million facility, is located in Vancouver, as is the Bridge Studios, which has one of the largest sound effect stages in North America. Pinewood Toronto Studios, located in downtown Toronto, is one of the world’s largest custom-built sound stages, designed to attract large-budget Hollywood productions requiring large-scale studio space. It includes seven sound stages, and a “Mega Stage” with 46,000 sq ft of column-free space with a height of 60 feet, the largest purpose-built studio in North America.

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Government Financial Support

The federal government and each of the provincial governments provide generous financial support (typically in the form of refundable tax credits) to qualifying Canadian productions. For example, the Canada Media Fund (CMF) makes approximately $370 million dollars in funding available annually. More information on these and other programs can be found in this guide.

Incentives for “Canadian-Content” Productions

Producing films and television programs recognized as having ‘Canadian content’ can provide several benefits for foreign businesses. Canadian television broadcasters and cable services generally pay substantially higher licence fees for television programs meeting criteria established by the Canadian Radio-television and Telecommunications Commission (CRTC). Such productions are also generally eligible for direct government funding, tax credits and assistance from the CMF.

Tax Credits

Canada’s federal government offers attractive tax credits to aid in the development of the Canadian film and television production industry and to promote Canadian television programming. For example, the Canadian Film or Video Production Tax Credit (CPTC) is a fully refundable tax credit for eligible “Canadian content” film and video production produced by qualified taxable Canadian corporations. It is administered jointly by Canada Revenue Agency (CRA) and the Canadian Audio-Visual Certification Office (CAVCO), and is available to Canadian-controlled productions meeting the detailed requirements set out in the Income Tax Act, related regulations and guidelines of CAVCO. Most Canadian provincial and territorial governments have introduced similar or additional incentives to the federal tax credits, which, in most cases, are more generous than, and supplement, the federal incentives. More information on these incentives can be found in this guide.

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Financing Structures in Canada Listed below are the four primary financing structures used to produce films, television shows and other productions in Canada. Each structure provides access to various incentives, including Canadian Content and production services tax credits and direct government assistance. Production companies may also benefit from premiums paid by broadcasters for productions meeting content rules established by the CRTC.

1. Foreign-controlled “Service Productions”

These productions remain foreign-controlled but can qualify for production services tax credits based on the cost of qualifying Canadian labour.

2. CRTC Co-ventures

These productions are co-ventures between non-Canadian (e.g., American) and Canadian producers, and qualify as “Canadian content” for purposes of CRTC broadcast sale. Although ineligible for Canadian content tax credits, they can receive production services tax credits. These productions generally garner higher broadcast license fees, are easier to sell in Canada and non-Canadian producers can be openly involved in the production process.

3. Canadian Owned and Controlled Productions

Canadian owned productions are eligible for Canadian-Content tax credits, CRTC premiums, direct government support and private assistance.

4. International Treaty Co-productions

Productions made and certified under a co-production treaty gain “official treaty co-production” status, enjoy all government incentives available to domestic films in Canada, and are considered to be “national products” in both participating countries. These productions are eligible for Canadian-Content tax credits, CRTC premiums, direct government financing and Foreign financing.

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Foreign Services CRTC Co-Venture Canadian Content Treaty Co-ProductionCopyright 100% owned by non-

Canadian producer May be 100% owned by non-Canadian producer

100% owned by Canadian producer

Shared by co-producers in proportion to their financial contribution

Distribution 100% non-Canadian producer

Non-Canadian producermay distribute worldwide, excepting Canada

Non-Canadian producer may distribute, excepting Canada, with CAVCO approval

Non-Canadian producer may distribute production outside of co-producers’ “home territories”

Sharing of Net Receipts

100% retained by non-Canadian producer

Canadian producer must retain no less than 50% of “profits”

Canadian producer must retain 100% of Canadian distribution receipts and no less than 25-30% of worldwide (ex Canada) distribution revenues

Co-producers share revenues proportionate to their respective financial contributions

Tax Credits / CDN License Fee

“Services” tax credits / Lower Canadian license fee

“Services” tax credits / Higher Canadian license fee

May elect “Cancon” or “Services” tax credits / Higher Canadian license fee; CMF

May elect “Cancon” or “Services” tax credits / Higher Canadian license fee; CMF

Production Control

100% non-Canadian producer

Canadian producer must have equal decision-making control and financial responsibility/risk and be responsible for contributing no less than 50% of the budget

100% Canadian producer Technical and creative participation proportionate to the financial contribution of each co-producer. Creative and technical personnel must meet residency/citizenship requirements of treaty countries. Limited participation by personnel from third party countries

“Points Test” N/A 6 / 10 points – at least one of the director or screenwriter and at least one of the two leads must be Canadian

6 / 10 points – at least one of the director or screenwriter and at least one of the two leads must be Canadian

Creative elements must not be less than relevant Treaty minimum

Costs N/A Must meet the 75% spend tests

Must meet the 75% spend tests

Expenditures must be proportionate to the financial contribution of each co-producer

Producer Related Credits

N/A Canadian producer credits no less favourable than non-Canadian Executive producer credits

Foreign courtesy credit may be granted to non-Canadian producer if related to foreign broadcast, distribution or financing, or the provision of services under the strict supervision and control of the Canadian Executive producer

Foreign courtesy credit may be granted to non-Canadian producer if related to foreign broadcast, distribution or financing, or the provision of services under the strict supervision and control of the Canadian Executive producer

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International Treaty Co-Productions

Canada is a party to approximately 55 film and/or television co-production treaties in effect in 54 countries. Notably, the United States is not party to a co-production treaty with Canada. Co-production treaties assist Canadian producers and their foreign counterparts in collaborating and pooling financial and creative resources on a given production. Canada’s total volume of treaty co-productions in 2012 was $452 million.3

The most active treaty co-production relationships are with the United Kingdom, and France. European countries tend to comprise the vast majority of Canada’s co-production activity. However, a general trend among European Union members towards intra-European co-productions has contributed to lower co-production figures between Canada and many European states in recent years. Co-productions are increasingly being forged by Canada with non-European countries such as Australia, Brazil, Morocco, South Africa, and the Philippines.

A production made in accordance with a co-production treaty and certified by the Co-Productions office of Telefilm Canada gains “official treaty co-production” status. As an official treaty co-production, the production is treated as a “national production” of each co-producing country making it eligible for government incentives and tax benefits in each of the co-producer’s respective countries. These incentives and benefits include eligibility for government financial support from Telefilm Canada and from provincial agencies, access to federal and provincial tax credits and qualification for the “Canadian content” designation established by CRTC.

Benefits vary depending on the particular country’s co-production treaty. Some countries also offer production assistance and a qualifying co-production will be eligible to access this funding in addition to Canadian benefits. Certain treaty countries, such as France, have quota requirements for domestic television and a co-production will sometimes qualify under the relevant quota.

The co-production treaties between Canada and various European countries are bilateral agreements and their effect must be considered in light of the formation of the European Community (EC) and its directive on broadcasting. The EC Broadcasting Directive was first enacted in 1989 and has been incorporated into the domestic law of most EC Member States, including France and the United Kingdom. Article VI of the Broadcasting Directive provides that member states are to ensure that broadcasters reserve a majority proportion of their transmission time to European works. For a Canadian/European treaty co-production to qualify as a “European work”, the work must originate in Europe, be “mainly made by authors and workers residing in Europe,” and have a European entity as a majority co-producer. If all of these conditions are met, the co-production will qualify as 100% European content. Works that do not meet this definition are foreign works subject to the quota limits, but works that are mainly made by European residents are exempted from the quota to that degree of contribution. For example, if the European financial participation in a two-hour co-production amounts to one third of the total, 40 minutes of the co-production will qualify as European content.

3 “Profile 2013: Economic Report on the Canadian Film and Television Production Industry,” a report produced by The Canadian Film and Television Production Association and l'Association des producteurs de films et de télévision du Québec, in conjunction with the Department of Canadian Heritage with production facts and figures provided by Nordicity Group Ltd.

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While the co-production treaties provide several benefits as described above, they impose conditions on the co-producers which can limit flexibility. For example, each co-production treaty sets minimum standards for financial participation (the minority co-producer must normally contribute at least 20% of the financing), creative participation and the amount of third country involvement in the production. The treaties also specify the creative and technical contributions which must be made by citizens of the country of the minority co-producer. For example, co-production agreements may specify minimum numbers of writers, technicians, leading and supporting role performers, and producers who must be citizens of the participating country. Compliance with these sorts of conditions is the trade-off for enjoying the benefits accorded under the co-production treaties.

Currently there is no co-production treaty between Canada and the United States and none anticipated in the near future. Although U.S. controlled entities will not qualify as “Canadian” for purposes of the co-production treaties, in some cases, U.S. producers may take indirect advantage of international co-production treaties through the medium of non-Canadian subsidiaries or affiliates incorporated and carrying on business in non-Canadian jurisdictions which are parties to a co-production treaty with Canada. This is allowed where such non-Canadian subsidiaries or affiliates meet the relevant qualification criteria under the applicable co-production treaty. In other cases, a U.S. rights holder may license production rights to a Canadian company to facilitate an official co-production between Canada and another country for distribution by the U.S. rights holder. As a practical matter, however, the majority of U.S. productions in Canada will either be CRTC Co-ventures or Foreign-controlled “Service Productions”.

Telefilm Canada Certification for Co-Production

Telefilm Canada will generally certify co-productions if all of the following criteria are satisfied:

Co-productions are with foreign producers from countries that have signed a co-production agreement with Canada or, in the case of multipartite co-productions, with one of the other co-producing countries;

Creative and technical participation is proportionate to the financial contribution of each co-producing country;

If the Canadian company is affiliated or associated with a foreign corporate group, it must be incorporated and operated independently from that group;

The Canadian financing covers the cost of Canadian elements, which can never be lower than the minimum applicable treaty requirements. The minimum financial participation of each country varies depending on the treaty from 15% to 30%;

The producer, crew and personnel exercising control over the creative, financial and technical aspects of the Canadian portion of the project must be Canadian citizens or permanent residents; and

For co-productions with a European Union member country, the director(s) and scriptwriter(s) must be citizens or permanent residents of Canada or of a European Union member country.

For more information, visit the Telefilm website and review the Telefilm Co-Production Guidelines available online at www.telefilm.gc.ca.

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Canadian/International Co-Production Agreements

Algeria Columbia Hong Kong Luxembourg Romania Switzerland

Argentina Cuba Hungary Malta Russian Federation United Kingdom

Australia Czech Republic Iceland Mexico Senegal Uruguay

Austria Denmark India Morocco Singapore Venezuela

Belgium Estonia Ireland Netherlands Slovak Republic Yugoslavia:

Brazil Finland Israel New Zealand South Africa Serbia

Montenegro

Croatia

Bosnia-Herzegovina

Slovenia

Macedonia

Bulgaria France Italy Norway South Korea

Chile Germany Japan Poland Spain

China Greece Latvia Republic of Philippines Sweden

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Canadian Financial Assistance The non-Canadian who desires to benefit indirectly from Canadian government and private sector financing must become familiar with the maze of rules regarding Canadian financial assistance and tax benefits. For the most part, these rules are designed to foster the domestic Canadian film industry and encourage the growth and development of Canadian film productions. Generally to access these benefits, an association with an individual Canadian producer with genuine control over the production will be required to gain access to the funding. Non-Canadians can reap the benefits of Canadian financing - provided they understand and adhere to the rules of the game. A number of production services tax credits have been introduced both at the federal level and in many of the provinces. These new credits are designed to promote and encourage foreign production in Canada, and thereby develop and grow Canadian production service industries. For this reason, the eligibility requirements for such credits are generally far less stringent than those associated with the “Canadian content” incentives.

Canadian financial assistance to film and television productions normally falls into one of the following five broad categories. A brief summary of each program is given, followed by more detailed information.

Federal and Provincial Tax Credits

CRTC – “Canadian Content”

Direct Federal Assistance

Direct Provincial Assistance

Private Assistance

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Federal and Provincial Tax Credits

EL = Eligible Labour Costs ELNL = Eligible Labour and Non-Labour Costs TPC = Total Production Cost

Federal

Name Amount Canadian Film or Video Production Tax Credit www.pch.gc.ca/cavco

25% of EL (max = 15% of TPC)

Canadian Film or Video Production Services Tax Credit www.pch.gc.ca/cavco

16% of EL

Provincial

Alberta Multimedia Development Fund www.film.alberta.ca/

25 - 30% of ELNL*

Film Incentive BC Tax Credit www.creativebc.com

35% of EL* (max = 21% of TPC)

British Columbia Production Services Tax Credit www.creativebc.com

33% of EL*

Manitoba Film and Video Production Tax Credit www.mbfilmmusic.ca

45% of EL* or 30% of ELNL

New Brunswick Multimedia Initiative www.nbfilm.ca

25 - 30% of ELNL

Newfoundland and Labrador Film and Video Industry Tax Credit www.nlfdc.ca

40% of EL (max = 25% of TPC)

Nova Scotia Film Industry Tax Credit www.novascotia.ca

50% of EL* (max = 25 – 30% of TPC)

Nunavut Spend Incentive Program www.nunavutfilm.ca

17 - 30% of ELNL*

Ontario Film and Television Tax Credit www.omdc.on.ca

35 of EL*

Ontario Production Services Tax Credit www.omdc.on.ca

25% of ELNL

Quebec Film and Television Production Tax Credit www.sodec.gouv.qc.ca

28 - 36% of EL*(max = 14 - 18% of TPC)

Quebec Production Services Tax Credit www.sodec.gouv.qc.ca

20% of ELNL*

Quebec Film and Television Dubbing Tax Credit www.sodec.gouv.qc.ca

28% of EL

Saskatchewan Film/TV and Digital Tax Credit www.creativesask.ca

25% of ELNL* (Non-refundable and Details TBA)

Yukon Film Location Incentivewww.reelyukon.com

Total rebate = (A+B) or (B+C) Yukon Spend Rebate (A): 25% of ELNL Yukon Training Rebate (B): Up to 25% of eligible trainers wages Yukon Travel Rebate (C): Up to 50% of travel costs from Vancouver, Edmonton or Calgary to Whitehorse (maximum $15,000)

Provincial Animation / Digital Media Incentives British Columbia Digital Animation or Visual Effects Tax Credit www.creativebc.com

17.5% of EL

British Columbia Interactive Digital Media Tax Credit www.creativebc.com

17.5% of EL

Ontario Computer Animation and Special Effects Tax Credit www.omdc.on.ca

20% of EL

Ontario Interactive Digital Media Tax Credit www.omdc.on.ca

35 - 40% of ELNL

Quebec Computer Animationand Special Effects Tax Credit www.sodec.gouv.qc.ca

8% of EL for claims related to French-language or giant-screen production, 16% of EL for claims related to other productions

Nova Scotia Digital Media Tax Credit www.novascotia.ca

Lesser of 50% of EL* or 25% of ELNL*

Manitoba Interactive Digital Media Tax Credit www.gov.mb.ca

40% of EL (capped at $500,000)

* Regional and/or other bonus incentives available

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CAVCO Key Creative Point Requirements

To be eligible for the federal Canadian Film or Video Production Tax Credit and certain provincial incentives, productions must satisfy criteria established by the Income Tax Act Regulations, as administered by CAVCO.

Live Action Production

A live action production must earn a minimum of six units of production or “points” based on the following key personnel qualifying as Canadians:

In addition, at least one of the director or screenwriter and at least one of the highest paid or second highest paid actors must be Canadian.

In the case of a documentary production that does not involve performers or other elements such as music composer or art director, a production may meet the creative services criteria even if it has not been allotted the minimum six points as set forth above. However, all the creative positions must be occupied by Canadians.

Animated Production

There is a separate 10 point scale for animation productions. To qualify for the CPTC, animation productions must obtain a minimum of six points based on the following key personnel qualifying as Canadians and the following services being rendered in Canada:

At least one of the director or the screenwriter and storyboard supervisor must be Canadian, the lead voice must be Canadian, and the key animation must be done in Canada.

For more information on CAVCO and the certification process, visit www.pch.gc.ca/cavco.

Position Points

Director 2 points Screenwriter 2 points Highest Paid Actor 1 point Second Highest Paid Actor 1 point Art Director 1 point Director of Photography 1 point Music Composer 1 point Picture Editor 1 point

Position Points

Director 1 point Screenwriter and Storyboard Supervisor 1 point Highest or Second Highest Paid Lead Voice 1 point Design Supervisor 1 point Camera Operator 1 point Music Composer 1 point Picture Editor 1 point Layout and Background (Performed in Canada) 1 point Key Animation (Performed in Canada) 1 point Assistant Animation and In-between (Performed in Canada)

1 point

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CRTC – “Canadian Content”

Distinct from the Income Tax Act, the Broadcasting Act (Canada)4 provides a similar set of Canadian content rules for evaluating Canadian programming. These rules are administered by the CRTC and are the basis upon which Canadian broadcasters fulfill their licence requirements for minimum quotas of Canadian programming.

Although the CRTC and CAVCO criteria are similar, it is important to distinguish between the rules regarding “Canadian film or video productions” for tax credit purposes and the rules regarding “Canadian content” for CRTC purposes. In a public notice issued by the CRTC in March of 2000,5 the requirements for the recognition of Canadian programs were updated by the CRTC and came into effect on September 1, 2000. Very briefly, the requirements are essentially the same as the CAVCO requirements for a Canadian film or video production and include an individual Canadian producer, an accumulation of a minimum of six points in the specified point system and the two 75% expenditure tests described below of the Canadian Film or Video Production Tax Credit.

A “Canadian film or video production” (as defined in the Income Tax Act) will qualify automatically for CRTC Canadian content purposes. Therefore, a broadcaster regulated by the CRTC that telecasts a “Canadian film or video production” will receive recognition from the CRTC by meeting its Canadian programming quotas. However, the reverse is not always true: a production which qualifies for CRTC “Canadian content purposes” will not automatically qualify as a “Canadian film or video production” for tax credit purposes because the CRTC recognition rules are in some cases broader than the tax certification rules. Several productions which would not qualify as a “Canadian film or video production” may qualify as Canadian programs for CRTC purposes. For example, the CRTC policy contains a series of rules dealing with co-ventures which are co-productions not governed by an international co-production treaty. An American production company and Canadian production company could enter into a co-venture which would meet the Canadian content criteria, but would not be eligible for certification for tax purposes. The criteria for the recognition of co-ventures as Canadian programs are also set out in the CRTC public notice. Co-ventures will qualify for special recognition where the “Canadian production company has at least an equal measure of decision-making responsibility with other co-venture partners on all creative elements of the production and is responsible for the administration of not less than the Canadian content of the production budget.”6 In addition, the Canadian production company must retain a financial participation of at least 50% and a 50% share of the profits.

Co-ventures with a non-treaty country, such as the United States or producers from Commonwealth or French-speaking countries, must also obtain at least six points and meet the 75% expenditure tests as mentioned in the Canadian Film or Video Production Tax Credit. Co-ventures with treaty country producers need only attain five points and meet a 50% expenditure test. The chief advantage of the co-venture structure is that non-Canadians may be openly involved in the production and may receive producer related credits and there are no restrictions over control of distribution or even ownership of copyright. The main disadvantage is that a co-venture, while Canadian for CRTC broadcast quota purposes, will not qualify for the Federal Content Credit or provincial Canadian content tax credits (but may be eligible for the lesser Federal and provincial production services tax credits).

4 R.S.C. 1985, c.B-9 (as amended). 5 Canadian Radio-Television and Telecommunications Commission, Public Notice CRTC 2000-42, March 17, 2000. 6 Ibid., at C.VII.

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To summarize, the CRTC “Canadian content” designation, per se, is irrelevant for tax purposes, where a production must be “certified” by the Minister of Canadian Heritage as a result of a separate application to CAVCO. The significance of the “Canadian content” designation is that because of the Canadian programming quota requirements imposed by the CRTC, Canadian broadcasters (including pay and specialty television services) are often willing to pay a premium for television programming which qualifies for the designation.

Direct Federal Assistance

Canada Media Fund www.cmf-fmc.ca

Canada Council for the Arts www.canadacouncil.ca

Canada Feature Film Fund www.telefilm.ca/en/funds-and-programs/development-program

National Film Board www.nfb.ca

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Direct Provincial Assistance

Jurisdiction Incentive Program

Alberta www.albertafilm.ca

Alberta Production Grant: 25% - 30% of all eligible expenses incurred in Alberta (retroactive to April 1, 2009)

Up to $5 million

Alberta Incentives: Alberta Project/Script Development Grant Export Market Development Grant Training and Mentorship Grant Cultural Industries Grant Individual Artists Project Grant Arts Organization Operational Grant Alberta Foundation for the Arts - Film and Video Projects Alberta Cultural Industries Association Loan Guarantee Community Initiatives Program Edmonton Filmed Entertainment Fund

British Columbia www.creativebc.com www.bcartscouncil.ca

British Columbia Incentives: British Columbia Film Project Development Fund BC Film + Media’s Digital Media Funding British Columbia Arts Council Project Assistance for Media

Manitoba www.artscouncil.mb.ca www.mbfilmsound.mb.ca

Manitoba Arts Council Incentives:

Film/Video Production Grant Up to $20,000 for a range of production related costs

Film/Video Script Development Grant Up to $6,000 per project for aid in creation of scripts

Film/Video Project Grant Up to $6,000 per project related to project development

Major Arts Grant Up to $25,000 for living, project and travel expenses

Film and Sound Recording Development Corporation: Television and Web-Based Development Fund Feature Film Development Fund Television and Web-Based Production Fund Feature Film Production Fund Grant Program for Emerging Talent and Micro-Budget Production Feature Film Marketing Fund Access to Markets and Access to Festivals Programs

New Brunswick www.nbfilm.ca

New Brunswick Film Incentives: Equity Investments: 10% of the total production budget to a maximum of $250,000 Promotional Travel Assistance Development Loans Short Film Venture Program: 25% of the total production cost to a maximum of $4,000 -

$6,000

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Jurisdiction Incentive Program Newfoundland and Labrador www.newfilm.nf.net

Newfoundland and Labrador Equity Investment Program: 20% of overall cost of the production

Nova Scotia www.film.ns.ca

Nova Scotia Film Development Corporation Incentives: Equity Investment – Film and TV Equity Investment - New Media Shorts-to-Features Program First Feature Project Web Drama Series Program Market & Festival Assistance Development Loan Program Eastlink TV Independent Production Fund Professional Development Assistance Partnerships in Training Feature Film Distribution Assistance

Nunavut www.nunavutfilm.ca

Funding Programs for Nunavut Filmmakers: Market Endowment Program Entry-Level Experience Fund Short Film Fund Spend Incentive Program Creative Content Development Fund Industry Development and Training Fund

Ontario www.arts.on.ca www.torontoartscouncil.org

Ontario Incentives: The Ontario Arts Council Toronto Arts Council Grants to Media Artists Program

Quebec www.ficc.qc.ca www.sodec.gouv.qc.ca www.fidecinvest.com

Quebec Incentives: Fonds d’investissement de la culture et des communications Societe de development des enterprises culturelles (SODEC) La financière des enterprises culturelles du Québec (FIDEC)

Saskatchewan www.artsboard.sk.ca

Saskatchewan Arts Board Creative Industries Transition Fund: Market Development and Distribution Grant Screen-based Media Production Grant

Yukon www.reelyukon.com

Yukon Film Incentive Labour Rebate Program: 25% of Yukon below-the-line spend

Yukon Film Incentive Travel Rebate Program: Maximum of 50% of eligible travel costs from Vancouver, Calgary or Edmonton to

Whitehorse, to a maximum of $15,000 or 15% of Yukon expenditures not otherwise subsidized whichever is less

Television Commercials: Travel rebate cap is the lesser of $10,000 or 10% of Yukon expenditures

Yukon Film Training Rebate Program: Up to 25% of a trainee’s wages

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Private Assistance

The Harold Greenberg Fund www.bellmedia.ca/harold-greenberg-fund/ 416.956.5432

Rogers Documentary Fund www.rogersgroupoffunds.com 416.935.2526

Independent Production Fund www.ipf.ca 416.977.8966

Shaw Rocket Fund www.rocketfund.ca 403.750.4517

Rogers Telefund www.rogersgroupoffunds.com 416.935.2526

The Bell Fund www.bellfund.ca 416.977.8154

Rogers Cable Network Fund www.rogersgroupoffunds.com 416.935.2526

Cogeco Program Development Fundwww.cogecofund.ca 416.977.8966

More information on these programs is found on pages 63 - 66.

How can Goodmans help?

Goodmans lawyers are available to work with your team to:

Explain the detail behind available Canadian financial assistance and explore whether your production or treaty co-production qualifies.

Assemble the necessary financial, title and corporate documents to support your project’s application and to ensure that your production corporation is recognized as a qualified corporation.

Recommend changes to the project so that it meets tax credits’ guidelines regarding Canadian producers, producer control, screen credits and creative personnel.

Verify that your production genre and expenses are covered by these programs.

Maximize the scope of the credits and facilitate their assignment to financiers as necessary.

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Federal Credits and Incentives

Canadian Film or Video Production Tax Credit (“CPTC”)

What is the Benefit?

The CPTC is a federal refundable tax available to qualified corporations (see “Who is Eligible” below). The federal tax credit is equal to 25% of qualifying Canadian labour expenditures capped at 60% of production costs, providing up to a maximum of 15% (25% of 60%) of the total production costs. Qualifying labour expenditures can include eligible salaries, wages and other remuneration paid or payable for services rendered in connection with the production of a Canadian film or video production. Such qualifying expenditures are net of any assistance which the producer receives from any Canadian federal or provincial film agency, provincial tax credit program or other grants, subsidies and similar benefits.

Type of Benefit: Refundable tax credit

Rate: 25% of qualifying Canadian labour expenditures, qualifying labour expenditures cannot exceed 60% of production costs

Project Cap: 15% of production costs

Who is Eligible? The production company must:

1. Be a Canadian-owned and controlled corporation, taxable in Canada, whose primary activity is the production of Canadian films.

2. Be the exclusive worldwide copyright owner in the production for at least 25 years production completion.

3. Retain an acceptable share of revenues from exploitation in non-Canadian markets.

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4. Control the initial worldwide exploitation rights over the production.

Which Productions are Eligible?

To be eligible for this tax credit, the production must meet all of the following requirements:

1. An application for the project must be sent to the program within 24 months of the first fiscal year end following the commencement of principal photography. The Canadian Audio-Visual Certification Office (CAVCO) must issue a Part B certificate within six months of this date.

2. The production cannot fall under any of the excluded genre categories.

3. A production must meet CAVCO's minimum (6) key creative point requirements to verify that key creative personnel and producers identified as Canadian are Canadian.

4. All producer-related personnel (other than those receiving exemptions permitted in limited circumstances) must be Canadian.

5. At least 75% of the production costs (net of specific excluded costs) must be paid to Canadians, and at least 75% of the post-production costs must be incurred for services provided in Canada.

6. A Canadian distributor or a CRTC-licensed broadcaster must show the production in Canada within 2 years of completion.

7. The production cannot be distributed in Canada by a non-Canadian entity within 2 years of completion.

Many of these requirements do not apply to treaty co-productions. For more information on treaty co-productions and Canada’s international film agreements, see page 21.

Sunset/Review: None

For more information, please visit www.pch.gc.ca/cavco.

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Production Services Tax Credit (“PSTC”)


The PSTC supports non-Canadian content film and television productions produced in Canada. The PSTC is designed to strengthen Canada’s international reputation as a top location for film and video productions employing the services of Canadians. Both Canadian producers and foreign producers with a permanent establishment in Canada can qualify without having to meet the Canadian content criteria. The PSTC is not available where a production has received a Federal Content Credit under the CPTC, but the PSTC can be claimed with complimentary provincial tax credit programs.


Rate: 16% of qualifying Canadian labor expenditures

Project Cap: None

Who is Eligible? To be eligible for the PSTC, the applicant must:

be a corporation that carries on in Canada, primarily through a permanent establishment, a film production business or a production services business and must either:

own the copyright in the production throughout the period during which the production is produced in Canada; or

be contracted directly by the owner of the copyright in the production to provide production services.


To qualify for the PSTC, productions must meet minimum expenditure requirements of $1 million for feature films, $200,000 for a one-hour television episode, or $100,000 for a 30-minute television episode.

The following types of programs are not eligible for the PSTC: news programs, talk and game shows, a sports event or activity, a gala presentation or an awards show, productions that solicit funds, reality television, pornography, advertising, industrial, corporate or institutional productions.

Sunset/Review: None

For further information please visit www.pch.gc.ca/cavco.

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Combining Federal and Provincial Refundable Film Tax Credits

The federal tax credits described above may be combined with the provincial tax credits described next in this guide. The chart below indicates the federal and provincial tax credit rates available for an eligible “Canadian content” production. As mentioned, the CPTC can only be accessed by Canadian controlled corporations with productions earning at least 6 points on CAVCO’s point system. In general, provincial credits will reduce the federal credit but the federal credit will not reduce the quantum of the provincial credits. The federal credit is capped at 60% of production costs and it therefore cannot exceed 15% of total production costs.

Canadian Content

Rates = percentage of eligible labour costs

“First-time productions” in Ontario, non-Vancouver regional productions and productions with training opportunities in British Columbia, regional productions in Saskatchewan and French language feature films and documentaries in the Province of Quebec are eligible for higher provincial rates in prescribed circumstances. A slightly lower tax credit is applicable in Nova Scotia for productions shot within the Halifax region.

7 A 60 per cent tax credit is available for productions shot outside of the Halifax region. For productions shot within the

Halifax region, the tax credit is equal to 50 per cent of eligible wages or labour.

Province Federal Credit Provincial Credit

Ontario 25% 35%

Quebec 25% 28%

British Columbia 25% 35%

Saskatchewan 25% 25%

Manitoba 25% 45%

Nova Scotia 25% 50%7

New Brunswick 25% 30%

Newfoundland 25% 40%

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The following are the maximum combined federal and provincial services tax credits available for an eligible non-Canadian content production (i.e., productions claiming the PSTC).8

Production Services

Rates = percentage of eligible costs

Province Federal Credit Provincial Credit

Ontario 16% 25%

Quebec 16% 20%

British Columbia 16% 33%

Saskatchewan 16% 25%

Manitoba 16% 45%

Nova Scotia 16% 50%

New Brunswick 16% 30%

Newfoundland 16% 40%

8

The Ontario and Quebec production services tax credits cover both eligible labour and non-labour costs, unlike the federal Canadian production services tax credit which applies only to eligible labour costs. The Manitoba credit may or may not cover eligible non-labour costs. the combination of the federal credit with these provincial credits will therefore vary depending upon the respective quantum of eligible provincial labour vs. non-labour costs, the foregoing also does not take into account any provincial regional filming bonuses, “frequent filming” bonuses and similar variations to the eligible provincial film credits. There is generally no maximum cap on these refundable production services tax credits, unlike most “Canadian content” film credits.

PPrroovviinncciiaall TTaaxx CCrreeddiitt PPrrooggrraammss aanndd OOtthheerr IInncceennttiivveess

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Provincial Tax Credit Programs and Other Incentives

Ontario Tax Credits

Ontario Film and Television Tax Credits (“OFTTC”)


The OFTTC is a refundable tax credit which counts towards 35% of the eligible Ontario labour expenditures for “Canadian content” film and television productions produced in the province. An enhanced credit equal to 40% of the first $240,000 of qualifying labour expenditure is also available for a “first-time production”. Productions having at least five location days in Ontario (or in the case of a television series, where the number of location days is at least equal to the number of episodes) and at least 85% of location days in Ontario outside the Greater Toronto Area (GTA) qualify for a 10% bonus on Ontario labour expenditures. Animated productions having 85% of its content from outside of the GTA also qualify for this bonus. This credit is harmonized with the CPTC.


Rate: 35% of the eligible Ontario labour expenditures

+ 5% for first-time productions

+ 10% bonus for productions outside of the GTA

Project Cap: None

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Who is Eligible? To be eligible for the OFTTC, the production company must be a Canadian-controlled corporation that files an Ontario corporate tax return.


The production will be eligible if it is:

Recognized as a “Canadian film or video production” for purposes of the Canadian content points or as a valid treaty co-production. For more information on treaty co-productions and Canada’s international film agreements;

Mostly filmed (or animated) and 95% post-produced in Ontario (exceptions exist for documentaries and inter-provincial and international treaty co-production);

Produced by an Ontario resident who has been a resident for the past two years prior to filming;

Spending a minimum of 75% of all production costs in Ontario, and in the case of inter-provincial and treaty co-productions, 75% of total expenditures is in respect of the Ontario portion of the production;

Spending, in the case of an inter-provincial co-production, not less than 20% of the cost of producing the production is in respect of the Ontario portion of the production;

Released in Ontario by an Ontario based theatrical film distributor or broadcast by a Canadian broadcaster during prime time (between 7 p.m. and 11 p.m. EST) within two years of its completion; and

Not included in any of the following genres: news programs, talk and game shows, a sports event or activity, a gala presentation or an awards show, productions that solicits funds, reality television, pornography, advertising, industrial, corporate or institutional productions.

Sunset/Review: None

For further information please visit www.omdc.on.ca/film_and_tv/tax_credits/OFTTC.

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Ontario Production Services Tax Credit (the “OPSTC”)


The OPSTC is a refundable tax credit that is equal to 25% of eligible labour and certain production expenditures that occur in Ontario during an eligible film or television production. The credit is available to both Canadian and foreign production companies and there are no per project or annual corporate limits on the amount that may be claimed. The credit can be combined with the PSTC.


Rate: 25% of the eligible Ontario labour and production expenditures

Project Cap: None

Who is Eligible? An eligible corporation can be either Canadian or foreign-owned but must be in the film or video production, or production services business and have a permanent Ontario office. The corporation must file an Ontario corporate tax return and own the copyright of the production or contract directly with the copyright owner for the production.


An eligible production must exceed a minimum production cost of $1 million. For a multi-episode television series, the production must cost at least $100,000 for each episode lasting thirty minutes or less or $200,000 for longer episodes.

Ineligible genres: news, current events or public affairs programming; a program that includes weather or market reports; talk shows; productions in the nature of a game, questionnaire or contest; a sports event or activity; a gala presentation or awards show; a production that solicits funds; reality television; pornography; advertising; a production produced primarily for industrial, corporate or institutional purposes; a production for which public financial support would be contrary to public policy.

Sunset/Review: None

For further information please visit www.omdc.on.ca/film_and_tv/tax_credits/OPSTC.

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Ontario Computer Animation and Special Effects Tax Credit (the “OCASE”)

The OCASE is a refundable tax credit equal to 20% of qualifying labour expenditures incurred by a qualifying corporation for eligible computer animation and special effects activities. There are no per project limits on the amount of credit that may be claimed, and there is no cap for expenditures. Activities eligible for the credit include computer animation and special effects activities carried out in Ontario in support of digital animation or digital visual effects for use in an eligible production.

Producers who are eligible for the OFTTC or the OPSTC are generally eligible for the OCASE.

For further information please visit www.omdc.on.ca/film_and_tv/tax_credits/OCASE.

Ontario Interactive Digital Media Tax Credit (the “OIDMTC”)


The OIDMTC is a refundable tax credit for up to 40% of eligible Ontario labour, marketing and distribution expenditures incurred by a qualifying corporation to create interactive digital media products. A rate of 35% is available for digital game producers or for those developing projects under a fee-for-service arrangement. There is no cap for eligible Ontario labour expenditures. Marketing and distribution expenses are capped at $100,000 and must have been incurred during the 2 years before 1 year after, completing the product.


Rate: 40% of the eligible Ontario labour, marketing and distribution expenditures

35% for digital game producers or for projects under a fee-for-service arrangement

Project Cap: Marketing and distribution expenses are capped at $100,000.

Who is Eligible? An applicant corporation must be a Canadian corporation, have a “permanent establishment” in Ontario, annual gross revenues under $20 million and total assets under $10 million during the preceding taxation year.

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Productions eligible for the OIDMTC must:

be interactive digital media products whose primary purpose is to educate, inform, or entertain, and achieve their primary purpose by presenting information in at least two of: (i) text, (ii) sound and/or (iii) images; and

have been developed in Ontario for commercial exploitation and must not be used primarily to present or promote the qualifying corporation or its products and services.

If the product is developed under a fee for service arrangement, it qualifies provided the product is:

developed by the qualifying corporation under an agreement entered into after March 23, 2006, with a purchaser that deals at arm’s length with the qualifying corporation;

for the purpose of sale or license by the purchaser to one or more persons who are not related to the purchaser;

created 90% or more in Ontario; and

completely developed after March 23, 2006.

Sunset/Review: None

For further information please visit www.omdc.on.ca/interactive/tax_credits/OIDMTC.

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Quebec Tax Credits

Quebec Refundable Tax Credit for Film and Television Productions (the “QRTC”)


For English-language productions, the QRTC credit is equal to 28% of qualified labour expenditures incurred by a qualified Quebec corporation in the production of a certified Quebec film or television production. For French-language feature films or documentaries (excluding documentary series) satisfying additional Quebec content criteria, the tax credit is equal to 36% of qualified labour expenditures, with a maximum effective rate of 26% of production costs. The maximum effective rate for regional productions shot outside Montreal (but in the province of Quebec), by a producer from outside of Montreal, is 26%. A bonus of 8% is available for eligible computer animation and special effects. Quebec also announced a new 8% bonus on the QRTC for labour expenditures incurred after January 1, 2009; however, this new bonus applies only to fiction feature films lasting at least 75 minutes or documentaries lasting at least 30 minutes (unless for children under 13). In addition, the production must not have financial assistance from a public organization.


Rate: French-language feature films or documentaries: 36% of qualified labour expenditures

English-language feature films or documentaries: 28% of qualified labour expenditures

Films produced 25 km or more outside Montreal: 52% of qualified labour expenditures

+ 8% for productions that do not receive financial assistance from certain public bodies

+ 8% of labour related to computer animation and special effects work

Project Cap: 50% of production costs

Who is Eligible? Available to corporations that:

have an establishment in Quebec;

carries on film or television production as its primary purposes in Quebec; and

either own the copyright for the eligible production throughout the

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period during which the production is carried out in Quebec or, in the case where the owner of the copyright is not an eligible corporation regarding such production, have a contract with the copyright owner of the eligible production to supply production services in relation to such production.


Productions certified as a “Quebec film or television production” by the Société de développement des entreprises culturelles (“SODEC”) are eligible for the QRTC.

To be certified as a “Quebec film or television production,” the following requirements must be met for productions longer than 75 minutes:

a minimum of six points must be obtained on the Quebec-content point system (similar to CAVCO’s point system, but in respect of persons who have lived in Quebec for at least two years);

at least 75% of post-production must be paid for services provided in Quebec; and

at least 75% of the total cost of producing the film must be paid to Quebec residents, excluding the remuneration of the producer and post-production costs.

Eligible genres are feature films, television programs, documentaries, children’s programs, magazine type programs and variety shows.

Sunset/Review: None

For further information please visit www.sodec.gouv.qc.ca.

30

Quebec Refundable Tax Credit for Film or Television Production Services (the “QRTCPS”)


To encourage the production of foreign films and television in Quebec, and to remain competitive with the other provinces in Canada, the Quebec government offers a refundable tax credit for film or television production services of 20% of qualifying Québec Labour and other non-labour expenditures. The QRTCPS can be combined with the federal PSTC. The tax credit is not available where the production has received the QRTC.


Rate: 20% of labour and non-labour expenditures

Project Cap: None

Who is Eligible? Applicant must be a corporation with an establishment in Quebec whose activities consist primarily of operating a film or television production business or a film or television production services business. The applicant company must either own the copyright in the eligible production or have concluded directly with the copyright owner a contract to supply production services.


Eligible productions must meet a cost minimum:

For feature film productions: $1 million

For series with episodes running 30 minutes or less: $100,000 per episode

For series with longer episodes: $200,000 per episode


Sunset/Review: None

For further information please visit www.qftc.ca.

31

Quebec Multimedia Production Tax Credit (“QMPTC”)


To encourage the production of multimedia titles, particularly video games, the Government of Quebec offers refundable tax credit to eligible corporations. The rate of the tax credit is based on the amount of eligible labour expenditures and the nature of the production. The rate generally ranges from 21% to 30%.


Rate: French multimedia titles, not for vocational uses: 30%

Non-french multimedia titles, not for vocational uses: 24%

Other titles, including vocational titles: 21%

Project Cap: None

Who is Eligible? Eligible corporations are those with an establishment in Québec and which produce eligible multimedia titles.


A multimedia title must:

include a significant amount of three of the following four types of information: text, sound, fixed images, or animated images. A title will be deemed to satisfy this condition if it is intended for customers with a disability. The production must be published on electronic information media and controlled by software that allows for interactivity;

be produced on an electronic and interactive platform; and

have copyright in the production owned by a Quebec-controlled taxable corporation for at least three years and 75% of production costs must relate to Quebec costs.

Multimedia productions must submit an application to Investissement Quebec.

Sunset/Review: None

For further information please visit www.investquebec.com.

32

Quebec Dubbing Tax Credit (“QDTC”)


The QDTC amounts to 28% of the amount paid for eligible services rendered in Quebec in the dubbing of an eligible production. The audition, preparation of texts and the production of video titles for a version in a language other than the original, will qualify as eligible expenditures for purposes of this credit.

Rate: 28% of eligible labour expenditures incurred for dubbing

Project Cap: Consideration received for the film dubbing contract is capped at 45%

Who is Eligible? Corporations having an establishment in Quebec and providing dubbing services; and

75% of the persons performing set direction or talent associated with the dubbing must be Quebec residents.


SODEC must certify the production as a qualified production.


The QDTC cannot be claimed where, for a given production dubbing costs were already included in production costs submitted for purposes of calculating the QRTC.

Sunset/Review: None

For further information please visit www.sodec.gouv.qc.ca.

33

British Columbia Tax Credits

Film Incentive British Columbia (the “FIBC”)


The FIBC provides incentives to producers of film and television productions in British Columbia in the form of refundable tax credits based on qualified British Columbia labour expenditures. This incentive is stackable with Canada's federal tax incentives.


Rate: The basic FIBC equals 35% of qualified British Columbia labour expenditures. Additional FIBC incentives are available at the following levels:

a regional incentive equal to 12.5% of qualified British Columbia labour expenditures;

a distant location regional incentive equal to 6% of qualified British Columbia labour expenditures;

a training incentive equal to the lesser of 3% of qualified British Columbia labour expenditures or 30% of qualified labour expenditures attributable to payments to eligible industry trainees; and

a digital animation or visual effects (DAVE) incentive equal to 17.5% of British Columbia labour expenditures directly attributable to digital animation effects activities (see below).

Project Cap: Eligible labour expenditures are capped at 60% of the total production budget. The basic incentive, therefore, will provide producers of eligible productions with up to 21% of the total cost of production.

Who is Eligible? The applicant producer must be a BC-based Canadian citizen.

The applicant corporation must be a taxable Canadian corporation with a permanent establishment in British Columbia primarily engaged in the business of film or video production.


The production must be awarded 6 out of 10 key creative services points under the CAVCO point system;

The applicant must own more than 50% of the copyright and be in financial and creative control of the project;

75% of the principal photography days must be in British Columbia;

75% of the cost of production must be paid to BC individuals or corporations;

75% of the cost of post-production work for the production must

34

be carried out in British Columbia; and

The production must not be in an excluded genre.

Some of these eligibility criteria are relaxed for treaty co-productions, interprovincial co-productions and documentaries.

Sunset/Review: None

For further information please visit www.creativebc.com/investment/tax-credits/film-incentive-bc/index.

35

British Columbia Film Production Services Tax Credit (the “BCPSTC”)


The BCPSTC, introduced by the British Columbia government on June 1, 1998, is an industry based production services tax credit similar in many respects to the federal and Ontario production services tax credits.


Rate: The basic BCPSTC applies to 33% of qualified British Columbia labour expenditures. Additional incentives are available at the following levels:

a regional incentive equal to 6% of qualified British Columbia labour expenditures;

a distant location regional incentive equal to 6% of qualified British Columbia labour expenditures; and

a DAVE incentive equal to 17.5% of British Columbia labour expenditures directly attributable to digital animation effects activities (see below).

Project Cap: None

Who is Eligible? The applicant must be a British Columbia based film or video production or production services company that either owns copyright in the production or has contracted directly with the owner of the copyright in the production to render production services in respect thereof.


Productions must satisfy minimum production cost requirements and must not be of an excluded genre. The minimum costs are:

Worldwide feature film or video: $1,000,000

Episode for series that is 30 minutes or longer: $200,000 per episode

Episode for series that is under 30 minutes: $100,000 per episode

Excluded genres include: pornography, talk shows, news shows, sports events, game shows, reality television and advertising. The BCPSTC may not be claimed in conjunction with any other FIBC incentive, but may be claimed in conjunction with the federal PSTC.

Sunset/Review: None

For further information please visit www.creativebc.com/investment/tax-credits/production-services-tax-credit/index.

36

DAVE Incentive


The DAVE Tax Credit Program provides refundable tax credits on a corporation’s digital animation or visual effects activities qualifying for the basic film and television tax credit or the production services tax credit.


Rate: 17.5% of BC labour expenditures incurred for DAVE activities

Project Cap: None

Who is Eligible? Corporations which have claimed either the basic BCPSTC or the basic FIBC.


production consists of DAVE activities (e.g., designing, modeling, rendering, lighting, painting, animating, compositing, visual effects photography) created primarily with digital technology

DAVE expenditure is a BC labour expenditure

Sunset/Review: None

For further information please visit www2.gov.bc.ca.

37

Alberta Film Grants

Alberta Production Grant (the “APG”)


The APG is an incentive available to motion picture filmmakers working in Alberta, provided by the Alberta Multimedia Development Fund. Importantly, unlike the federal and other provincial incentives discussed above, this new incentive is not a refundable tax credit. Rather, under the APG, filmmakers satisfying specified criteria will be eligible to receive direct grants from the Alberta government against all eligible production expenses.

Type of Benefit: Cash grant

Rate: Up to 29% of all eligible costs for productions with between 30 and 100% Albertan ownership and control and six Albertan residents in key creative positions.

Up to 25% of all eligible costs for productions with less than 30% Albertan ownership and four Albertan residents in key creative positions.

+ 1% available for productions that spend 30 consecutive days in the province or, for digital projects, use 300 person hours.

Eligible costs generally includes all expenditures for goods and services purchased or consumed in Alberta.

Project Cap: The maximum amount of funding per project is $5 million.

Who is Eligible? Applicants must be incorporated in Alberta or registered to conduct business in the province and in good standing with the provincial corporate registry.

Applicants receiving funding from the Cultural Industry Organization Project Grant are not eligible.


The Production must:

not be in a prohibited genre;

spend in Alberta $50,000 (before GST) or more for projects with a commercial license agreement or $100,000 for projects without such agreement; and

provide evidence of a commercial licence and 70% confirmed financing for projects with budgets over $1 million or 50% for projects under $1 million.

Sunset/Review: None

For further information please visit www.film.alberta.ca.

38

Saskatchewan Tax Credits

Non-refundable Film/TV and Digital Tax Credit (FTDC)


The Government of Saskatchewan has recently implemented the FTDC as a replacement for its longstanding refundable film tax credit. The FTDC is a non-refundable, non-transferable, tax credit of 25% on all eligible Saskatchewan production expenses, including labour costs. There are potential "bonuses" for items such as use of Saskatchewan labour, which increase the total FTDC incentive to as much as 43%. At the time of publication, no information has been released regarding program eligibility or project caps.

Type of Benefit: Non-refundable tax credit

Rate: 25% of eligible Saskatchewan production expenses

+18% for bonuses such as Saskatchewan copyright and intellectual ownership, use of Saskatchewan labour, production and post-production occurring in Saskatchewan and convergence if film and digital companies collaborate on a project including labour costs.

Project Cap: TBA

Who is Eligible? Applicants must be incorporated in Saskatchewan or registered to conduct business in the province and in good standing with the provincial corporate registry.

Distributors and broadcasters are not eligible.


TBA

For further information please visit www.pcs.gov.sk.ca.

39

Manitoba Tax Credits

Manitoba Film and Video Production Tax Credit (the “MFVTC”)


The MFVTC is a refundable tax credit allowing companies to claim either a 45% film tax credit based on eligible labour costs (“Cost of Salary”) or a 30% tax credit based on production costs incurred and paid for labour, goods and services provided in Manitoba (“Cost-of-Production”).


Rate: Option 1 - Cost of Salary Rate: Base rate of 45%, calculated on eligible labour expenditures

+10% Frequent Filming Bonus for third film shot within a 2-year period

+5% Manitoba Producer Bonus for co-producing with a Manitoba producer

+5% Rural and Northern Bonus for shooting at least 50% of the Manitoba production days at least 35km from Winnipeg’s center

Option 2 - Cost-of-Production Rate: 30% on all eligible Manitoba expenditures. Eligible expenditures include Manitoba labour, deemed labour, Manitoba service contract expenditures, and Manitoba expenditures for the rental or acquisition of tangible property. Living expenses (flights and hotels with exceptions), insurance expenses, and financing expenses are not eligible.

Project Cap: Determined based on the amount of eligible Manitoba labour expenditures.

Who is Eligible? Applicants must be tax-paying Canadian corporations who primarily produce films and have a permanent establishment in Manitoba. To be eligible, a minimum of 25% of the corporation’s T4 Summary must be paid to Manitoba employees for work performed in Manitoba.


Projects may include fully financed television movies, documentaries, feature films, dramatic series, variety, multimedia, animation, children’s programming, music programming and informational series. Productions can be released on media used for traditional film and video productions, or as multimedia, digital and CD-ROM

Sunset/Review: 2016

For further information please visit mbfilmmusic.ca/en/film/tax-credits.

40

Manitoba Interactive Digital Media Tax Credit (the “MIDMTC”)


The MIDMTC offers qualifying corporations a refundable tax credit equal to 40% of eligible labour expenditures during the period in which the corporation is developing and producing an eligible video game.

Rate: 40% of eligible labour expenditures

Project Cap: $500,000 maximum tax credit

Who is Eligible?

A qualifying corporations must:

be a taxable Canadian corporation with a permanent establishment in Manitoba; and

pay at least 25% of the salaries and wages to employees who are residents of Manitoba during the project period.

Sunset/Review: 2017

For further information please visit www.gov.mb.ca/jec/busdev/sibd/idm_taxcredit.html.

41

Nova Scotia Tax Credits

Nova Scotia Film Industry Tax Credit (the “NSFTC”)


The NSFTC is a fully-refundable corporate income tax credit administered by the Nova Scotia Film Development Corporation for the Nova Scotia Department of Finance.


Rate: 50% of the costs of eligible Nova Scotian labour in the metro Halifax area and 60% outside of Halifax.

frequent filming bonus of 5% is available if a third production takes place within a two-year period.

Project Cap: None

Who is Eligible? The applicant production company must:

be incorporated in Canada or a province of Canada;

have a permanent establishment in Nova Scotia;

pay at least 25% of salaries and wages in connection with the production in Nova Scotia to Nova Scotia residents; and

be registered by the NSFDC as producing an eligible film.


Eligible productions for the NSFTC include feature films, television series, made-for-television movies, specials, and non-theatrical programs whose primary exhibition will be educational or non-theatrical. Productions must have confirmed exhibition commitments in Nova Scotia as well as full marketing plans to be eligible.

Sunset/Review: 2016

For further information please visit www.film.ns.ca/content/tax_credit.

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Digital Media Tax Credit


The Digital Media Tax Credit is a refundable tax credit for costs directly related to the development of interactive digital media products in Nova Scotia.


Rate: 50% of eligible Nova Scotia labour expenditures

25% of total expenditures made in Nova Scotia

+10% geographic area bonus on labour expenditures (5% bonus on total expenditures) if products are created outside the Halifax Regional Municipality

credit for marketing and distribution expenditures is also available, up to a maximum of $100,000 per product

Project Cap: None

Who is Eligible? The corporation developing an interactive digital media product must:

be a taxable Canadian corporation with a “permanent establishment” in Nova Scotia; and

not be a prescribed labour-sponsored venture capital corporation under the federal Income Tax Act.


The digital media product must:

be interactive;

have as its primary purpose, the goal of educating, informing or entertaining users;

be developed for use by either individuals or businesses; and

present information in at least two of three formats: text, sound or images.

To be eligible for the geographic area bonus, the corporation must:

have a permanent establishment outside the Halifax Regional Municipality; and

at least 50% of salaries for the development of the product must be paid to employees who work out of a permanent establishment in the eligible geographic area.

The following products not eligible for the credit include operating system software, applications software, interpersonal communications products, pornographic or discriminatory products and advertisements.

Sunset/Review: 2014

For further information please visit film.ns.ca

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New Brunswick Film Grants

New Brunswick Multimedia Initiative


To support New Brunswick’s production companies and to increase employment in the film industry, the Government of New Brunswick provides funding of 25% to 30% of eligible expenditures incurred in New Brunswick.

Type of Benefit: Cash grant

Rate: 25% of eligible expenditures incurred in the province

+5% for production companies permanently established in New Brunswick and producing dramatic and documentary films or television shows, except variety shows or festival capitations

Expenditures include salaries, goods and/or services that are paid and purchased in New Brunswick

Project Cap: Maximum provincial contribution of 30% per production

Who is Eligible? Film, Television or New Media companies who:

are incorporated in New Brunswick and have a permanent establishment in the province;

hold less than $25 million in assets and have company directors who possess New Brunswick residency; and

have a majority of the company’s voting shares (51%) owned by New Brunswick residents.


A production is eligible if:

60% of the total production budget is spent in New Brunswick;

25% of all labor is based in New Brunswick; and

it is not a title in an excluded genre.

Sunset/Review: None

For further information please visit www.nbfilm.ca.

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Newfoundland and Labrador Tax Credits and Incentives

Newfoundland and Labrador Film and Video Tax Credit (the “NLFVTC”)


NLFVTC is a refundable tax credit designed to encourage the development, training and hiring of Newfoundland personnel in the film and television production industry. The NLFVTC is administered by the Newfoundland and Labrador Film Development Corporation for the province’s Department of Finance.


Rate: The lesser of 40% of provincial labour expenditures or 25% of total production costs of an eligible project with no maximum

A Deeming Provision exists that removes the residency labour requirement if a qualified resident person is not available and a non-resident person serves as a mentor of a resident instead.

Project Cap: $4 million per 12-month period

Who is Eligible? A company must:

be incorporated in Canada or in one of the provinces of Canada;

have a permanent establishment in Newfoundland;

carry on primarily the business of film, television or video production; and

pay at least 25% of its salaries and wages with respect to an eligible project to eligible employees in the province.


Eligible productions include feature films, TV series, movies in the following genres: drama, variety, animation, children’s programming, music and documentary.

Excluded genres include: news, talk shows, sports events, galas, pornography, advertisement, projects against public policy and those deemed ineligible by the government.

Sunset/Review: None

For further information please visit www.nlfdc.ca/taxcredit.aspx.

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Newfoundland and Labrador Equity Investment Program (the “NLEIP”)


The NLEIP provides production assistance in the form of “Equity Investment” to eligible producers for financing of productions. For the purposes of the project, “Equity Investment” means financial contributions by the NLEIP which must be repaid from earned revenue resulting from production. Equity Investment may be used to assist in the financing of costs normally associated with a film or video project.

Type of Benefit: Equity Investment

Rate: The NLFDC will normally provide a maximum of 20% contribution of the overall costs of the project.

Project Cap: NLFDC Equity Investment is generally subject to the following maximums:

$250,000 for a dramatic series;

$250,000 for a theatrical feature film; and

$150,000 for a documentary.

Who is Eligible? Corporations that are:

Newfoundland and Labrador film and video production companies;

primarily focused on development, production and distribution of film and video product; and

at least 51% owned by a resident or residents of Newfoundland and Labrador. For the purpose of the program a “Newfoundland and Labrador” resident is a person who has maintained a principal residence in Newfoundland and Labrador for at least 12 consecutive months immediately prior to the date of application.

Individuals, non-incorporated groups or licensed broadcasters are not eligible.


The project must meet the CAVCO Canadian content requirements.

For further information please visit www.fin.gov.nl.ca/fin/tax_programs_incentives.

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Prince Edward Island Incentives

The Government of Prince Edward Island no longer offers incentive programs for film and television production.

However, the following broad incentive programs were available in Prince Edward Island at the time of writing:

Marketing Support Program: Financial Assistance is available to producers to assist in research, market investigation, advertising and promotion.

Professional Services Program: Non-repayable contributions to PEI small business owners requiring support. Support will be made in the form of a 50% cost-shared contribution towards the cost of retaining professional services, up to $1000 per business.

Capital Acquisition Program: provides capital contributions to PEI businesses that are in the process of acquiring the infrastructure needed to develop from start-up through exporting. Assistance will not exceed $40,000 in eligible capital costs.

For more information regarding these programs please visit www.innovationpei.com or www.gov.pe.ca.

Yukon Incentives

As there is no tax paid in the Yukon, no tax credits are available to production companies that produce in this territory. Instead, Yukon film has developed other incentive programs which are summarized below.

Yukon Film Development Fund

The Yukon Film and Sound Commission offers incentives for both Yukon-based and non-Yukon based filmmakers.

Programs for Yukon filmmakers include the following:

Yukon Film Development Fund: Eligible Yukon residents or Yukon corporations may access financial contributions of up to 50% of the actual Yukon expenditures to a maximum of $35,000 or 33% of total project expenses (whichever is less). Applicants must have a broadcast development agreement or a distribution arrangement in place to access funds under this program.

An additional $10,000 may be available to an applicant if the broadcaster/distributor requires more senior personnel, not available in the Yukon, to be attached to the project.

Yukon Film Production Fund: This program provides up to $500,000 in funding per project for Yukon corporations who financially and creatively control projects to assist with the costs of producing a film in the Yukon. To be eligible, applicants must have a commitment by a licensed broadcaster to participate financially in the production of the project, or a distribution arrangement. For productions solely controlled by a Yukon resident or

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corporation, the contributions will be based on 30% of Yukon expenditures or 30% of total production costs, whichever is the lesser amount. The contribution for co-productions will be based on the lesser of 30% of Yukon expenditures or 20% of total production costs.

The Yukon Filmmakers Fund: Through this program, film and video professionals who are Canadian citizens or landed immigrants and who have resided in the Yukon for at least one year may access up to $8,000 for the development of films and videos for broadcast or commercial release.

Yukon Film Training Fund: Up to $3,000 per applicant per year is available to Yukon residents to undertake training in film production or post-production. Applicants must demonstrate a commitment to a career in this field (such as significant recent course work and/or work experience). Funding may be applied to tuition costs, and/or the costs of texts and supplies.

For non-Yukon filmmakers, travel, labour and training rebates are available:

Travel Rebate: Where the production company is from outside the Yukon and where Yukon labour content equals or exceeds 15% of the total person days on the Yukon portion of the production, the production is eligible for a travel rebate of up to 50% of travel costs to a maximum of $15,000 or 10% of all Yukon expenditures (whichever is the lesser amount) from Vancouver or Edmonton or Calgary to Whitehorse.

Yukon Spend Rebate: Where the production company has either a broadcast or distribution arrangement with an internationally recognized entity, and where eligible Yukon labour content equals or exceeds 50% of the total person days on the Yukon portion of the production, the production is eligible for a rebate of up to 25% of Yukon below-the-line spend. Note that productions accessing the Yukon Spend Rebate are not eligible for the Travel Rebate.

Training Rebate: Visiting productions may apply for a rebate of up to 25% of a trainer’s wages for the period during which they are actively transferring skills to a Yukon trainee. This must be at a rate no more than that of the position next more senior to the one being trained.

For more information please visit www.reelyukon.com.

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Nunavut Incentives

Nunavut Spend Incentive Program (NSIP)


Administered by the Nunavut Film Development Corporation, NSIP provides production companies with a rebate on the total eligible costs for production goods and services purchased and consumed in Nunavut. This program has been founded to support the development of a strong indigenous film, television and digital media industry; and to assist with the marketing of the Inuit language, its culture and traditions.

Type of Benefit: Cash rebate

Rate: Spending Stream I (Majority Nunavut ownership of 51% or more): 27%

+1% (to a maximum of 3%) for each additional Nunavut resident employed in a key creative position

+10% if Inukitut/Inuinnaqtun language version produced (up to $20,000)

only available to Nunavut filmmakers Spending Stream II (Equal or Minority Nunavut ownership of 10% - 50%):17%

+1% (to a maximum of 3%) for each additional Nunavut resident employed in a key creative position

+10% if Inukitut/Inuinnaqtun language version produced (up to $20,000)

available to both Nunavut and non-Nunavut filmmakers

Support will be provided for series production on the following basis:

Season One: 100% of the applicable rebate

Season Two: 80% of the applicable rebate

Season Three: 60% of the applicable rebate

Season Four: 40% of the applicable rebate

Season Five: 20% of the applicable rebate

Season Six: No Funding

As some production goods and services are not available for purchase in Nunavut, the Nunavut Film Development Corporation may deem eligible an additional funding amount proportionate to the number of Nunavut shoot days.

Project Cap: 30% maximum spend rebate for Spending Stream I, including any bonuses

20% maximum spend rebate for Spending Stream II, including any bonuses

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Who is Eligible? Eligible production companies must:

be incorporated pursuant to the laws of the Territory of Nunavut or Canada and focused on developing and producing film, television and/or digital media content;

own 100% of copyright in the eligible production, or first option to adapt the underlying property and acquire copyright ownership; and

employ Nunavut residents for at least 2 of the 8 key creative positions, or for 1 key creative position and 2 trainee key creative positions.

Stream II applications with budgets exceeding $500,000 must include an agreement with a licensed Canadian broadcaster or bona fide distributor.


The following production types are eligible:

feature length films, including animation, documentary or docudrama, intended for release in commercial cinemas, DVD sales and rentals and download;

television programming intended for commercial broadcast, DVD sales and rentals and download including dramas, sitcoms, factual, variety, reality, lifestyle and animation for youth; and

digital media projects, including those convergent to a television program intended for cross platform digital media exploitation and/or download.

Productions must spend more than $25,000 on goods and services consumed in Nunavut.

For further information please visit www.nunavutfilm.ca.

DDiirreecctt FFeeddeerraall AAssssiissttaannccee

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Direct Federal Assistance Telefilm Canada is the most important source of direct government financial assistance to private sector Canadian film productions. In 2011-2012, Telefilm Canada contributed $358 million through the Canadian Television Fund, Canada Feature Film Fund, Canada New Media Fund and its other programs. Telefilm administers the following funds and programs:

Canada Media Fund (“CMF”)

The CMF is a not-for-profit corporation that delivers $368 million in funding annually to support the Canadian television and digital media industries through two streams of funding:

Convergent Steam, which supports the creation of convergent television and digital media content. It includes the Broadcaster Performance Envelope Program, with $315.6 million of funding for the 2014-2015 program year.

Experimental Stream, which invests in the development of leading-edge, interactive, digital media content and software applications. The CMF allocated $39 million to the Experimental Stream for the 2014-2015 program year.

From a financing standpoint, the most important CMF stream is the Convergent Stream, and most of its financing is made available through the Performance Envelope Program. To receive funds from a performance envelope, a production must have received a commitment from a broadcaster that is willing to pay a minimum license fee. The broadcaster will determine what percentage of its Performance Envelope it will use to support a production (up to a set per-project limit). Performance Envelopes also have genre allocations, based on the types of CMF-supported programming licensed by that broadcaster in the past. Performance Envelopes are allocations of CMF program funds made to Canadian broadcasters with a track record of supporting Canadian programming. Broadcasters are free to use their Performance Envelopes to fund both eligible Television Components and Digital Media Components.

The CMF funding contribution to the Television Component takes the form of licence fee “top ups” paid to Canadian broadcasters and equity investments in eligible projects. The CMF contribution to the Television Component is in the form of a licence fee top-up to a maximum of 20% of the component’s eligible costs unless otherwise specified. Amounts in excess of this prescribed maximum will be contributed in the form of an equity investment up to a maximum of 49% of eligible costs. Notably, the CMF considers any eligible equity investment request of less than $10,000 to be too small for equity participation. Accordingly, any such amount requested will be automatically converted into a licence fee top-up.

To access funding, a project must meet all requirements set out in the CMF guidelines. The following is a limited summary of the 2013-2014 Television Component guidelines that are updated annually.

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Essential Requirements

Before a production can be considered for funding from the CMF, it must meet all of the following “Essential Requirements” (listed in order of importance):

1. the project must have ten out of ten points of Canadian content as determined by CMF using the CAVCO point scale or the maximum number of points applicable to the project;

2. the underlying rights are owned and significantly and meaningfully developed by Canadians (productions cannot be based on foreign television programming or films); and

3. the production is shot and set primarily in Canada.

Language and Genre Allocations

CMF funds are allocated between English and French language productions and across four genres: drama, childrens’ and youth programming, documentary, and variety/performing-arts programming. The percentage of funds allocated to each genre are different for French-language productions and English language productions.

Programming not eligible to receive CMF funds include sponsored productions, sports, news, game shows, current affairs, public affairs, human interest or lifestyle productions, “how-to” productions, reality television, instructional television, infomercials, music videos, formal or curriculum-based educational programming, format buys, magazine productions, talk shows, and award shows.

Eligible Applicants

To be eligible for CMF funding an independent production company must be a Canadian-controlled corporation, with its head office based in Canada. Alternatively, an eligible applicant must be a Canadian broadcaster, public or private, that is licensed to operate as such by the Canadian Radio-television & Telecommunications Commission (CRTC), including a CRTC-licensed VOD service. In addition, when assessing and Applicant’s eligibility, the CMF may choose to consider whether the applicant’s activities take place in Canada, its financial stability and whether or not it operates principally as a television or film production entity.

Eligible Projects

In addition to being in the appropriate genre or programming format and meeting the Essential Requirements, a project must satisfy additional criteria, including, but not limited to, the following:

(i) Canadian Ownership and Control

the project is under Canadian ownership and Canadian executive and creative control;

the project is financially controlled by Canadian citizens or permanent residents;

the project is controlled creatively and financially by a Canadian production company during all phases of production (from development to post-production) and all distribution and exploitation rights are owned and initially controlled by a Canadian production company;

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generally, no more than 49% of the production financing/final cost is provided by a single non-Canadian entity, person or related entity (via licence fees, distribution advances, goods and services and/or equity investment). Interim lending of more than 49%, however, may be provided by a non-Canadian arm’s-length entity in the business of lending money and taking security;

the Applicant retains and exercises all effective controls or approvals consistent with those of a producer. This includes control and final approval of creative decisions and production financing, distribution and exploitation, and preparation and final approval of budget, subject to reasonable and standard approval rights customarily required by arm’s-length financial participants, including Canadian broadcasters and distributors; and

the Applicant owns all rights (including copyright) and options necessary for the production and its distribution in Canada and abroad, and retains an ongoing financial interest in the project.

(ii) Technical Requirements

the production conforms to the Canadian Association of Broadcasters’ (CAB) Code of Ethics and to all programming standards endorsed by the Canadian Radio-television and Telecommunications Commission (CRTC);

the production must be closed-captioned if it contains narrative, dialogue or lyrics;

it is a new production (being one that is not substantially a repackaged version of a program previously broadcasted or presented on any platform);

the production begins principal photography/key animation within the fiscal year in which it is funded or within three months thereafter. Special considerations may be made for projects that need to capture a time-sensitive event or that are required to commence production during the period in which the CMF is closed to funding applications (i.e. December to March).

(iii) License Fee Requirements and Conditions

A production must have a genuine license from a Canadian broadcaster in order to access CMF funds. The licence fee itself must meet the CMF’s threshold for the applicable genre and category of production. The license fee must be paid in cash (as opposed to services, corporate sponsorship monies, etc.).

In addition, the broadcaster must commit to broadcast the production closed-captioned in prime-time, within 18 months of completion and delivery of the production. Should the broadcaster fail to comply with these broadcast requirements the licence fee will be deemed not to be an eligible licence fee. The CMF will consider requests for extension to this period on a case-by-case basis.

(iii) Regional Production

The CMF provides incentives to projects (that are considered “regional” and strives to achieve regional balance when making funding decisions. A “regional production” is a production for which: (a) principal photography occurs in the regions (outside of a 150 km radius from Montreal or Toronto); and (b) the applicant, among other things, is based in the region, exercises control of

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creative, technical and financial aspects of the projection, and has meaningfully participated in the production’s development.

For a complete description of the CMF and the funding requirements please visit www.cmf-fmc.ca.

Canada Feature Film Fund

Development Program

The Development Program supports the development of Canadian feature films through assistance to production companies and new talent working with established production companies. Depending on the applicant and the eligible costs per project, funding may range from $15,000 to over $200,000 and be in the form of a repayable advance.

Eligibility Requirements:

An applicant must:

be a Canadian controlled corporation

have its head office in Canada and carry out its activities in Canada;

operate as a feature film production company;

have produced at least one CAVCO-approved or official treaty fictional feature film that was theatrically released in Canada in the last five years, and own at least 20% of the Canadian copyright in such film(s); and

have Canadian citizens as members of key creative development team.

A project must:

be written in English or French by a Canadian;

be a Canadian feature-length fictional film or an official treaty coproduction;

be under the financial and creative control of the applicant, including exclusive rights and options, for at least 24 months, necessary for the full and complete worldwide exploitation of the project;

be certified by CAVCO with a minimum of 8 out of 10 points or certified as an official treaty coproduction; and

have a commitment letter for the packaging phase from a Telefilm-approved distributor for the level of the budget envisioned and a confirmed director.

Production Program

The Production Program is intended to increase the success of Canadian feature films by prioritizing funding support to companies who have had previous commercial, cultural and industrial success. The Program is designed to support Canadian-content productions, while also prioritizing support for women, emerging talent, aboriginal communities and visible minorities.

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English language projects may qualify for up to $4 million, while French projects may receive a maximum of $3.5 million. The decision to fund and the level of funding will be based on the track record of the production company and the creative team, market interest, promotion strategy and audience reach potential, and the film’s creative elements.

This support will be provided in one of two ways, depending on the choice of the producer:

an equity investment of up to 49% of the eligible Canadian recoupable advance; or

up to 49% of the eligible Canadian production costs


An applicant must:

be a Canadian controlled corporation;

have its head office in Canada and carry out its activities in Canada;


be financially stable;

have Canadian citizens in key production roles exercising creative and financial control over the project; and

demonstrate commitment to producing Canadian feature films and possess the experience and level of expertise necessary to complete the production.

A project must:

be a French, English or an Aboriginal language feature length (at least 75 minutes long) fictional film.

be aimed at the Canadian theatrical market while maximizing distribution on alternate platforms;

be under the ownership of the Canadian applicant(s);

have its copyright owned by Canadians;

be under the financial, creative and distribution control of the eligible applicant(s) and all of the rights and options necessary for the full and complete exploitation of the project must be held by the eligible applicant(s);

certified by the Canadian Audio‐visual Certification Office (CAVCO) as a “Canadian film or video production” (Canada) or as a treaty co-production;

be written by a Canadian screenwriter (exceptions to this requirement may be made in co‐writing situations);

be directed by a Canadian director;

have a Canadian performer in the lead role;

be budgeted at no less than $250,000; and

have a commitment from an eligible Canadian distribution company for theatrical release in Canada within one year of delivery, if project budgeted at more than $2.5 million.

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Marketing Program

The Marketing Program seeks to support the marketing and promotion of Canadian content and talent. It seeks to enhance the success of those films with the strongest theatrical and multiple-viewing platform potential. This program favours partnerships among producers, distributors, exhibitors and international partners and those films that received funding through the Production Program.

The Marketing Program offers repayable non-interest bearing advance up to 75% of the eligible Canadian marketing costs to a maximum of $50,000. The application will be judged on the applicant’s track record and the effectiveness of their proposed strategic marketing and distribution plan.


A project must:

be a feature film funding through the Production Program, or certified through CAVCO as a Canadian film or as a treaty coproduction. It must be available in French or English and be planned to be theatrically released. Those films without a Canadian distributor must have a commitment from an exhibitor for the theatrical release of the film or have been selected by a recognized Canadian festival.

An applicant must:

be either a distributor or a producer that is a Canadian controlled corporation

have Canadian citizens in key personnel roles exercising financial, distribution and marketing control over the project;

A distributor must: be financial stable, operate principally as a feature film distribution entity, and

demonstrate a commitment to and expertise in distributing Canadian feature films;

be active in theatrical distribution in Canada for the last two years, by demonstrating a sufficient volume of business;

demonstrate relevant expertise at all times and have one or more senior executives with five years of experience in the distribution company or a distribution company of; and

if affiliated with a Canadian broadcaster, be a separately incorporated entity, distinct from the operations of the broadcaster(s) with which it is affiliated. comparable size.

A production company must:

carry out its activities in Canada;


have obtained adequate promotion and marketing expertise; and

be financially stable (with appropriate considerations for new production companies without established parent companies).

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Micro-Budget Production Program

The Micro-Budget Production Program provides financing to eligible filmmakers for the production, distribution and promotion of a first-feature length film. This program prioritizes projects that will have one or more distribution platforms, including a digital platform release.

Funding is provided on the basis of recommendations by selected industry partners (available on the Telefilm website), under this program track record of the creative team, creative content, quality of launch strategy and feasibility of the project. Those selected receive a non-repayable financial contribution of up to 100% of the financing of the production, to a maximum amount of $120,000.


A project must:

have a letter of recommendation from a selected industry partner;

be a fictional or a documentary feature length film destined for distribution to the public on one or more platforms; and

have a budget lower than $250,000.

be a feature film funding through the Production Program, or certified through CAVCO as a Canadian film or as a treaty coproduction. It must be available in French or English and be planned to be theatrically released. Those films without a Canadian distributor must have a commitment from an exhibitor for the theatrical release of the film or have been selected by a recognized Canadian festival.

An applicant, if selected, will have to incorporate a company that:

operates as a film production company;

owns 100% of the rights of the project;

is under Canadian control;

is owned and controlled by the producer of the project who can also be the director and/or writer of the project; and

has Canadian citizens as individual producers and in other key production roles exercising creative and financial control over the project.

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Theatrical Documentary Program

The Theatrical Documentary Program supports feature-length documentary projects at either the production or the postproduction stages. At the production stage, support is provided through three recoupable financial contributions from Telefilm, Rogers and the National Film Board for a maximum of $375,000 for English-language productions or $312,500 for French-language productions, based on eligible Canadian production costs. At the post-production phase, Telefilm will make a recoupable financial contribution of a maximum of the lesser of 49% of the eligible Canadian post-production costs or up to $75,000.

Applications are assessed against the goal of building larger audiences for Canadian feature-length documentaries in theatres. Individual projects will also be evaluated on their creative merit, relevance and accessibility to theatrical audiences, and the potential for box office success.


An applicant production company must:

be a financially stable Canadian-owned and controlled corporation, with its head office based in Canada and with Canadian focussed activities;

have Canadian citizens exercising creative and financial control over the project;

have the experience necessary to complete the film; and

have a firm commitment from an eligible Canadian distribution company to theatrically release the project within one year.

Projects must be:

English-language or French-language feature length documentaries with a minimum production budget of $500,000;

under Canadian creative and financial control and ownership;

certified by CAVCO or be an official treaty co-production;

directed by a Canadian Citizen; and

the subject of an agreement with a distributor to allow a telecast window six months following the start of the theatrical release.

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International Marketing and Festival Participation Program

The International Marketing and Festival Participation Program provides financial support to market Canadian films having a high potential for success. Specifically, this program supports the marketing strategy of Canadian productions officially selected at international festivals.

For feature films, applicants may receive a non-refundable contribution of up to 100% of the eligible costs, up to a cumulative maximum of $40,000 per eligible production. Eligible costs are limited to those related to the promotional campaign for the participation of the selected production at the festival. For short films, applicants can receive a maximum cumulative amount of $1,500 per production to cover the Digital Cinema Package costs associated with the festival showing.


An applicant must:

have developed an International Marketing Plan;

have ownership of the right to exploit and benefit from the exploitation of an eligible production within the territories designated in the International Marketing Plan;

be a Canadian-owned and controlled companies;

have its head office in Canada; and

demonstrate the required expertise to successfully complete its International Marketing Plan.

A feature film project must be:

a Canadian feature length film;

funded by the Production Program, certified by CAVCO and/or certified as a treaty coproduction;

available in French or English;

intended for theatrical release in Canada;

officially selected at one of the international film festivals supported by the Program; and

likely to attract sales revenues in foreign markets.

A short film project must:

have a Canadian director and producer and that has its copyright owned by Canadians OR, if it is certified as an Audiovisual Treaty Co-production, is a majority co-production;

be under 30 minutes of duration;

be made available in French or English (in its original or subtitled version); and

be selected for a world or international premiere at one of the festivals supported by the program.

For more information please visit www.telefilm.ca/en/funds-and-programs/development-program.

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Canada Council for the Arts

This program provides grants that support individual artists, organizations, groups and independent collectives committed to the practice of film and video, new media and audio, and aboriginal media arts, as independent artist-controlled art forms. Financial assistance is available in the areas of development, scriptwriting and production.

For further information please visit www.canadacouncil.ca.

National Film Board (NFB)

The NFB works with independent Canadian directors and producers through its participation as a full producer or as a co-producer in the development and production of Canadian audiovisual works that are socially relevant and innovative. The NFB’s mandate is to “produce and distribute distinctive, culturally diverse, challenging and relevant audio visual works that provide Canada and the world with a unique Canadian perspectives”.

For further information please visit www.nfb.ca.

50 DDiirreecctt PPrroovviinncciiaall AAssssiissttaannccee

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Direct Provincial Assistance Several provincial governments in Canada also provide various forms of financial assistance, to qualifying Canadian productions. A summary of provincial incentive programs is listed on page 15.

The Ontario Media Development Corporation (“OMDC”) promotes Ontario as a location and, through the OFTTC, provides financial assistance to Ontario-based, Canadian-controlled production companies to encourage the development and production of Canadian motion pictures and television shows filmed in the Province of Ontario. The governments of British Columbia, Alberta, Manitoba, Quebec, Saskatchewan, Nova Scotia, New Brunswick, Newfoundland, Prince Edward Island, Northwest Territories and Yukon have each established agencies comparable to the OMDC to assist Canadian film makers in their respective provinces by providing various forms of government financial assistance to regional film productions.

The Province of Quebec deserves special mention. La Société de développement des enterprises culturelles (SODEC) assists Quebec screenwriters, producers, distributors, exhibitors, festivals and event organizers through subsidies, loans and equity investments. Applicants must be Quebec residents or businesses with a head office and principal place of business in Quebec, and at least 80% of SODEC’s production and development funding is allocated in Quebec for products produced in French. As well, as discussed on page 32, there is a refundable income tax system.

PPrriivvaattee AAssssiissttaannccee

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Private Assistance Several private sector non-profit organizations have been established, primarily by Canadian broadcasters and specialty television services, which invest in the development and production of qualifying Canadian film and television projects. Among the many private investment funds are the following:

The Harold Greenberg Fund (“HGF”)

HGF is a national funding organization run by Bell Media supporting the development of Canadian feature films. It has four components: (i) a script development program; (ii) an equity investment program; (iii) a short film program, and (iv) a script development-story optioning phase program.

(i) The Script Development Program

Invests in the development of English-language scripts written by Canadian screenwriters for quality movies suitable for theatrical release, and to support effective scriptwriting training programs, by providing interest-free script development loans repayable on the first day of principal photography. Among other requirements, (i) the production must receive at least 8 out of 10 points for Canadian content; (ii) the production must be originally produced in English; and (iii) the copyright of the film must be owned by a Canadian corporation or Canadian citizen or permanent resident. Script development funding is available to producers and/or writers for four phases of feature film development. Up to $18,000 will be lent for a first draft, up to $12,000 for first to second draft, up to $10,000 for the final draft phase, and seniors funding is available to a maximum of $25,000. Script Development funding is only available for movies suitable for theatrical release

(ii) The Equity Investment Program

Promotes the production of quality Canadian feature-length, theatrical-release dramas with a pay-per-view window, subject to the same requirements of the Script Development Program, included above. Equity investment funding is available for feature films and television series up to $200,000, or 10% of budget.

(iii) The Script Development Program – story optioning phase

Invests in the development of English-language scripts written by Canadian screenwriters for quality movies suitable for theatrical release, and to support effective scriptwriting training programs. The applicant must be a bona fide Canadian feature film producer, and priority will be given to producers with a track record in producing feature films and, in particular, who have experience with story adaptations. The French-language component of this funding is comprised of an equity investment program for feature-length films, television series documentaries, youth-oriented dramas, music programs, music videos, special events and a story optioning program.

For further information please visit fund.astral.com.

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Independent Production Fund (“IPF”)

IPF is a private charitable foundation established to assist independent production companies in financing the production of Canadian television drama series for private sector broadcasters and original drama series created initially for the Internet. IPF currently has a capital endowment of approximately $35 million. IPF now provides most of its funding to independent production companies focussed on dramatic series for the web. IPF has stopped accepting applications for traditional broadcast television dramas. In 2014, IPF invested almost $2 million dollars in 17 web series. Additionally, IPF provides grants to non-profit organizations and associations for activities and events which encourage dramatic series development in Canada.

For further information please visit www.ipf.ca.

Rogers Telefund

Rogers Telefund (which is controlled by Rogers Cable Inc., Canada’s largest cable system) is a revolving fund in excess of $34 million. It provides interim financing to Canadian producers with fully financed television projects and requires that a Canadian broadcaster be in place before a project is considered. This fund has a strong preference for television projects and projects that are distinctly Canadian.

For further information please visit www.rogersgroupoffunds.com.

Rogers Cable Network Fund (“RCNF”)

The RCNF provides approximately $9 million annually in equity financing to Canadian independent producers for first-run cable network programming with a first window broadcast on a licensed Canadian specialty or premium network. Eligible producers of eligible projects may receive a cash equity investment of up to 20% of the total production budget, to a maximum of $500,000 per project.


Rogers Documentary Fund

The Rogers Documentary Fund finances both English-language and French-language original, high-quality, provocative and/or controversial documentaries that are licensed for prime time national or francophone broadcast. Up to $2 million of funding is available annually in the form of non-recoupable advances through two programs. To be eligible, documentaries must achieve Canadian content status with a minimum of 8 out of 10 points in accordance with the Canadian content rules as administered by CAVCO/CRTC. Financial support includes a maximum grant of $75,000 for each project selected. This fund requires that a broadcast licence fee from a national Canadian broadcaster be in place.


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The Shaw Rocket Fund

The Shaw Rocket Fund seeks to invest its approximately $15 million annual fund in Canadian independent television programs for broadcast by conventional, specialty, and pay-TV networks. Financing of up to 15% of the production budget is available, but productions with budgets over $1.6 million historically receive investments in the range of $250,000 (for 13 episodes or movies of the week).

For further information please visit www.rocketfund.ca.

The Bell Fund

The Bell Fund was established in 1997 with the objective to maximize synergies between Canadian broadcast and new media producers, and to stimulate production of interactive content in both English and French. The Bell Fund provides financing through two separate funds (the Production Fund Program and the Development Fund Program) and eight separate programs. In 2013, the Bell Fund invested nearly $17 million in 187 projects. Under the Production Fund programs, eligible products must have both a broadcast and new media component, with an association existing between the two components. Funding for the new media component is available in the form of grants for up to 75% of the cost of production of the new media component, not exceeding $75,000 per project. Funding for the television component is also available in the form of grants for up to 75% of the total Canadian broadcast license fees for the program, not exceeding $75,000 per project. The Development Program budget is the result of a $10-million endowment from the BCE/CTV merger benefits package. Funding is available in the form of grants not to exceed 75% of the development cost, up to a maximum of $50,000.

For further information please visit www.bellfund.ca.

Cogeco Program Development Fund

The COGECO Fund consists of a pre-development program, a development program, a production program, and a theatrical feature film development program. The fund encourages the development of new scripts by Canadian writers for dramatic television series, movies of the week (MOWs) and feature films, and finances the production of MOWs and pilots for series. Programs must be produced by independent Canadian producers, in English or French, or preferably in both languages. The pre-development program offers eligible production companies up to $10,000 (in the form of a recoupable advance) to fund costs of script editors, screenwriters consultants, research and marketing. The development program offers up to $20,000 to Canadian independent producers for the development of a dramatic television series. Under the fund’s Production Program, $5 million per year is contributed for equity production financing, and under the Theatrical Feature Film Development Program, loans of up to $35,000 are available. The COGEGO Fund also supports the Director Advisor Program, which provides a $5,000 grant to contract an experienced director who will guide a television series, MOW or feature film through its development, and work with the screenwriter and producer.

For further information please visit www.cogecofund.ca.

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Important Information About Producing in Canada

Producing in Canada Without Canadian Financing

Non-Canadian producers may not be interested in the administrative and creative compromises necessary to achieve the higher licence fees that a “Canadian content” designation can bring from domestic Canadian broadcasters. They may simply wish to produce in Canada to save money or utilize Canadian talent, production services or locations.

In the case of such “straight” non-Canadian productions, it is not necessary for the non-Canadian producer to master the details of tax certification, “Canadian content”, Canadian film treaties and other rules pertaining to Canadian financing, discussed in detail above. However, the non-Canadian producer should bear in mind that a number of Canadian laws and regulatory policies which apply to all non-Canadian productions in Canada, with or without Canadian financing.

Investment Canada Act

The Investment Canada Act allows the Minister of Investments to review significant investments in Canada by non-Canadians to ensure such investments will be of “net benefit” to Canada. The Investment Canada Act applies to both takeovers of existing Canadian business by non-Canadians and the establishment of new businesses in Canada by non-Canadians. In most cases, the establishment of a new business in Canada by a non-Canadian is exempt from review under the Investment Canada Act. However, notice of establishment of the business must be given to the Investment Review Division, Industry Canada (formerly known as Investment Canada). For businesses related to Canada’s “cultural heritage or national identity,” (e.g., businesses in film and television production, and distribution, sale, and exhibition) notice of establishment of such business must be given to the Department of Canadian Heritage. Whether a non-Canadian film project constitutes “establishment of a new business” will depend on the specific situation. If it does not, notice need not to be filed with Canadian Heritage and the Investment Canada Act has no application. If it does, a notification must be filed with Canadian Heritage.

A non-Canadian considering establishing any “presence” in Canada, whether by incorporating a Canadian production or distribution company, building a Canadian studio, setting up a Canadian branch office or even merely producing a film in Canada, should give serious consideration to the Investment Canada Act’s application. The prudent approach is to always consider giving the Investment Review Division a notification of establishment of any film-related entity where a film project will be produced in Canada.

The Investment Canada Act also applies to the acquisition of control of existing Canadian businesses including those related to Canada’s “cultural heritage or national identity” by non-Canadians. Cultural businesses include, among others, production, distribution, sale and exhibition of film and television products. Notably, under the Investment Canada Act, the Minister of Canadian Heritage has considerable discretion to determine if any non-Canadian has acquired control of a Canadian cultural business notwithstanding that (for example) the non-Canadian does not own a majority of the voting shares of the Canadian business. The Minister can also exercise this discretion to determine if a non-Canadian has established a new business. If the Minister makes such a determination, the acquisition by the non-Canadian of its interest in the Canadian business (or establishment of a new business, as the case may be) would be reviewed.

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Finally, numerous Canadian benefit programs, including the Federal Canadian Content tax credit, provincial tax credit programs and the funding available from the CMF or the CFF and Telefilm Canada require the applicant to be “Canadian controlled” for purposes of the Investment Canada Act. The acquisition of control of a Canadian film business by a non-Canadian, therefore, will disentitle the Canadian target to a variety of benefit programs and impact the overall valuation of the Canadian business.

Extra-Provincial Licence

Non-Canadian production companies must apply for and obtain an extra-provincial licence to carry on business in most Canadian provinces. In Ontario, under the Extra-Provincial Corporations Act 1984 (Ontario),9 the extra-provincial company will file a form with a brief description of the business, an “Appointment of Agent for Service” specifying someone as agent for service for the company, and a “Name Search Report” to ensure that the non-Canadian company’s name is not too similar to an existing Canadian corporation.

Immigration

All non-Canadians (persons other than Canadian citizens or permanent residents) engaging in employment or providing services in Canada, must seek and obtain an employment authorization (a “work permit”) from Citizenship and Immigration Canada and Human Resources and Development unless exempted under the regulations to the Immigration and Refugee Protection Act (Canada).10 Before a non-Canadian may receive a work permit, he or she must be offered a job, and when that job offer has been validated at a Human Resources Development Canada Branch (generally by showing that there is no available Canadian with the required expertise to fill it), application is made for a work permit either at the Canadian border or at a Canadian visa office located in a Canadian Embassy or Consulate in the non-Canadian worker’s country.

Before commencing principal photography, the producer normally submits the following to the immigration authorities:

a list of all personnel;

a budget and a summary of the proposed production (including a brief description of the film and the filming location; and

the approximate number of foreign and Canadian workers to be hired by occupation).

Citizenship and Immigration Canada consults with relevant Canadian guilds and unions, such as the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) or the Directors’ Guild of Canada (DGC), before making any final decisions.

Each of the guilds and unions has developed detailed policies or guidelines regarding the issuance of work permits to non-Canadians who are to perform guild/union functions on Canadian film

9 R.S.O. 1990, c. E.2.

10 S.C. 2001, c. 27.

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productions. Generally, the guilds and unions are more willing to accept greater participation by non-Canadians in the case of “straight” non-Canadian productions, as opposed to those involving Canadian financing or government participation. While the recommendations of the guilds and unions are very persuasive, the ultimate decision-making responsibility to issue work permits rests with the immigration authorities. In some cases, the immigration authorities have been known to approve an application for a work permit over the objections of the relevant guild or union. When an application is approved, the foreign worker will contact the appropriate Canadian visa office before employment authorization is issued.

Producers acting on their own behalf or representing a company interested in filming in Canada should report to an Immigration Officer upon initial entry into Canada to clarify their status.

During scouting, temporary entrance is allowed without employment authorization. If the person wishes to remain or return to Canada for production purposes, they will be required to make an application for employment authorization.

Tax

Income Tax

The Income Tax Act generally requires that taxes be withheld by the payor, including non-resident payors, for payments made to non-residents for services rendered in Canada.

For non-resident independent contractors, 15% of the payment is to be withheld. Payments to non-resident actors in Canada or their loan-out companies are subject to a withholding tax of 23% of the payment for film and acting services provided by the non-resident in Canada. A non-resident can elect to have his or her acting services payment taxed at ordinary Canadian rates but any person, including a non-resident who makes the acting services payment, must withhold and remit 23% of the payment whether or not the non-resident chooses taxation at ordinary rates.

Certain exemptions from Canadian taxes exist for non-resident employees where there is a treaty between Canada and the employer’s country of residence. If the tax treaty requirements are met, there will be no Canadian taxes owing by the non-resident employee, and no corresponding withholding tax obligation.

Another exception exists for payments to behind-the-camera (BTC) independent contractors (e.g., producers, directors, writers, etc.). Payors may be granted a tax treaty-based waiver of its withholding tax obligations by the Canada Revenue Agency (CRA). Such waivers are granted according to CRA guidelines which should be consulted for further information: www.cra-arc.gc.ca/tax/nonresidents/film.

The Canada-United States Income Tax Convention does not provide any relief from Canadian tax liability for on-camera performers. As a result, waivers will not be granted by CRA with respect to such payments.

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GST

The goods and services tax (“GST”) is a 5% tax levied on the value of most goods and services made in Canada. The GST is structured so that while the tax is collected by the vendors of goods or services at each step in the production and distribution chain, ultimately it is borne by the end users of the goods or services.

Generally, both Canadians and non-Canadians who are producing film or television productions in Canada must register under the GST system and pay the GST. Producers pay the GST for most services provided in Canada by independent contractors (e.g., actors, directors, and writers) and for the leasing of premises and equipment and utilization of Canadian post-production facilities. Producers registered under the system can often claim “input tax credits” equal to the GST that they have paid to obtain a tax refund.

HST

The harmonized sales tax (“HST”) has replaced the provincial sales tax (“PST”) in several Canadian provinces, namely Ontario, Nova Scotia, New Brunswick, and Newfoundland and Labrador, by combining the GST and PST into a single sales tax. While production services that were not subject to GST before the HST was implemented will remain exempt, services that were previously subject to GST will now be subject to HST. Non-Canadians that were exempt under the GST system will remain exempt for the purposes of the HST. However, HST might benefit producers, despite the higher tax rate, as the full amount of tax paid (federal and provincial) will be recoverable on the producers’ GST return.

For further information please visit www.fin.gov.on.ca/en/tax/hst/.

Guilds and Unions

We have already touched on the importance of Canadian film industry guilds and unions in connection with the issuance of work permits for non-Canadians. Non-Canadian producers hiring Canadian performers or production workers must become parties to the collective agreements between independent producers and the relevant guilds or unions. For “above-the-line” Canadian personnel, this means adhering to the collective agreements of the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA) the Directors Guild of Canada (DGC), or the Writers Guild of Canada (WGC).

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ACTRA

Under the current ACTRA Independent Production Agreement, producers are granted a prepayment option to acquire the unrestricted use of the production in all media for the four year period which commences on the date of first exploitation of the production (other than the “declared use”) by paying all performers, in lieu of residuals, a prescribed percentage of the net fees otherwise payable to them for their participation in the production (i.e. 130% of net fees for theatrical films; 105% for television and other productions). Alternatively, the producer may choose to pay a non-refundable advance against future residuals, at the time of production, based on varying percentages of the performers’ net fees. The amount of the advance is part of a sliding scale tied to the level at which performers will eventually participate in “back end” receipts of the production after recoupment by the producer of the advance such that a higher advance (e.g., advance of 100% of net fees) will be credited against a smaller back end (e.g., 3.6% of distributor’s gross revenue) and vice versa (e.g., advance of 25% of net fees against 6.6% of distributor’s gross revenues). The ACTRA Independent Production Agreement also addresses minimum fees and residuals payable in connection with producers’ exploitation of productions in “New Media”.

WGC

With the exception of animation production, WGC writers may not transfer or assign copyright in their screenplays or teleplays to the producer. Rather, WGC writers may only license copyright in such materials, subject to the provisions of the collective agreement. The WGC agreement also provides that every non-Canadian writer contracted by the adhering producer is governed by the terms and conditions of the agreement and any affiliation agreement among the WGC and other counterpart non-Canadian guilds such as the Writers Guild of America (WGA). Where a non-Canadian production in Canada is written by an American writer who is not a member of the WGC, the WGA or another foreign writers guild, the WGC will assert its authority to protect the interests of the “unrepresented” writer.

Copyright

The basic term of copyright in Canada is the life of the author plus 50 years. Copyright can be assigned or licensed either wholly or partially and subject to both temporal and geographic limitations.

Under the Copyright Act,11 in addition to economic rights, authors are granted extensive moral rights. These include the right to seek an injunction or sue for damages for any modification of their works or use of their works in association with a product, cause or institution that prejudices their honour or integrity. Moral rights may not be assigned but may be waived by authors.

Unless an agreement states otherwise, works created during employment are owned by the employer. This principle is similar to the U.S. concept of “works made for hire” but differs in the following ways:

11 RSC 1985, c C-42.

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unlike the U.S. concept, the principle only applies to works created by employees and does not extend to works created by independent contractors commissioned to render services in respect of a film production;

the words “work made for hire” have no particular status under the Canadian Copyright Act;

under the Canadian Copyright Act, the employer owns the work but is not deemed to be the author, in contrast to the U.S. approach; and

the term of copyright for all film productions created in Canada is generally the life of the author plus 50 years as opposed to the different term of copyright in the U.S. for audiovisual productions.

On June 29, 2012, Canadian government passed Bill C-11 (also known as the Copyright Modernization Act) to modernize Canadian copyright law. This Bill addressed numerous issues, including: (i) the legalization of time and format shifting; (ii) the expansion of fair dealing to include satire, parody and education; (iii) the protection of technological protection measures such as “digital locks” and rights management information in compliance with the WIPO Internet Treaties; (iv) new rights for photographers and moral rights for performers; (v) the non-commercial use of copyright works and the liability of non-commercial users, internet service providers and search engines for infringements; and (vi) the legalization of so-called “mash-ups” of copyrighted works in prescribed circumstances.

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The Goodmans Entertainment Team

David Zitzerman [email protected] 416.597.4172

Profile David Zitzerman is a partner and head of the Entertainment Law Group at Goodmans. He has exclusively practised entertainment law for over 25 years. His practice focuses on the film, television and interactive industries in Canada and the United States. His clients include independent producers, Canadian networks, Hollywood studios, US cable services, European broadcasters, film and TV distributors, publishers, game companies, talent guilds and agencies, writers and performers.

David was the Gold Medalist in arts at the University of Manitoba and has a J.D. from the University of Toronto Law School. He is recognized as a leading entertainment lawyer by The Canadian Legal Lexpert Directory, The Lexpert/American Lawyer Media Guide to the Leading 500 Lawyers in Canada and The Best Lawyers in Canada and is recommended for media in Euromoney’s Guide to the World’s Leading Technology, Media & Telecommunications Lawyers and PLC’s Which Lawyer? He was named the 2010 Toronto Entertainment Lawyer of the Year by Best Lawyers and one of the 25 leading media lawyers in the world in 2013, 2011, 2009 and 2002 by Euromoney’s The Best of the Best. He holds an AV Distinguished™ rating from Martindale-Hubbell. David joined Goodmans in 1986 and became a partner in 1990.

He is the Co-Chair of the annual Bloomberg BNA CITE Film Finance Conference in New York and Los Angeles and regularly lectures on entertainment and media law at a number of educational institutions and associations and speaks at Canadian, U.S. and international entertainment-related seminars. He is an Adjunct Professor teaching entertainment law at the University of Toronto Faculty of Law, a guest lecturer at Osgoode Hall Law School and is a frequent commentator on entertainment industry issues for the Business News Network (BNN) and other media outlets. He has published a number of articles in entertainment law journals and is a co-writer of “Entertainment Law in Canada” published by LexisNexis.

David is a director and serves on the Executive/Finance Committee of the Canadian Film Centre, is on the Program Advisory Committee of the Ryerson School of Radio & Television Arts and the Canadian Women in Communications Digital Convergence Executive Program, is a Gold Patron of the Toronto International Film Festival and is a member of Film Ontario, the Canadian Media Production Association, the Academy of Canadian Cinema and Television, the Canadian Association of Recording Artists and the Toronto International Film Festival Fundraising Committee.

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Education University of Manitoba, B.A., 1978 (Gold Medal - Highest Standing in Arts) University of Toronto, J.D., 1981

Professional Affiliations Director-Canadian Film Centre Gold Patron-Toronto International Film Festival Advisor-Ryerson School of Radio & Television Arts and Digital Convergence Executive Program Canadian Bar Association (Ontario) – Media and Communications Law Section Member

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Carolyn P. Stamegna [email protected] 416.597.6250

Profile

Carolyn Stamegna is a partner at Goodmans LLP. Her business law practice focuses on domestic and international transactions within the film and television, media and technology sectors. She represents domestic and foreign financial institutions, private financiers and investors and various Canadian public and private media companies, including transmedia producers, digital content creators, mobile and web application developers. She has extensive experience leading domestic and multi-jurisdictional production, corporate and structured finance transactions, international co-production and co-venture arrangements. She also advises clients on structuring traditional and new media ventures and acquisitions and provides advice on the acquisition, exploitation and protection of IP rights. Carolyn is a frequent speaker at national and international entertainment law, technology and finance conferences as well as the University of Toronto & York University law schools. She is recognized as a leading lawyer in her areas of practice by Lexpert, Euromoney and The Best Lawyers in Canada. She holds a B.Comm and an LL.M. (Intellectual Property). Carolyn is a member of the Institute of Corporate Directors and received her ICD.I in 2013.

Education

McGill University, B.Comm Canadian Institute of Chartered Accountants, Tax Designation York University, LL.M. (Intellectual Property)

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Tara Parker [email protected] 416.597.4181

Profile

Tara Parker is a partner in the Entertainment Group at Goodmans. Tara was recently named the Best Lawyers’ 2015 Toronto Entertainment Law “Lawyer of the Year” and is also recognized as a leading entertainment lawyer by The Best Lawyers in Canada, The Canadian Legal Lexpert Directory and The Lexpert/American Lawyer Guide to the Leading 500 Lawyers in Canada. She is also recognized for media by Euromoney’s Guide to the World’s Leading Technology, Media & Telecommunications Lawyers and the Guide to the World's Leading Women in Business.

Her practice focuses on representing major American and Canadian studios, broadcasters, independent producers, literary, artistic and business clients, in all aspects of the development, production, financing, licensing and distribution of film, television, book publishing, theatrical, music, video game and digital media projects.

In particular, Tara provides production legal advice, drafts and negotiates format option agreements, literary option/acquisition agreements, talent agreements, rights clearance agreements, broadcast licenses, distribution and other exploitation agreements, music license agreements, co-venture, co-production and production services agreements. As production counsel, Tara represents independent producers in production financing transactions, provides chain-of-title and corporate opinions, undertakes errors and omissions insurance review, provides advice regarding collective agreements and Canadian film and television tax incentives, and provides similar advice to entertainment clients throughout the development, production, and exploitation of film and television production.

Tara is a frequent speaker and panellist at seminars on a range of media-related issues. She has been a guest lecturer on entertainment law and digital copyright at the University of Toronto Law School, Osgoode Hall Law School, and for The Business of Film Course at the Cinema Studies Institute, Innis College; and has spoken at several Canadian and U.S. media law panels and seminars including: “Leading-Edge Strategies to Finance Independent Film” (TIFF); “Advising Clients in the Wake of Cinar v. Robinson” (OBA); “How to Manage the Pitfalls of Production in Canada” (OBA); “New Deals in Canadian Entertainment Law: Terms of Trade, Consolidation and Commercial Clauses” (OBA); “Domestic and International Co-Productions” (WIFT), “Master of Negotiation” (KidScreen); “Co-Ventures: Right for your Project?” (WIFT); “The Mobile Platform: Current Realities and Future Trends” (Entertainment Industries Summit); “Production Incentives” (Sundance); and “Licensing Non-Canadian Formats” (Entertainment, Advertising and Media Law Symposium), “Monetizing Digital Content” (Digital Theory Media).

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She has appeared as a guest expert on the subject of “Reality Television” on the Business News Network (BNN). Tara is a contributing editor to Canadian Forms and Precedents: Commercial Transactions – Information Technology and Entertainment published by LexisNexis and has contributed articles to various entertainment law publications relating to her area of practice.

Education

University of Toronto, B.A. (Hons.) (History and English, with distinction), 1994 University of Toronto, M.A. (Medieval History), 1995 University of Victoria, J.D., 1999

Professional Affiliations

Past President and Chair of Crow’s Theatre Law Society of Upper Canada Ontario Bar Association, Entertainment, Media and Communications Law Past Section Executive WIFT-T Women in Film and Television – Toronto Film Ontario Academy of Canadian Cinema & Television

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Jaclyn Seidman [email protected] 416.849.6911

Profile Jaclyn is a partner at Goodmans LLP. She practices in the area of corporate commercial law. Her practice focuses on entertainment law, social media issues and trade-mark clearance, prosecution and enforcement. Jaclyn has acted on a broad range of transactions, including, acquisitions, complex licensing arrangements and corporate reorganizations. Her entertainment practice includes representing clients in the film, television, theatre and publishing industries.

Jaclyn is a contributing editor to Canadian Forms and Precedents: Commercial Transactions – Information Technology and Entertainment published by LexisNexis. She co-authored the Goodmans’ Guide to Producing in Canada and Doing Business with Canadians.

She serves on the boards of several non-profit organizations, including the Jewish Chamber of Commerce and the McGill Alumni Association - Toronto Branch.

Jaclyn teaches business law courses at the University of Toronto’s Rotman Commerce Department and is the recipient of several Excellence in Teaching awards. She is also a frequent guest lecturer on entertainment law at the University of Toronto Law School.

Education

McGill University, B.ED (Dean’s List), 2002 McGill University, B.C.L / LL.B (With Great Distinction), 2005

Professional Affiliations

Canadian Bar Association Law Society of Upper Canada Ontario Bar Association

Year of Call

2006 Ontario

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Goodmans LLP Bay Adelaide Centre 333 Bay Street, Suite 3400 Toronto, Ontario M5H 2S7 Telephone: 416.979.2211

David Zitzerman 416.597.4172 [email protected]

Carolyn Stamegna 416.597.6250 [email protected]

Tara Parker 416.597.4181 [email protected]

Jaclyn Seidman 416.849.6911 [email protected]

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