Canadian Film or Video Production Tax Credit (FTC) Program – Summary

Under this program, the federal government provides income tax incentives to qualified corporations for the production of Canadian film or video productions.

Who qualifies?

To qualify for the FTC program, the applicant must be a qualified corporation that carries on through a permanent establishment in Canada a business that is primarily a Canadian film or video production business. Specifically excluded are prescribed labour-sponsored venture capital corporations, tax-exempt corporations and corporations controlled by one or more tax-exempt persons. In addition, the qualified corporation must own the copyright in the film for which a claim is being made.

Rate:

A qualified corporation can receive the FTC at the rate of 25% of qualified labour expenditure incurred for the production of a Canadian film or video production. The qualified labour expenditure may not exceed 60% of the cost of production at the end of the year net of assistance. The tax credit is therefore limited to 15% of the cost of production net of assistance.

What kind of productions qualify?

To qualify for the FTC program, the Canadian Audio-Visual Certification Office (CAVCO) must certify that the production is a "Canadian film or video production". A Canadian film or video production means a film or video production, other than an "excluded production", produced by a "prescribed taxable Canadian corporation" and that is either a treaty co-production or a film or video production that meets the requirements of the Income Tax Regulations (the Regulations).

Co-productions between Canada and another country are eligible for the FTC program only when co-produced under an official treaty. Telefilm Canada is responsible for the certification of treaty co-productions. However, in order to obtain a certificate to access the FTC program, the producer must apply directly to CAVCO.

Administration:

CAVCO and the Canada Revenue Agency (CRA) jointly administer the FTC program.

CAVCO is responsible for:

• certifying that the production is a Canadian film or video production;
• estimating the qualified labour expenditure of a qualified corporation; and
• issuing certificates to allow Canadian producers to claim the FTC.

CRA is responsible for:

• providing assistance to claimants;
• interpreting and applying section 125.4 of the Income Tax Act (the Act) and all other provisions in the Act and Regulations that may have an impact on the tax credit;
• reviewing or auditing the FTC claims within a reasonable time frame;
• assessing T2 Corporation Income Tax Returns; and
• issuing timely refund cheques.

How do taxpayers apply?

To apply for the FTC, a qualified corporation must complete Form T1131, Claiming a Canadian Film or Video Production Tax Credit. The certificate issued by CAVCO, or a copy thereof, must be attached to the T2 Corporation Income Tax Return for the year along with Form T1131 (attach these documents to the top of the T2 return for early identification by the CRA).