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Tax credit for film production services
This credit applies to film and television production services and will help ensure that foreign productions continue to be shot in Québec. The rate for the credit is 20%. The credit is claimed with regard to the Québec labour expenditures incurred for foreign productions shot in Québec.
Corporations that may apply for the credit
A qualified corporation is a corporation that, in the year, has an establishment in Québec, and whose activities consist principally in carrying on one of the following businesses:
- a film or television production business
- a film or television production services business
The credit cannot be claimed for a production in respect of which the corporation has claimed the tax credit for a Québec film production.
In addition, the corporation must meet one of the following conditions:
- It must own the copyright on the qualified production throughout the period during which it is produced in Québec.
- It must have contracted, directly with the owner of the copyright, to render film production services.
Special rules apply to corporations not dealing at arm's length with broadcasters whose taxation year begins after March 31, 2003. A corporation or a broadcaster that, at any time in the taxation year or the preceding 24 months, was not dealing at arm's length with a broadcaster cannot claim the credit.
The following corporations are not eligible for the credit:
- a corporation that is exempt from tax for the year
- a corporation that is directly or indirectly controlled by one or more corporations that are exempt from tax at any time in the year and whose mission is cultural
Exception
A corporation that does not deal at arm's length with a broadcaster may claim tax credits for film and television production services only for productions that it carries out for corporations other than the broadcaster with which it does not deal at arm's length, provided it maintains a minimum annual volume of independent production.
Residency requirement
The salaries and wages claimed for the credit must have been paid to individuals resident in Québec at some time during the taxation year in which the services were rendered.
For the purposes of the credit, the portion of the remuneration included in the calculation of the qualified corporation's labour expenditures for a taxation year must have been paid to:
- an individual resident in Québec at some time during the taxation year in which the services were rendered
- a corporation or partnership (as applicable) with an establishment in Québec
Where an employee of a subcontractor provides services, the employee must be resident in Québec at some time during the taxation year in which the services are rendered.
Expenses giving entitlement to the credit
Labour expenditures must be paid by the time the credit is claimed. The following amounts are labour expenditures:
- the salaries and wages directly attributable to the production of the property and relating to services rendered in Québec for the various stages of production (from the script stage to the post-production stage)
- the portion of the remuneration, other than salaries or wages, that relates to services rendered in Québec for the various stages of production (from the script stage to the post-production stage) and that is paid during the year to an individual, corporation or partnership
- the reimbursement to the parent corporation of an expenditure incurred by the parent corporation, provided the expenditure would have been a labour expenditure for the corporation applying for the credit if that corporation had itself incurred the expenditure
The amount of any government or non-government assistance reduces the amount of the credit. However, this does not apply to assistance granted in the form of federal tax credits for film or video productions or for film or video production services.
How to apply for the credit
To apply for the credit, the corporation must complete form CO-1029.8.36.SP, Crédit d'impôt pour des services de production cinématographique, and enclose the form with its income tax return or file the form no later than 12 months after the filing deadline for the return.
The return must also be accompanied by a copy of the valid favourable advance ruling or the valid certificate issued by SODEC with regard to the production.
