OFTTC Frequently Asked Questions
*The February 2017 version of the FAQs has been updated:
- to advise of the new tax credit administration fee structure, effective April1, 2017; and
- to confirm there is no change to the treatment of talk shows.
As of February 2017
In the case of an inter-provincial co-production, the OFTTC requirements that 85% of the shooting/key animation take place in Ontario and that 95% of the cost of post-production be carried out in Ontario are waived. The production must still meet all the other OFTTC requirements.
There must be a co-production agreement in place between the Ontario qualifying corporation and a Canadian corporation from another province. In addition, there must be an individual Ontario producer and a producer who is resident in the other provincial jurisdiction who perform producer functions on behalf of each of the coproducing companies. At least 20% of the costs of the production must be borne by the Ontario producer.
The OFTTC is based on Ontario expenditures, so it is preferable to have separate corporations in each jurisdiction. Although a jointly-owned production company is eligible for the OFTTC, it may be more difficult to identify the Ontario co-producer’s costs with such a structure. It is therefore not recommended as a co-production structure since it can be problematic for audit purposes.
Other provinces may have further requirements, so please check with the relevant entities in those jurisdictions.
A production will qualify as a regional Ontario production if:
a) all of the Ontario Principal Photography takes place outside the Greater Toronto Area (City of Toronto, Durham, Halton, Peel and York);
b) where Principal Photography in Ontario is done partly inside the GTA and partly outside the GTA, if:
i) there are at least 5 Ontario location days* (or for a TV series, the number of
Ontario location days at least equals the number of episodes in the production);
ii) at least 85% of those Ontario location days are outside the GTA.
When an applicant is claiming the regional bonus, we will not issue a Certificate of Eligibility until Principal Photography has been completed. The OMDC analyst will take a very close look at the shoot day ratio, and will want to see all call sheets or DPRs. If the production does not have call sheets or DPRs, other items that might also help to prove where shooting took place include: location permits, invoices, etc.
* Ontario location day: is a day on which principal photography for the production is done in Ontario outside a film studio.
A production qualifies for this bonus if:
• the producer does not have more than one previous producer screen credit for a production that was commercially released, or broadcast in prime time; and
• the producer has not participated as a producer on another production which received an OFTTC certificate; and
• the qualifying production company is not controlled directly or indirectly by: an individual with more than one previous producer screen credit for a production that was commercially released or broadcast in prime time; or by someone who has participated as a producer on a production that has received an OFTTC certificate; or by a corporation that has received an OFTTC certificate.
If you would like to apply for the bonus, you should contact us for a First-Time Producer Declaration, which will have to be submitted (along with a c.v.) for every producer on the production, including the executive producers and co-producers.
Only eligible labour incurred on or after the Production Commencement Time (PCT) can be claimed for a production. The PCT is the earlier of a) or b):
a) is the commencement of principal photography;
b) is the latest of the following 3 dates:
i) first script labour expenditure *
ii) rights acquisition **
iii) 2 years prior to principal photography
* The date of first script labour expenditure is the date the applicant production company (or its parent corporation***) first incurs an expenditure for salary, wages or other remuneration for the activities of scriptwriters, that are directly attributable to the development by the company of script material for the production. Script material can include a draft script, original story, narration, outline, synopsis, or treatment, etc. It does not include research.
** The date of rights acquisition is the date the applicant production company (or its parent corporation***) first acquires the property on which the production is based.
*** For the purposes of PCT, ‘parent corporation’ is interpreted to mean a corporation that 100% owns another corporation. If there are two or more shareholders of a corporation, that corporation is considered not to have a parent.
The rule of thumb for fringes is that only those costs that are taxable benefits to the employee can be included as eligible labour expenditures. Items such as vacation pay, retirement contributions and insurance contributions can be taxable benefits if they are included in the gross wages of the employee (and listed on the T4).
In order to receive the OFTTC, a production must have no more than 25% non-Ontario costs. Non-Ontario costs are costs not paid to either Ontario residents or corporations with a permanent establishment in Ontario. Ontario costs are those that are paid to Ontario-based individuals or corporations for goods or services provided by the Ontario-based individuals or corporations in the course of carrying on their businesses at permanent establishments in Ontario.
Non-Ontario costs are not necessarily determined the same way as non-Canadian costs are for the federal credit. For instance, per diems that are spent outside of Ontario are non-Ontario costs unless those amounts were included in the crew agreements for Ontario residents as taxable income. Hotel expenses outside of Ontario are non-Ontario costs, even if the person who stayed in the room is an Ontario resident.
Even if a production company paid an Ontario travel agent to assist in the booking of the hotel room outside of Ontario, this would still be considered a non-Ontario cost as the travel agent is in the business of finding the room and making the connections, but they are not in the business of renting and providing the actual hotel room. The same principle would apply if the production company was using an Ontario travel agent to assist with booking flights or rental cars outside of Ontario. Again, to be considered an Ontario cost, the expenditure must be paid to an Ontario-based individual or corporation for goods or services that that Ontario-based individual or corporation provides in the course of carrying out their business at a fixed place of business in Ontario. Production companies may not insert an Ontario company as a middleman if that company is in a different line of business in order to convert the expenditure into an Ontario cost.
Where travel arrangements for flights are booked online (ie via an airline’s website or on websites such as Expedia.ca) whether these expenditures would be considered as Ontario or non-Ontario costs would be a matter of fact. Questions that production companies should consider: Is the company in the business of providing that specific good or service (ie flight, hotel room, etc) or are they the party that makes the arrangements but payment must be made to a non-Ontario entity for the good or service when you/your crew arrive at your destination? If the company is in the business of providing that specific good or service, are they in fact carrying on their business at a permanent establishment (ie fixed place of business) in Ontario where they provide these goods and services? Does the airline you are purchasing flights from have an office in Ontario?
If a production company is unsure, it should be conservative in its estimates and treat such costs as non-Ontario costs. In the event that the applicant for the OFTTC has treated these types of expenditures as Ontario costs, when OMDC reviews the application, if it appears that considering these expenses as non-Ontario costs would put the production offside (ie the total non-Ontario costs would be more than 25% of the overall final cost), OMDC will consult with CRA on the facts of the case to determine if the costs in each specific fact pattern are Ontario or non-Ontario costs.
Assistance includes grants, subsidies and forgivable loans. These will reduce (‘grind’) your tax credit.
Bona fide loans with a set repayment date, other tax credits, licence fees and equity investments are not considered assistance.
Sponsorships may be considered assistance if there does not appear to be an exchange of benefits (such as cash or goods) at fair market value between the producer and the sponsor.
Labour deferrals reduce the amount of labour that can be claimed for the tax credit. Deferrals for non-labour costs do not.
We will want to see documentation of all the financial contributions to a production, including loans, deferrals and sponsorship amounts.
No, we generally do not want to see these declarations as part of our review. We require crew/cast lists that include the job title and residency address for each person for whom labour is being claimed.
Since January 1, 2011 we are only accepting CAVCO personnel numbers as proof of citizenship/permanent residency status. Applicants are responsible to ensure that any Canadian filling a producer-related or key creative role in their production has obtained a CAVCO personnel number. Applicants are encouraged to put wording to that effect in their contracts with key personnel. Please visit CAVCO’s website for more information on obtaining CAVCO personnel numbers.
A screen credit recognizing financial support from the Ontario Government is available for producers to acknowledge the OFTTC’s contribution to their production. Although it is not required (since tax credit information is considered confidential), a screen credit is certainly a welcome and appropriate way to acknowledge taxpayer support. The Ontario wordmark logo and accompanying guidelines can be downloaded from: Ontario Wordmark
The Canada Revenue Agency (CRA) administers Ontario’s film and media tax credits on behalf of Ontario and does not allow for a tax refund to be assigned to a third party.
The CRA does, however, allow a corporation to redirect its tax refund less any taxes owing to the mailing address of its choice, for example, a financial institution. The name of the payee on the refund cheque, however, will be that of the eligible corporation filing the claim.
If you want the CRA to send your refund cheque to an address other than your regular mailing address, inlcude a letter with your T2 Corporation Tax Return requesting this and ensure that you provide the address. Submit the letter to the taxation centre where you file your T2 Corporation Tax Return. A list of the tax centres is available at http://www.cra-arc.gc.ca/cntct/t2ddr-eng.html.
Talk shows have always been ineligible to receive the OFTTC and this continues to be the case despite recent Federal changes to the Canadian Film or Video Production Tax Credit. The Ministry of Finance issued a bulletin on January 11, 2017, which confirms this treatment of talk shows. See link.
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.
The new tax fee structure will be applied to tax credit applications received on or after April 1, 2017.
The additional filing fee and fee for Amended Certificates are separate from the new fee structure. These fees will be applied to older tax credit applications received on or after January 1, 2017 and requests for Amended Certificates received on or after January 1, 2017
If you have further questions, please contact the phone duty line by e-mail email@example.com, or call us at 416-642-6659.Please leave a detailed message including your name, company, phone number and the file about which you are inquiring. There is a different person on phone duty every day, and he/she will respond to your email or call within one business day.