Ontario Film & Television 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 OFTTC administration fee will be calculated as 0.15% of eligible expenditures for the application. There is a minimum fee of $500 per application and a maximum 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 Certificate requested.
What Is It?
The OFTTC is a refundable tax credit based upon eligible Ontario labour expenditures incurred by a qualifying production company with respect to an eligible Ontario production. The OFTTC is generally “harmonized” with the Canadian Film or Video Production Tax Credit.
How Much Is The Tax Credit?
The OFTTC is generally calculated as 35% of the eligible Ontario labour expenditures incurred by a qualifying production company with respect to an eligible Ontario production. An enhanced credit rate of 40% on the first $240,000 of qualifying labour expenditure is available for first-time producers. Productions that are shot in Ontario entirely outside of the Greater Toronto Area (GTA), or that have at least five location days in Ontario (or in the case of a television series, the number of location days is at least equal to the number of episodes), and at least 85% of the location days in Ontario are outside the GTA, receive a 10% bonus on all Ontario labour expenditures incurred for the production. Wholly animated productions which create at least 85% of key animation in Ontario outside of the GTA qualify for the regional bonus.
Who Is Eligible?
A qualifying production company is a Canadian corporation which is Canadian-controlled, has a permanent establishment in Ontario, and files an Ontario corporate tax return. In addition, the individual producer of the production must have been an Ontario resident for tax purposes at the end of both of the two calendar years prior to commencement of principal photography.
What Types of Production Are Eligible?
An eligible Ontario production is a production which:
- has six Canadian content points (unless it is an official treaty co-production)
- is predominantly shot and posted in Ontario (Note: There are exceptions for documentaries, interprovincial co-productions and international treaty co-productions)
- spends at least 75% of its total final costs on Ontario expenditures
- if for television, is suitable for a minimum 30-minute time slot (except children’s programming)
- has an agreement with an Ontario-based distributor or a Canadian broadcaster to be shown in Ontario within two years of completion (broadcast must occur between 7:00 p.m. and 11:00 p.m., except for children’s programming)
- is not in an excluded genre (such as news or current affairs, talk shows, game shows, sports shows, awards shows, fundraising shows, reality television)
What Expenditures Are Eligible?
Eligible Ontario labour expenditures consist of:
- Salaries and wages paid to Ontario residents;
- Remuneration paid to:
a) corporations that are personal service companies subject to tax in Ontario for the services of an Ontario resident,
b) sole proprietors or freelancers subject to tax in Ontario,
c) partnerships, for the services of a partner subject to tax in Ontario, and
d) taxable Canadian corporations with a permanent establishment in Ontario for the services of their employee(s) who are Ontario residents; and
- 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.
Ontario residents are individuals who were resident in Ontario for tax purposes at the end of the calendar year prior to commencement of principal photography. The labour expenditures of a corporation for the purposes of the OFTTC must be reasonable and must be included in the cost of the production.
Labour expenditures must not only be incurred but must also be paid in the taxation year (or within 60 days after the end of the taxation year) for which they are being claimed.
Eligible labour expenditures include those incurred from the production commencement time (PCT) until the end of post-production. Productions can claim eligible labour expenditures as early as two years prior to the commencement of principal photography. This may include labour expenditures for script development.
How to Determine Production Commencement Time (PCT)?
To determine the PCT date, the applicant must take the earlier of a) or b):
a) the commencement of principal photography (PP);
b) the latest of:
i) the date the first labour expenses for script material were incurred by the applicant (or their parent corporation);
ii) the date the applicant (or their parent corporation) acquired the property on which the production is based;
iii) two years before commencement of principal photography
How Is The Credit Administered?
The OFTTC 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 the 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 OFTTC. 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 FOR TAXATION YEARS ENDING AFTER DECEMBER 31, 2008. 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 OFTTC legislation and regulation for further details.