Canada and Ontario have long been recognized for their vibrant film industries, offering a wealth of opportunities for filmmakers. To support this creative sector, both federal and provincial governments provide various tax credits, grants, and subsidies to ease the financial burden on film producers. This blog will delve into the tax credits available, the government grants, the accounting methods used during film production, and the necessary tax forms to be completed.
*** NOTE: Tax credits, grants, and subsidies are subject to constant changes therefore please consult with your accountant prior to budgeting for your project. If you don’t have a charismatic accountant with movie star type personality who cares about your financial well-being, then please feel free to reach out. ***
Government Grants for Feature Film Production
Canada Media Fund (CMF)
The Canada Media Fund supports the creation of content across various platforms, including feature films. The CMF provides financial assistance to Canadian film producers through various funding streams:
- Experimental Stream: Supports projects that innovate in terms of content, form, or delivery. Grants can cover up to 75% of eligible project costs.
- Convergent Stream: Supports television and digital media content. Grants can cover up to 50% of eligible project costs.
Telefilm Canada
Telefilm Canada is a crown corporation that provides funding to Canadian film projects to promote the country’s cultural heritage and economic growth. Telefilm offers several funding programs:
- Production Program: Offers financial support for feature-length films. Funding covers up to 49% of the total production budget, to a maximum of $4 million.
- Talent to Watch Program: Supports emerging filmmakers with grants up to $125,000 for micro-budget productions.
Tax Credits Available for Feature Film Production
Federal Tax Credits
The Canadian Audio-Visual Certification Office (CAVCO) administers federal tax credits for film and television production. Key federal tax credits include:
- Canadian Film or Video Production Tax Credit (CPTC): Provides a refundable tax credit of 25% on qualified labour expenditures for Canadian content productions.
- Film or Video Production Services Tax Credit (PSTC): Offers a refundable tax credit of 16% on qualified Canadian labour expenditures for foreign or domestic productions.
Ontario Tax Credits
Ontario offers several provincial tax credits to support film production:
- Ontario Film and Television Tax Credit (OFTTC): Provides a refundable tax credit of 35% on qualified labour expenditures for Ontario-based productions. An additional 10% regional bonus is available for productions shot outside the Greater Toronto Area.
- Ontario Production Services Tax Credit (OPSTC): Offers a refundable tax credit of 21.5% on qualified production expenditures for both foreign and domestic productions.
- Ontario Computer Animation and Special Effects Tax Credit (OCASE): Provides a refundable tax credit of 18% on eligible labour expenditures for digital animation and visual effects work performed in Ontario.
Subsidies for Film Producers in Canada and Ontario
In addition to grants and tax credits, various subsidies are available to film producers:
- Regional Development Agencies: Agencies such as Western Economic
Diversification Canada (WD) and the Atlantic Canada Opportunities Agency
(ACOA) offer financial assistance for film production in their respective regions. - Municipal Incentives: Many municipalities in Ontario provide location incentives and fee waivers to attract film productions to their areas.
Accounting Methods Used During Film Production
Accounting in film production involves tracking expenses and revenues to ensure the project stays within budget. The most commonly used accounting methods include:
- Cash Accounting: Records income and expenses when they are actually
received or paid. This method is simple but may not accurately reflect the
project’s financial status. - Accrual Accounting: Records income and expenses when they are earned or incurred, regardless of when the money changes hands. This method offers a more accurate picture of the project’s financial health.
Tax Forms and Their Purposes
Film producers must complete various tax forms to claim tax credits and comply with regulatory requirements. Key forms include:
- T1 General Income Tax and Benefit Return: Used by individuals to file their personal income tax returns. Film producers who are sole proprietors must report their production income on this form.
- T2 Corporation Income Tax Return: Used by corporations to file their income tax returns. Film production companies must report their income and claim tax credits on this form.
- Form T1131 (Cash rebates received from a government, municipality, or other public authority): Used to report any cash rebates received, which can affect the calculation of the production’s tax credits.
- Form T2203 (Provincial and Territorial Taxes for Multiple Jurisdictions): Used to calculate provincial and territorial taxes if the production is carried out in multiple jurisdictions.
- Schedule 367 (Film or Video Production Tax Credit): Used to claim the federal CPTC. This form details the production’s labour expenditures and other relevant costs.
- Form CT23 (Corporation Tax Return): Required for Ontario-based productions to claim the OFTTC. This form includes the calculation of the eligible labour expenditures and the tax credit amount.
In conclusion, the Canadian and Ontario governments offer a variety of tax credits, grants, and subsidies to support film producers. Understanding these financial aids, the accounting methods used in film production, and the necessary tax forms can significantly ease the financial burden on filmmakers and help them bring their creative visions to life. Happy filmmaking!