Ontario Production Services Tax Credit
Please note: Effective April 1, 2017 there is a new administration fee structure for tax credits which will offset the costs of administering the program. The OPSTC administration fee will be calculated as 0.15% of eligible expenditures for the application. There is a minimum fee of $5,000 per application and a maximum fee of $10,000 per application.
As previously announced, effective January 1, 2017 there is an additional filing fee of $100 applied to applications for Certificates of Eligibility received more than 24 months after the end of the first fiscal year in which principal photography began. Where a year-end has not been included in the application, the additional fee will be applied to applications submitted more than 24 months after the start of principal photography. As well, there is a fee of $100 for each Amended Certificates requested.
What Is It?
The Ontario Production Services Tax Credit (OPSTC) is a refundable tax credit based upon eligible Ontario labour and other production expenditures incurred by a qualifying corporation with respect to an eligible film or television production.
The OPSTC requirements are generally “harmonized” with the federal Film or Video Production Services Tax Credit administered by the Canadian Audio Visual Certification Office of the Department of Canadian Heritage (CAVCO) and Canada Revenue Agency (CRA). For information on the federal credit contact CAVCO at 1-888-433-2200 or CAVCO.
How Much Is The Tax Credit?
The OPSTC is calculated as 21.5% of all qualifying production expenditures incurred in Ontario. A qualifying corporation’s Ontario labour expenditures, including Ontario labour paid under an eligible service contract, must be at least 25% of the qualifying production expenditures claimed for taxation years that commence after April 23, 2015. The OPSTC can be combined with the federal Film or Video Production Services Tax Credit of 16% of qualified Canadian labour expenditures. There are no per-project or annual corporate tax credit limits.
Who Is Eligible?
A qualifying corporation is a Canadian or foreign-owned corporation which carries on a film or video production, or production services business, at a permanent establishment in Ontario, files an Ontario corporate tax return and owns the copyright in the eligible production, or contracts directly with the copyright owner to provide production services to an eligible production.
What Types of Production Are Eligible?
An eligible production must exceed a minimum production cost and must not be in an excluded genre. In addition, a production that receives an Ontario Film and Television Tax Credit (OFTTC) is not eligible for an OPSTC.
The production cost must exceed $1 million (Cdn.), except in the case of a series consisting of two or more episodes, or a pilot for such a series. In the case of a series or pilot, the cost for each episode which has a running time of less than thirty minutes must exceed $100,000 (Cdn.) and the cost for episodes with a longer running time must exceed $200,000 (Cdn.).
The production must not be in an excluded genre: news, current events or public affairs programming; a program that includes weather or market reports; talk shows; productions in the nature of a game, questionnaire or contest; a sports event or activity; a gala presentation or awards show; a production that solicits funds; reality television; pornography; advertising; or a production produced primarily for industrial, corporate or institutional purposes; nor must it be a production for which public financial support would be contrary to public policy.
What Expenditures Are Eligible?
Qualifying production expenditures are incurred in Ontario and include eligible wages, eligible service contracts and eligible tangible property expenditures, such as equipment, studio rentals and computer software.
Eligible production expenditures are expenditures paid to companies and partnerships which have a permanent establishment in Ontario and to Ontario-based individuals (individuals resident in Ontario at the end of the calendar year prior to the commencement of principal photography and at the time the payments were made).
The expenditures must also be reasonable in the circumstances, directly attributable to the production, and incurred for the stages of production after the final script stage to the end of postproduction. Expenditures must be incurred in the taxation year, paid in the taxation year or within 60 days after the end of the taxation year, and paid for services provided in Ontario.
How Is The Credit Administered?
The OPSTC is jointly administered by the Ontario Media Development Corporation (OMDC) - an agency of the Ministry of Tourism, Culture and Sport - and the Canada Revenue Agency. Application is made to OMDC for a certificate of eligibility, which the production company files with the Canada Revenue Agency together with its tax return in order to claim the OPSTC. The amount of the credit, net of any Ontario taxes owing, will be paid to the qualifying corporation. If the qualifying corporation does not owe any taxes, the full amount will be paid out.
*PLEASE NOTE: CANADA REVENUE AGENCY (CRA) ADMINISTERS BOTH FEDERAL AND ONTARIO CORPORATE TAXES. THE CRA IS THE FIRST POINT OF CONTACT FOR ALL CORPORATE TAX ENQUIRIES (1 800 959-5525).
Note: This sheet is a general guide and may not be relied upon in order to determine eligibility or the amount of an anticipated credit. Please consult the OPSTC legislation and regulation for further details.