Motion Picture Tax Credits

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Minimum budget levels for PSTC applicants

Know the minimum budget requirement for your production to be qualified for PSTC Under the Production Services Tax Credit (PSTC) there are different minimum budget threshold requirements for different types of productions.   The following can help you determine a...

Are Screenwriters Eligible?

The Film Incentive BC Tax Credit has been expanded to add a 35% Scriptwriting Tax Credit for expenditures incurred on or after February 21, 2018. The expansion will include BC labour for scriptwriting expenditures incurred by a corporation prior to the completion of the final script stage of the production and must be claimed in the taxation year in which principal photography of the production begins. The cost of purchasing a script is not an eligible scriptwriting expense.

How is FIBC administered?

Creative BC processes the eligibility and completion applications and issues the certificates. The certifying authority is the Ministry of Tourism, Arts and Culture. The Canada Revenue Agency reviews and audits claims and issues refund cheques where appropriate.

Who can claim FIBC?

The FIBC credit may be claimed by an eligible production corporation. Please see the Ministry of Finance website for more information on the eligibility requirements: Â British Columbia Film and Television Tax Credit.

Is the credit refundable?

Yes, the credit is refundable to the extent it exceeds the corporation’s income tax payable.

How do I claim FIBC?

The credit is claimed when filing the T2 Corporation Income Tax Return. A completed claim form (T1196) and eligibility certificate for each production should be attached to the top of the T2 form.

We haven't set the fiscal year end for the production corporation yet. Is this a problem?

Yes.  We need to have the production corporation’s fiscal year-end before we can issue the eligibility certificate since completion and filing deadlines are set from this date. If the corporate fiscal year-end changes, please notify us.

When should I apply for an eligibility certificate?

Production companies are encouraged to apply for an eligibility certificate as early as possible in the pre-production or production stage. This allows time to address any issues that may put a production offside prior to the start of the production. Documents required when submitting an application are set out in the FIBC Checklist. Please note that the eligibility certificate will not be issued until principal photography has commenced.

Is there a time limit to apply for a completion certificate?

Yes. A completion certificate must be issued by Creative BC within 30 months from the end of the corporation’s fiscal year in which principal photography began. Documents required at the time of application are set out in the FIBC Checklist. If you fail to submit your application and documents on time, or do not allow Creative BC sufficient time to issue the completion certificate, your eligibility certificate may be revoked. If the eligibility certificate is revoked, the production corporation is not entitled to FIBC and must repay any monies received for that production.

What is the time limit for making a claim with CRA for the FIBC?

For taxation years beginning on or after February 19, 2020, the claim form (T1196), eligibility certificate and T2 must be filed with the Canada Revenue Agency (CRA) within 18 months from the end of the tax year in which FIBC is being claimed. The CRA will not process claims that are filed late.

For example, a production company’s taxation year starts on April 1, 2020. The company’s fiscal year end is March 31, 2021. The production company has until September 30, 2022, to claim the tax credits with CRA related to BC labour expenditures incurred in that fiscal year. This would be Claim 1.

If the production company continued to incur qualified BC labour expenditures for a production until May 31, 2021, the tax credits for the fiscal year ending March 31, 2022 must be claimed with CRA by September 30, 2023. This would be Claim 2.

** Please note that for taxation years beginning before February 19, 2020, the filing period with CRA is 36 months from the fiscal year end of the production corporation.

 

How long does it take to get an eligibility or completion certificate?

Our service standard is to process applications within 120 days from the date we receive a complete application, 90% of the time. Incomplete applications, outstanding information or missing documents will delay the issuing of certificates.

Note! We are dealing with a large volume of tax credit applications and are working towards better meeting this service standard. We apologize for the current delays.

How long does it take to get a refund?

The Canada Revenue Agency Film Services Units try to complete their work on a claim within 60 days for a complete claim that is not selected for an audit, or within 120 days when an audit is performed. The complete file is then forwarded to your tax centre for assessment. A refund cheque is issued within a few days where applicable.

    We need to have the eligibility or completion certificate amended. What is the procedure?

    Please email your request to Creative BC at attachments@creativebc.com, referencing the name of the production and the application number. Please note that we will likely need additional back-up supporting the amendment request.

    There is a fee of $200 + GST for an amended certificate when the application to amend is being assessed separately from the completion application. There is no amendment fee when the eligibility certificate is amended at the time the completion certificate is issued.

    What are the requirements for a person to be considered BC labour?

    The individual must be resident in BC and ordinarily resident in Canada as of December 31 of the year preceding the end of the fiscal year for which the tax credit is being claimed. For example, if the production corporation’s fiscal year end is March 31, 2013, the person must be resident in BC as of December 31, 2012 to be part of the corporation’s BC labour for that tax year.

    Note that it must be established that the individual is also a resident of Canada when they have recently moved to Canada. This is assessed by the Canada Revenue Agency based on a number of factors indicating that the individual is not in Canada temporarily. Paying tax in BC in the previous calendar year is a good indicator but is not necessarily the determining factor that the individual is a resident of BC for the purposes of the tax credit.To determine if the individual is resident of Canada, refer to the CRA’s guidelines on Resident Status and Tax Obligations.

    For further information, please refer to the CRA residency guidelines or contact the CRA Film Services Unit at 1-866-317-0473.

    What documents are considered proof of BC residency?

    The Canada Revenue Agency (CRA) requires a copy of any one of the following documents to support residency status:

    • Notice of assessment (T1) showing that the individual is a resident of Canada/province for the relevant tax year;
    • Letter from the CRA giving an opinion of the individual’s residency status in Canada for the relevant year(s)*;
    • Long-term (one year or more) lease or purchase of a Canadian dwelling with utility and/or cell phone bills showing the individual is living at that Canadian address.

    *After completing Form NR74, Determination of Residency Status (Entering Canada) or NR73, Determination of residency status (leaving Canada).

    OR if none of the above documents are available, the CRA requires a copy of three of the following documents to support residency status.

    • Copy of the last income tax return filed in the country of origin and/or any document filed with the foreign tax authority in which the individual has declared that they are no longer a resident.
    • Short-term (less than a year) lease agreement or letter from a landlord supporting a rental agreement.
    • Provincial/territorial health or services card for the individual, their spouse and/or dependant.
    • Driver’s licence or vehicle registration from the relevant province/territory**.
    • Professional association or union membership in Canada.
    • Statements of accounts (ex. bank accounts, retirement savings plan, credit cards, securities accounts) from a Canadian branch of a financial institution.

    **A provincial or territorial services card that includes health care and a driver’s licence will count as two documents.

    For further information on residency status determination, refer to the CRA’s Residency Guidelines or contact the CRA Film Services Unit at 1-866-317-0473.

    What are the requirements for a person to be considered a BC producer?

    The individual must be a Canadian citizen or permanent resident of Canada who is subject to tax in BC on December 31 of the year before principal photography starts on the production.

    Are kit rentals considered eligible labour expenditures?

    The Film Incentive BC Tax Credit is calculated on labour expenditures paid to BC-based individuals. Kit rental charges are not direct labour expenditures as they are paid for the rental of the equipment or tools and not for the individual’s labour. If an individual is being paid as a contractor, the kit rentals are not permitted as eligible labour expenditures.

    However, if the kit rental is paid to an employee and is included as a taxable benefit to the employee on his/her T4 and the relevant source deductions have been taken, kit rentals will be allowed to be included as an eligible labour expenditure. CRA’s Application Policy FIS 2006-01 provides further information on the inclusion of taxable benefits as labour expenditures.

    Are fringes considered eligible labour expenditures?

    Only if they are paid to an employee of the corporation and included as a taxable benefit on his or her T4. Fringes paid to contractors are not eligible. CRA’s Application Policy FIS 2006-01 provides further information on the inclusion of taxable benefits as labour expenditures.

    Do you have a form that we need to use to show BC labour / Non-BC costs?

    You can provide this information in your own format or, if you prefer, you can use our Schedule of BC / Non-BC Costs Template.

    What are the rules for interprovincial co-productions?

    An interprovincial co-production under the BC legislation is a production that is jointly produced in more than one province by corporations from each jurisdiction. Please refer to Program Summary for Interprovincial Co-Productions under the FIBC Tax Credits Overview FIBC Tax Credits Overview for further detailed information.

    What are the rules for international treaty co-productions?

    An international treaty co-production is a production that is jointly produced by two or more production companies under the terms of a co-production treaty between Canada and another country. Telefilm Canada is the certifying authority for treaty co-productions. Please contact Telefilm for further information and guidelines. Creative BC requires a Telefilm Preliminary Recommendation with the eligibility application and a Final Recommendation with the completion application.

    Please refer to the Program Summary for International Treaty Co-Productions for further detailed information.

    When the production is an interprovincial co-production or an international treaty co-production, what amount is used as the production cost limit when determining the labour cap calculation?

    The production cost limit (i.e. the BC labour cap) may be calculated on the total global production costs net of assistance provided to all copyright owners in the production.

    How is a production treated when it is both an interprovincial co-production and an international treaty co-production?

    Creative BC treats these productions as international treaty co-productions and defers to Telefilm’s requirements. Note, however, that the BC production company must hold over 50% of the copyright as between the other Canadian co-producers and other Canadian copyright holders. For example, if 80% of the copyright in the production was held by the non-Canadian co-producer, then the BC company would have to hold over 50% of the remaining 20% Canadian held copyright.

    How does Creative BC define "reality" programs?
    Reality programming consists of scenes recorded on private or public authority surveillance equipment. This category also includes programming currently known as court television and similar formats (e.g. “Cops”).
    How do you verify that a company is "Canadian-controlled"?
    For privately held companies, over 50% of the voting shares need to be held by Canadians. We do a look-through to the individual shareholders of the production corporation and any parent corporations (including parent corporations of parent corporations!). To do this, we need the Schedule B (Certificate of an Officer), Corporate Share Register and Certificate of Incorporation for the production corporation and all parent corporations. For publicly-held corporations, please use our Public Corporation Affidavit.
    Does an agreement with a sales agent meet the legislative requirement that there is a written agreement at fair market value with a Canadian-controlled distributor or arms-length Canadian broadcaster to have the production shown in Canada within 24 months

    No. Agreements with sales agents are not accepted in lieu of agreements with Canadian distributors or broadcasters at fair market value.

    I have private investors helping to finance my production. Is this OK?

    It depends on the nature of the investment. A tax shelter investment will put the production offside. Note that investment by way of share purchase in the production corporation itself is usually acceptable. We recommend that you get independent legal advice on this issue.

    Please contact CRA Film Services Unit if you have further questions.

    What if I use crowdsourcing? Will this affect my tax credits?

    The Canada Revenue Agency currently considers crowdsourcing (a.k.a. crowdfunding) assistance and therefore it may reduce the federal and provincial tax credits but it does not appear to put a production offside for tax credits. Please see the CRA’s application policy on this issue.

    What "grinds" the tax credits? What does this mean?

    When a financing source “grinds” the tax credits, it means that it is deducted from the total cost of production when calculating the BC labour cap. The following is a non-exhaustive list of ineligible costs that grind the BC tax credits:

    • Website costs
    • Promotional / marketing costs incurred after the production is complete
    • 50% of craft services
    • Tax credit application fees
    • Crowdsourcing
    • Grants
    • Deferrals
    • Non-recoupable advances
    • Other provincial tax credits (not federal tax credits)
    • Non-bona fide loans (please refer to CRA’s application policy on this issue and additional types of assistance)

    Note that bona fide loans, equity financing and CAVCO (federal) tax credits do not grind the BC tax credits.

    Is there an on-screen credit requirement for the tax credits?

    Please see our FIBC on-screen credit request here

    If principal photography occurs within the designated Vancouver area (DVA) and outside the DVA on the same day, can the day be considered a regional day for the regional tax credit?

    Yes, but only if principal photography (first unit shooting) on that day takes place substantially outside of the designated Vancouver area. For tax purposes, “substantially” is interpreted as 90% or more. Second unit shooting is not counted as principal photography.

    More questions?

    They may be answered elsewhere on our website or on the BC Ministry of Finance and CRA websites:

    Finally, feel free to call or email Creative BC

    Disclaimer

    PLEASE BE ADVISED that where there is a discrepancy between these FAQs and the Income Tax Act (BC) and Regulations (“The Act”, the provisions of The Act prevail. Creative BC cannot confirm whether a production will be eligible for tax credits until we have received a complete application and all corresponding documentation.