The Canadian Look, Canadian Films and Canadian Tax Incentives

Peter Howell writes in the Toronto Star about how “Canadian films don’t have to ‘look Canadian’ any more” – describing the aesthetic improvement resulting from increased production budgets.  On the one hand, Howell notes, Canadian locations, particularly films shot in Canadian urban centres, seem increasingly capable of functioning as “every place and anyplace”.  On the other hand, some directors are increasingly willing to expressly set their movies in identifiably Canadian locales (Atom Egoyan’s recent work Chloe is set in Toronto).

One item which Howell touches on warrants further attention:

[Kari] Skogland presents a pragmatic truth that all filmmakers must accept, Canadian or not: financing often determines your setting. Tax incentives are often doled out on the proviso that a film be shot in a certain location…

The bolded portion deserves to be unpacked a little.  When financing a Canadian film, there are generally two different types of “tax incentives” a producer can try to obtain: tax credits, which are payments made by the government (federal and/or provincial) on the basis of how much money has been spent on paying “production” or “labour” costs to Canadians in a given jurisdiction (eg if you film a movie in Toronto, you can qualify for federal tax credits and for Ontario tax credits); and “direct incentives”, such as equity investments or (recoupable) grants made by a government agency such as Telefilm Canada or the Canada Media Fund.  (Heenan Blaikie’s publication Producing in Canada, available here, offers a comprehensive guide to the various types of incentives available.)

Tax credits, whether the somewhat confusingly named “Canadian content” credits (which are for projects which include a sufficient number of individuals who are Canadian working in creative roles, such as directors, screenwriters and actors, as measured by the Canadian Audio-Visual Certification Office (CAVCO)) or (the less lucrative) “production services” credits (which are for projects shot in Canada, but which do not have the required Canadian nationals fulfilling the required creative roles), are not required to be set in Canada or to be “about” Canada or Canadians.  A sci-fi movie such as Resident Evil: Apocalypse, which was shot in Toronto, can qualify to obtain tax credits just as Passchendaele can.

Direct government incentives, on the other hand, where the government is effectively using taxpayer money to directly invest in a movie, generally do require that a project, in addition to qualifying as “Canadian content” due to the nationality of the people working on it, have some kind of “Canadian content” in respect of the story itself.  Thus, the Canada Feature Film Fund guidelines state that, when considering which projects to invest in, they will prioritize projects which

“present a distinctly Canadian point of view (for example: Canadian characters, setting, themes, talent and stories reflecting Canadian society and cultural diversity)”

The basic requirement is that a project be filmed in Canada and make payments to Canadian residents – but that bare minimum entitles a producer only to receive the bare minimum of available incentives (the “production services” tax credits).  The more “Canadian” a project is, in terms of Canadians working in creative roles, and in terms of being “about” Canada, the more incentives for which it can potentially qualify.

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Bob Tarantino

About Bob Tarantino

Bob Tarantino is Counsel at Dentons Canada LLP and focuses his practice on the interface between the entertainment industries and intellectual property law, with an emphasis on film and television production, financing, licensing, distribution, and IP acquisition and protection. His clients range from artists and independent producers to Canadian distributors and foreign studios and financiers at every stage of the creative process, from development to delivery and exploitation.

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