Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)) (2024)

Marginal note:Definitions

  • 125.5(1)The definitions in this subsection apply in this section.

    accredited film or video production certificate

    accredited film or video production certificate, in respect of a film or video production, means a certificate issued by the Minister of Canadian Heritage certifying that the production is an accredited production. (certificat de production cinématographique ou magnétoscopique agréée)

    accredited production

    accredited production has the meaning assigned by regulation. (production agréée)

    assistance

    assistance means an amount, other than an amount deemed under subsection 125.5(3) to have been paid, that would be included under paragraph 12(1)(x) in computing the income of a taxpayer for any taxation year if that paragraph were read without reference to subparagraphs 12(1)(x)(v) to 12(1)(x)(vii). (montant d’aide)

    Canadian labour expenditure

    Canadian labour expenditure of a corporation for a taxation year in respect of an accredited production means, in the case of a corporation that is not an eligible production corporation in respect of the production for the year, nil, and in any other case, subject to subsection 125.5(2), the total of the following amounts in respect of the production to the extent that they are reasonable in the circumstances:

    • (a)the salary or wages directly attributable to the production that are incurred by the corporation after October 1997, and in the year or the preceding taxation year, and that relate to services rendered in Canada for the stages of production of the production, from the final script stage to the end of the post-production stage, and paid by it in the year or within 60 days after the end of the year to employees of the corporation who were resident in Canada at the time the payments were made (other than amounts incurred in that preceding year that were paid within 60 days after the end of that preceding year),

    • (b)that portion of the remuneration (other than salary or wages and other than remuneration that relates to services rendered in the preceding taxation year and that was paid within 60 days after the end of that preceding year) that is directly attributable to the production, that relates to services rendered in Canada after October 1997 and in the year, or that preceding year, to the corporation for the stages of production of the production, from the final script stage to the end of the post-production stage, and that is paid by it in the year or within 60 days after the end of the year to a person or a partnership, that carries on a business in Canada through a permanent establishment (as defined by regulation), and that is

      • (i)an individual resident in Canada at the time the amount is paid and who is not an employee of the corporation, to the extent that the amount paid

        • (A)is attributable to services personally rendered by the individual in Canada in respect of the accredited production, or

        • (B)is attributable to and does not exceed the salary or wages paid by the individual to the individual’s employees at a time when they were resident in Canada for personally rendering services in Canada in respect of the accredited production,

      • (ii)another corporation that is a taxable Canadian corporation, to the extent that the amount paid is attributable to and does not exceed the salary or wages paid to the other corporation’s employees at a time when they were resident in Canada for personally rendering services in Canada in respect of the accredited production,

      • (iii)another corporation that is a taxable Canadian corporation, all the issued and outstanding shares of the capital stock of which (except directors’ qualifying shares) belong to an individual who was resident in Canada and the activities of which consist principally of the provision of the individual’s services, to the extent that the amount paid is attributable to services rendered personally in Canada by the individual in respect of the accredited production, or

      • (iv)a partnership, to the extent that the amount paid

        • (A)is attributable to services personally rendered in respect of the accredited production by an individual who is resident in Canada and who is a member of the partnership, or

        • (B)is attributable to and does not exceed the salary or wages paid by the partnership to its employees at a time when they were resident in Canada for personally rendering services in Canada in respect of the accredited production, and

    • (c)where

      the reimbursement made by the corporation in the year, or within 60 days after the end of the year, of an expenditure that was incurred by the parent in a particular taxation year of the parent in respect of the production and that would be included in the Canadian labour expenditure of the corporation in respect of the production for the particular taxation year because of paragraph (a) or (b) if

      • (iii)the corporation had had such a particular taxation year, and

      • (iv)the expenditure were incurred by the corporation for the same purpose as it was incurred by the parent and were paid at the same time and to the same person or partnership as it was paid by the parent. (dépense de main-d’oeuvre au Canada)

    eligible production corporation

    eligible production corporation, in respect of an accredited production for a taxation year, means a corporation, the activities of which in the year in Canada are primarily the carrying on through a permanent establishment (as defined by regulation) in Canada of a film or video production business or a film or video production services business and that

    • (a)owns the copyright in the accredited production throughout the period during which the production is produced in Canada, or

    • (b)has contracted directly with the owner of the copyright in the accredited production to provide production services in respect of the production, where the owner of the copyright is not an eligible production corporation in respect of the production,except a corporation that is, at any time in the year,

    • (c)a person all or part of whose taxable income is exempt from tax under this Part,

    • (d)controlled directly or indirectly in any manner whatever by one or more persons all or part of whose taxable income is exempt from tax under this Part, or

    • (e)prescribed to be a labour-sponsored venture capital corporation for the purpose of section 127.4. (société de production admissible)

    qualified Canadian labour expenditure

    qualified Canadian labour expenditure of an eligible production corporation for a taxation year in respect of an accredited production means the amount, if any, by which

    • (a)the total of all amounts each of which is the corporation’s Canadian labour expenditure for the year or a preceding taxation year

    exceeds the aggregate of

    • (b)the total of all amounts, each of which is an amount of assistance that can reasonably be considered to be in respect of amounts included in the total determined under paragraph (a) in respect of the corporation for the year that, at the time of filing its return of income for the year, the corporation or any other person or partnership has received, is entitled to receive or can reasonably be expected to receive, that has not been repaid before that time pursuant to a legal obligation to do so (and that does not otherwise reduce that expenditure),

    • (c)the total of all amounts, each of which is the qualified Canadian labour expenditure of the corporation in respect of the accredited production for a preceding taxation year before the end of which the principal filming or taping of the production began, and

    • (d)where the corporation is a parent, the total of all amounts each of which is included in the total determined under paragraph (a) in respect of the corporation for the year and is the subject of an agreement in respect of the accredited production referred to in paragraph (c) of the definition Canadian labour expenditure between the corporation and its subsidiary wholly-owned corporation. (dépense de main-d’oeuvre admissible au Canada)

    salary or wages

    salary or wages does not include an amount described in section 7 or an amount determined by reference to profits or revenues. (traitement ou salaire)

  • Marginal note:Rules governing Canadian labour expenditure of a corporation

    (2)For the purpose of the definition Canadian labour expenditure in subsection 125.5(1),

    • (a)remuneration does not include remuneration determined by reference to profits or revenues;

    • (b)services referred to in paragraph (b) of that definition that relate to the post-production stage of the accredited production include only the services that are rendered at that stage by a person who performs the duties of animation cameraman, assistant colourist, assistant mixer, assistant sound-effects technician, boom operator, colourist, computer graphics designer, cutter, developing technician, director of post production, dubbing technician, encoding technician, inspection technician — clean up, mixer, optical effects technician, picture editor, printing technician, projectionist, recording technician, senior editor, sound editor, sound-effects technician, special effects editor, subtitle technician, timer, video-film recorder operator, videotape operator or by a person who performs a prescribed duty;

    • (c)that definition does not apply to an amount to which section 37 applies; and

    • (d)for greater certainty, that definition does not apply to an amount that is not a production cost including an amount in respect of advertising, marketing, promotion, market research or an amount related in any way to another film or video production.

  • Marginal note:Tax credit

    (3)An eligible production corporation in respect of an accredited production for a taxation year is deemed to have paid on its balance-due day for the year an amount on account of its tax payable under this Part for the year equal to 16% of its qualified Canadian labour expenditure for the year in respect of the production, if

    • (a)the corporation files with its return of income for the year

      • (i)a prescribed form containing prescribed information in respect of the production,

      • (ii)an accredited film or video production certificate in respect of the production, and

      • (iii)each other document prescribed in respect of the production; and

    • (b)the principal filming or taping of the production began before the end of the year.

  • Marginal note:Canadian film or video production

    (4)Subsection 125.5(3) does not apply in respect of a production in respect of which an amount is deemed to have been paid under subsection 125.4(3).

  • Marginal note:When assistance received

    (5)For the purposes of this Act other than this section, and for greater certainty, the amount that a corporation is deemed under subsection 125.5(3) to have paid for a taxation year is assistance received by the corporation from a government immediately before the end of the year.

  • Marginal note:Revocation of certificate

    (6)An accredited film or video production certificate in respect of an accredited production may be revoked by the Minister of Canadian Heritage where

    • (a)an omission or incorrect statement was made for the purpose of obtaining the certificate, or

    • (b)the production is not an accredited production,

    and, for the purpose of subparagraph 125.5(3)(a)(ii), a certificate that has been revoked is deemed never to have been issued.

  • [NOTE: Application provisions are not included in the consolidated text
  • see relevant amending Acts and regulations.]
  • 1998, c. 19, s. 145.1
  • 2001, c. 17, s. 116
  • 2003, c. 15, s. 80

I am an expert in the field of film and video production tax credits, particularly in the context of Canadian regulations. My expertise extends to understanding the intricate details of the provisions, definitions, and criteria involved in accrediting film or video productions for tax benefits.

In the provided article, several key concepts are discussed, and I'll break down each one:

  1. Accredited Film or Video Production Certificate:

    • Definition: A certificate issued by the Minister of Canadian Heritage certifying that a production is accredited.
  2. Accredited Production:

    • Definition: The meaning is assigned by regulation, and the specific criteria for accreditation are likely detailed in those regulations.
  3. Assistance:

    • Definition: Refers to an amount (other than a deemed amount) that would be included in computing the income of a taxpayer for a taxation year, specifically related to the film or video production.
  4. Canadian Labour Expenditure:

    • Definition: The total amount spent by a corporation for a taxation year in respect of an accredited production, particularly related to salaries, wages, and reimbursements.
  5. Eligible Production Corporation:

    • Definition: In respect of an accredited production, a corporation primarily engaged in film or video production business in Canada and meeting specific criteria regarding copyright ownership, contract services, and exemptions.
  6. Qualified Canadian Labour Expenditure:

    • Definition: The amount, if any, by which the total Canadian labour expenditure exceeds certain deductions, including assistance received and expenditures from preceding years.
  7. Salary or Wages:

    • Definition: Excludes certain types of amounts in the context of film and video production.
  8. Rules Governing Canadian Labour Expenditure:

    • Specifies rules related to remuneration, services in post-production, applicability to section 37, and exclusions.
  9. Tax Credit:

    • An eligible production corporation is deemed to have paid an amount on account of its tax payable for the year based on its qualified Canadian labour expenditure.
  10. Canadian Film or Video Production:

    • Certain provisions and subsections apply or do not apply based on whether an amount is deemed to have been paid under subsection 125.4(3).
  11. Assistance Received:

    • For tax purposes, the amount deemed to have been paid is considered assistance received by the corporation from a government.
  12. Revocation of Certificate:

    • The Minister of Canadian Heritage has the authority to revoke an accredited film or video production certificate under specific circumstances.

These definitions and provisions form a comprehensive framework for incentivizing and regulating film and video production through tax credits in Canada. If you have specific questions or need further clarification on any of these concepts, feel free to ask.

Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)) (2024)

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