The federal government offers two programs to help the film industry in Canada. They are the Canadian Film or Video Production Tax Credit ( CPTC ) and the Film or Video Production Services Tax Credit ( PSTC ) programs. Many provincial governments also offer similar tax credit programs.
The primary objective of the CPTC is to encourage Canadian programming and to stimulate the development of an active domestic independent production sector. The CPTC program gives a tax credit to qualified corporations producing Canadian film or video productions. Canadian control requirements ensure that the incentive is available only to Canadian-controlled companies.
The CPTC program gives a refundable tax credit of 25% of qualified labour expenditures by a qualified corporation for the production of a Canadian film or video production. The qualified labour expenditures cannot be more than 60% of production cost, net of any assistance. The maximum credit available is therefore limited to 15% of production cost net of assistance. You cannot claim the CPTC for a production that gets a benefit under the PSTC program.
The purpose of the PSTC is to give help for films and videos produced in Canada where Canadian labour is used. This program complements the CPTC program, since it is open to both Canadian and foreign-owned companies. The intention of this program is to make Canada a more attractive place for film production and stimulate job growth in the Canadian film industry.
The PSTC gives a refundable tax credit of 16% of qualified Canadian labour expenditures incurred for an accredited production. You cannot claim the PSTC for a production that gets a benefit under the CPTC program.
The film tax credit programs are co-administered by Canadian Heritage through the Canadian Audio-Visual Certification Office ( CAVCO ) and Canada Revenue Agency ( CRA ).
For the CPTC program, CAVCO is responsible for issuing the Canadian film or video production certificate and the certificate of completion for a Canadian film or video production. For the PSTC program, CAVCO is responsible for issuing the accredited film or video production certificate for an accredited production.
CRA is responsible for reviewing CPTC and PSTC claims, assessing corporate income tax returns, and issuing timely refund cheques for the tax credit programs.
CRA and CAVCO jointly promote the tax-based incentives and help claimants as necessary.
The first step to get a tax credit under either program is to get the appropriate certificate from CAVCO . For the CPTC program, you have to get a Canadian film or video production certificate. For the PSTC program, you have to get an accredited film or video production certificate.
The next step is to attach the appropriate certificate, or a copy, and Form T1131, Canadian Film or Video Production Tax Credit, or Form T1177, Film or Video Production Services Tax Credit, to the front of a completed T2 Corporation Income Tax Return. This will help CRA to quickly identify your claim.
Send your return and attachments to your tax centre. On receipt, the tax centre will send your claim to the appropriate tax services office. The tax services office will determine if a full review of your claim is necessary. CRA has specially trained staff familiar with the film industry to review claims.
The Film Services Units in the CRA try to complete their work on a claim within 60 days for a complete claim that does not need 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.