Production Services Tax Credit FAQs
Motion Picture Tax Credits
Who administers the PSTC?
Creative BC processes the accreditation 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 the PSTC?
The PSTC may be claimed by an accredited production corporation. Please see the Ministry of Finance website for more information on the eligibility requirements: British Columbia Production Services Tax Credit.
Is the tax credit refundable?
Yes, the credit is refundable to the extent it exceeds the corporation’s income tax payable.
Are there any caps on the PSTC amount?
No. There are no production caps, corporate caps or annual caps and there is no sunset date for Production Service Tax Credit program.
How do I claim the PSTC?
The credit is claimed when filing the T2 Corporation Income Tax Return. A completed claim form (T1197) and an accreditation certificate for each production should be attached to the top of the T2 form.
Is there a time limit for applying for an accreditation certificate?
There is no time limit for applying for an accreditation certificate. However, there are two important deadlines you need to be aware of under PSTC:
- Prior to submitting a PSTC application, you must register for Pre-certification with Creative BC within 60* or 120** days after the production’s first accredited BC labour expenditure is incurred. *Productions that incurred first accredited BC labour expenditures before February 22, 2022 and after June 30, 2020 have 60 days to file a pre-certification form (per Budget 2020). **Productions that incurred first accredited BC labour expenditures on or after February 22, 2022 have 120 days to file a pre-certification form (per Budget 2022). See more details in our PSTC Pre-certification FAQ; and
- There is a deadline for claiming the PSTC with the Canada Revenue Agency (CRA), and an accreditation certificate is required for CRA to process the PSTC claim. See more information here.
Production companies are encouraged to apply for an accreditation 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.
What is the time limit for making a claim with CRA for the PSTC?
For taxation years beginning on or after February 19, 2020, the claim form (T1197), accreditation certificate and T2 must be filed with the Canada Revenue Agency (CRA) within 18 months from the end of the tax year in which the PSTC 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 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 accreditation certificate amended. What is the procedure?
Please email your request to Creative BC at firstname.lastname@example.org, 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 accreditation certificate.
Are the minimum budget requirements under PSTC in respect of the BC portion of the budget?
No, the requirements are for the global budget on the production. There is no minimum BC spend under the PSTC.
What do you need for proof of permanent establishment?
A proof of permanent establishment must:
- Show the name of the accredited corporation (i.e. the corporation applying for the tax credits)
- Show the accredited corporation’s address in BC (i.e. their place of business) and
- Be dated during the relevant taxation year.
Examples of documents that show proof of permanent establishment in BC:
- Lease agreement for the production office or studio
- Tax credit administration fee cheque from the accredited corporation
- Bank statement
- Utility bill
- Registered and Records Office Agreement with a law firm or,
- Invoice from a supplier relevant to the production.
When there is more than one copyright holder, is an Affidavit for Official Designee required from each copyright holder?
An Affidavit for Official Designee must be obtained from the copyright holder who holds the greatest percentage of the copyright. If copyright is held 50/50 between two corporations, we will accept an Affidavit from one of the copyright holders, provided that this company is a signatory to the Production Services Agreement.
Note that if copyright ownership was transferred after production, the Affidavit must be from the current copyright owner. We do not need Affidavits from all former copyright holders.
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 fiscal year end is March 31, 2020, the person must be resident in BC as of December 31, 2019 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.
Also note that under the PSTC, the BC labour costs need to be incurred in BC to be included in BC labour.
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.
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.
Are kit rentals considered eligible labour expenditures?
The Production Service 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.
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”).
Is there an on-screen credit requirement for the tax credits?
Please see our PSTC 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.
Can the DAVE credit be claimed on productions where the only work done in BC is animation voice-over or visual effects?
Yes, so long as the production corporation can provide the global start date for principal photography or key animation on the production and the primarily digital methodology is confirmed. No methodology is required for productions that are 100% digital animation. Note that only BC labour incurred in BC can be included in the BC labour and BC DAVE labour amounts.
Can we apply for the DAVE tax credit on mechanical/on-set BC labour incurred in BC if the visual effects are being done outside BC?
Yes. Note that the BC on-set DAVE labour must be directly related to the digital effect and the primarily digital methodology must be provided.
Does 3D or stereoscopic filming or conversion qualify for the DAVE tax credit?
3D or stereoscopic filming or conversion (3D) may be eligible for the DAVE tax credit, provided the shots are manipulated after shooting for depth perception and other visual effect properties. The wages, salaries and remuneration paid to BC-based individuals performing the 3D associated post-production functions may qualify as BC labour expenditures for the purposes of calculating the DAVE tax credit. Please note, only the individuals using digital technology for the 3D process will qualify for the “digital” component of the credit for the purposes of determining primarily digital. The fact that a production is made entirely using 3D processes does not make the production automatically 100% DAVE eligible. The primarily digital determination must be performed to determine the amount of DAVE eligible activities for the production.
They may be answered elsewhere on our website or on the BC Ministry of Finance and CRA websites:
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.