Film & TV Production Incentives in Ontario

Added on Friday, March 1, 2013 | Tagged ,

The Ontario Media Development Corporation (‘OMDC’) is an essential branch of the Ontario Ministry of Culture & Tourism. The OMDC is mandated with assisting in the stimulation of jobs and investment in 6 cultural media industries (i.e. books, film, interactive digital media, magazines, music, and television) through the application of various funds, programs & events, organizational support, as well as the co-administration of tax credits with the Ministry of Finance. Detailed below are some of the more notable tax incentive programs that are currently in place supporting the film & television industry in Ontario.

ONTARIO FILM & TELEVSION TAX CREDIT (‘OFTTC’)  

The OFTTC is a refundable tax credit that is administered to qualifying production companies that accumulate labour expenditures, while completing eligible Ontario productions. The tax credit is equal to 35% of eligible labour costs (no cap), with an enhanced rate of 40% on the first $240,000 for first-time producers.

The OFTTC also allows for an additional tax credit bonus of 10% on labour expenditures if:

i) the production is shot entirely outside of the GTA OR

ii) at least 5 location days are spent in Ontario (if it’s a TV series, the number of location days must be equal to the number of episodes) AND at least 85% of those location days are outside the GTA

(*note – this bonus also applies to wholly animated productions, under the same stipulations)

Eligibility Requirements

  • The ‘production company’ must:

i) be Canadian controlled

ii) have a permanent establishment in Ontario

iii) be primarily engaged in the business of film or video production

  • The ‘production’ must:

i) be predominantly shot and posted in Ontario (unless it’s a documentaryinterprovincial co-production, or international treaty co-production)

ii) attain a minimum of 6 CAVCO points

(Canadian Director or Screenwriter = either one gets a score of 2 points)

(Canadian Lead Performer/Second Lead Performer/Art Director/Director of Photography/Music Composer/Editor = 1 point)

*note: if it’s an animated production – Director, Screenwriter/Scriptwriter each receive 1 point

iii) be released in Ontario by an Ontario-based theatrical film distributor or broadcasted by a Canadian broadcaster during prime time (7:00pm –11:00 pm), within two years of completion (excluding children’s programming)

  • The producer must be an Ontario resident for at least 2 years preceding the year the production takes place
  • 75% of total production costs must be incurred in Ontario, with 95% of post-production costs accruing there as well (unless it’s a co-production)
  • A minimum of 85% of the total number of days of principal photography/key animation must be done in Ontario (unless it’s a documentary or co-production)
  • Ineligible productions include: non-prime time television programs (unless it’s children’s programming), non-Canadian controlled productions, news, game shows, award shows, fundraising shows, talk shows, reality television and sports shows

Eligible Expenditures

  • Salaries & wages paid to Ontario residents
  • Remuneration paid to:

i)      corporations that are personal services companies, subject to tax in Ontario

ii)    sole proprietors or freelancers subject to tax in Ontario

iii)   partnerships, for the services of a partner subject to tax in Ontario

iv)   taxable Canadian corporations who perform services for employees who are Ontario residents

  • Reimbursements by a wholly-owned production company to its parent company for labour expenditures (as above), that were paid by the parent company on behalf of the production company

(*Eligible labour expenditures include those incurred from the production commencement time (PCT) until the end of post-production – that may even also include script development)

ONTARIO PRODUCTION SERVICES TAX CREDIT (‘OPSTC’)

The OPSTC is a refundable tax credit that is administered to qualifying corporations that incur labour and production expenditures, with respect to an eligible film or television production. All qualified production expenses that accumulate in Ontario after June 30th, 2009 receive a 25% tax credit under this scheme. If expenditures began to accrue before this date, the OPSTC is calculated as being 25% of eligible labour expenditures that accrued in Ontario (no cap).

Eligibility Requirements

  • The ‘qualifying corporation’ must:

i)      be a Canadian or foreign-owned corporation

ii)    carry on a film, video production, or production services business at a permanent establishment in Ontario

iii)   file an Ontario corporate tax return

iv)   own the copyright in an eligible production or contracts directly with the copyright owner

  • The ‘production’ must be at least $1 million (Cdn) unless it’s a series consisting of 2 or more episodes with a runtime of 30 minutes or less – the cost in that case is $100,000 an episode and if the above runtime is exceeded, it is $200,000 an episode
  • The OFTTC and the OPSTC cannot both be claimed for the same episode of a television series
  • Ineligible genres include: news shows, talk shows, game or contest productions, sports events, gala or award presentations, pornography, reality television, and advertising or industrial productions

Eligible Expenditures

  • Qualifying production expenditures’ consist of:

i)    wages

ii)   service contracts

iii)  tangible property expenditures (i.e. equipment, studio rentals, computer

software

iv)  any expenditures paid to companies and partnerships which have a permanent

establishment in Ontario and Ontario-based individuals

(*note: there is a standard of reasonableness when dealing with expenditures – costs need to be directly attributable to the production and incurred for the stages of production i.e. costs accumulated anywhere from the final script stage to the post-production stage)

ONTARIO COMPUTER ANIMATION & SPECIAL EFFECTS TAX CREDIT (‘OCASE’)

The OCASE is a refundable tax credit applicable to eligible Ontario labour expenditures involving the creation of digital animation or digital visual effects. The tax credit is calculated as 20% of all eligible expenditures (no cap). It can also be claimed concurrently with the OFTTC and the OPSTC.

Eligibility Requirements

The ‘qualifying corporation’ must:

i)      be a Canadian corporation that is either Canadian or foreign owned

ii)    have a permanent establishment in Ontario

iii)   file an Ontario corporate tax return

  • The OCASE may be applicable to – animation or visual effects houses, post-production houses and film & television production companies that perform eligible computer animation & special effects activities

Eligible Activities

  • Animation or visual effects’ includes – designing, modelling, rendering, lighting, painting, animating and compositing
  • Animation or visual effects’ does not include:

i)    activities that involve scientific research and/or experimental development

ii)   audio effects

iii)  in-camera effects

iv)  credit rolls

iv)   subtitles

v)    animation or visual effects, all or substantially all, of which are created by editing activities, or

vi)   animation or visual effects for use in promotional material for the eligible production

Eligible Expenditures

  • Qualifying labour expenditures’ includes:

i)      salaries & wages – must be directly attributable to activities being carried on by the qualified corporation and that salaries/wages were paid to Ontario residents who report directly to the permanent establishment of the aforementioned corporation

ii)    50% of remuneration paid to freelancers (individuals or partnerships) for expenditures accrued before March 27th, 2009

iii)   100% of remuneration paid to freelancers (individuals, partnerships, and/or personal service corporations) for expenditures incurring after March 26th, 2009

 

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