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Tax credit for the production of performances
A qualified corporation that produces a performance may be entitled to a tax credit equal to 29.1667% of the qualified labour expenditures it incurred with respect to the performance.
The qualified labour expenditures cannot exceed 45% of the production costs for the performance. Tax assistance is therefore limited to 13.125% of these costs. The credit is also subject to a limit of $262,500 per qualified performance.
Corporations that may apply for the credit
A qualified corporation is a corporation that has an establishment in Québec and carries on in Québec a performance production business that is a qualified business.
The following corporations are not eligible for the credit:
- a corporation that, at any time in the taxation year or the preceding 24 months, is directly or indirectly controlled by one or more persons not resident in Québec
- a corporation that is exempt from tax for the year
- a Crown corporation or 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
After March 11, 2003, shares held by persons not resident in Québec must be hypothetically attributed to a hypothetical person. If such attribution means that control of the corporation is given to the hypothetical person, the corporation is considered to be controlled by a person not resident in Québec.
Residency requirement
The salaries and wages claimed for the credit must have been incurred with regard to individuals who were 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 corporation's labour expenditures for a taxation year must have been paid to:
- an individual who was 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
The following labour expenditures give entitlement to the credit, provided they are paid by the time the credit is claimed:
- reasonable salaries and wages that are directly attributable to the production of qualified performances, that relate to the various production stages from pre-production to the first performance before an audience, and that the corporation paid to its eligible employees
- the portion of the reasonable remuneration, other than salaries or wages, that was actually incurred by the corporation before the end of the year, is directly attributable to the production of performances, and was paid to one of the following:
- an eligible individual, for services rendered by the individual or by the individual's eligible employees (special rules apply where the individual is an artist)
- a corporation that has an establishment in Québec, where the amount is attributable to the salaries and wages of that corporation's eligible employees (special rules apply where the individual is an artist)
- a corporation that has an establishment in Québec and all of whose capital stock belongs to an eligible individual
- a partnership that carries on a business in Québec and has an establishment in Québec, where the amount is attributable to services rendered by an eligible individual who is a member of the partnership or to the salaries or wages of the partnership's eligible employees (special rules apply where the individual is an artist)
Labour expenditures incurred for the dissemination and promotion of the performance do not give entitlement to the credit.
Qualified performance
A qualified performance is a property that is a performance and for which the corporation has obtained a certificate or favourable advance ruling from the Société de développement des entreprises culturelles (SODEC) with regard to one of the following periods:
- the period covering the stage of pre-production of the property through the end of the first full year after the first performance of the property before an audience
- the period covering the second full year after the first performance of the property before an audience
- the period covering the third full year after the first performance of the property before an audience
For more information about the eligibility requirements for performances, contact SODEC.
A qualified performance can be a performance of:
- music
- drama
- comedy
- mime
- magic
Labour expenditures and production costs are reduced by any government or non-government assistance, except in the case of the tax credit for the production of performances, and financial assistance granted by:
- the Conseil des arts et des lettres du Québec (CALQ)
- the Canada Council for the Arts
- SODEC
- the Fondation Musicaction
- the Foundation to Assist Canadian Talent on Records (FACTOR)
How to apply for the credit
To apply for the credit, the corporation must complete form CO-1029.8.36.SM, Crédit d'impôt pour la production de spectacles musicaux, 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 valid copy of the certificate or favourable advance ruling issued by SODEC with regard to the production.
