Frequently Asked Questions
What is a film tax credit / rebate?
There are tax credits for several industries including film and television. A ‘tax credit’ is as the name implies; a credit towards taxes owing. In theory, if you owe $1000 in taxes and your tax credit claim is valued at $1000, then the balance owing would therefore be zero.
The tax credits are based on qualifying labour and/or expenses, depending on which tax credit program the production is applying for.
Since most films are held by a single purpose corporation and no revenue has occurred at the time of applying, any tax credit claim would be refundable to the corporation once the corporation has filed its tax return with the CRA.
How long does it take to get back my film tax credit refund?
This will depend entirely on how backed up Ontario Creates and/or the CAVCO offices are.
Let’s assume that the production has elected to submit after the end of principal photography. Once an application is submitted it can take upwards of 4 months for an agent to review the file. At which time, the agent may request additional information to support the application.
Once the agent is satisfied and receives approval from a supervisor; a certificate of eligibly and letter of confirmation (provincially) and Part A/B (federally) will be issued to the production. These documents (also known as certificates) will need to be forwarded to your accountant who will include them when filing taxes for the corporation.
You’re almost there.
The Canada Revenue Agency (CRA) can take as long as 60 days to process the return. Assuming there is no taxes owing; the CRA will issue a refund for the full amount of the tax credit estimates.
It should be noted that the CRA may elect to audit the file despite being approved by both Ontario Creates and CAVCO. This can add more time for processing.
As you can see, the process from start to finish can take as much as 6 months (if not longer).
One way to expedite the process is to submit your application prior to the end of production. Doing this places the production in cue much sooner and avoids longer wait periods. However, in order to accomplish this, the production must have certain elements in place in order to qualify.
Ultimately there is no exact time frame as each production is at the mercy of the Government and should prepare themselves accordingly.
Do I have to wait until my film is complete to get the tax credit refund?
While it is true that tax credit refunds are only issued once certificates have been filed with the qualifying corporation’s tax return, most savvy Producers use the tax credit estimate to bankroll their production in advance.
Many financial institutions and private lenders will loan against the estimate to help Producers make up a large portion of the production’s budget.
The process can be daunting but doesn’t have to be. Speak to us before approaching a lender to ensure a smooth application experience and while you’re at it, sign up for our newsletter and receive a starter checklist for film tax credit loans.
How much can I expect to get back?
There are two components to a film and TV tax credit here in Canada; a Provincial and a Federal.
The Provincial offers three programs:
i) the OFTTC (Ontario Film and Television Tax Credit) which returns 35% on all eligible labour. In addition, qualifying productions can also claim a regional bonus of 10% and an enhancement credit of an additional 5% for first time producers (on the first $240,000) or
ii) the OPSTC (Ontario Production Services Tax Credit) which returns 21.5% on all qualifying expenses (both labour and purchases and rentals) and
iii) the OCASE (Ontario Computer Animation & Special Effects Tax Credit) which returns 18% of all qualifying VFX and animation labour.
The Federal offers two programs:
i) the CPTC (Canadian Film or Video Production Tax Credit) which returns 25% of all qualifying labour or
ii) the PSTC (the Film or Video Production Services Tax Credit) which returns 16% of all qualifying labour.
Provincial and Federal tax credits can be combined but not at face value as assistance from one will discount the other.
Let’s look at a typical example.
An Ontario Production company makes a film that qualifies for Canadian Content for $1,000,000 of which $600,000 is spent on labour, assuming the production exercises the 35% (OFTTC) program, the provincial tax credit would be $210,000. Therefore the net cost of of the production less assistance would be $790,000.
With me so far?
This next part is slightly tricky. The production would now use this figure of $790,000 and apply the CPTC program (which allows for a maximum of 60%) totalling $474,000, times by 25%, which gives us a total of $118,500.
When we add $210,000 + $118,500 it gives us a total of $328,500
This is but one example giving the production back almost 33% of its spend.
Not bad right?
Contact us for a tax credit estimate.
What do you charge for your service?
We pride ourselves on working within your budget and never bill by the hour. We will design a flat fee plan that will pay for itself through our expert advice.
We at High Star Entertainment understand that most independent filmmakers overlook external costs that pop up after all of the production budget has been depleted.
Once you have scheduled a call, one of our administrators will ask you a series of questions to help us understand how much work will be required.
Contact us today for a complimentary call.
Doesn’t my accountant take care of everything?
While your accountant can take care of some of what is required, such as corporate returns and creating a final cost report, it is highly recommended to seek the services of a professional with expertise in the film and television industry.
After all, you wouldn’t hire a real estate lawyer to close a deal on a Movie Star would you?
There are specifics within the film and television industry that are outside of a regular accountants wheel house.
We can work with your accountant (or recommend several to choose from) and take care of all the planning and administration that comes with financing and applying for tax credit at a fraction of an accountant's hourly rate.
Schedule a complimentary call with us and we’d be happy to help design a road map based on your production.