Film or Video Production Services Tax Credit
The Film or Video Production Services Tax Credit (PSTC) provides eligible production corporations with a tax credit at a rate of 16 per cent of the qualified Canadian labour expenditures incurred in respect of an accredited production.
Co-administered by the Canadian Audio-Visual Certification Office and the Canada Revenue Agency, the PSTC is designed to enhance Canada as a location of choice for film and video productions employing Canadians, as well as to strengthen the industry and secure investment.
Offered by Canadian Heritage and the Canada Revenue Agency
Amount
Refundable tax credit of 16% of the qualified Canadian labour expenditure incurred for the accredited production; no cap on the amount of PSTC per production
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Who can apply
To be eligible for the PSTC, a production corporation must be:
- a taxable Canadian corporation or a foreign-owned corporation;
- engaged primarily (more than 50%), through a permanent establishment in Canada, in the activities of a film or video production business, or a film or video production services business; and
- the owner of the copyright in the accredited production, throughout the period during which the production is produced in Canada (or have contracted directly with the copyright owner of the production, to provide services for the production).
For a production to be eligible under the PSTC program, it must meet all requirements set out below; each is further described in the noted sections of this guide:
- The corporation applying for the PSTC must be an eligible production corporation. (s. 2.01)
- The production must meet a prescribed cost minimum requirement. (s. 4.03)
- The production must not fall under any of the excluded genre categories. (s. 4.02)
The CRA is charged with the legislative requirement of determining if the corporation claiming the PSTC is an eligible production corporation throughout the taxation year in which production occurs. It must be a taxable Canadian corporation or a foreign-owned corporation, the activities of which in the year 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. "Primarily" is generally determined to mean more than 50%.
It is important to note that the corporation's primary activity must be in relation to the production of "films or videos" or the provision of "film or video production services". If the business of a corporation includes other activities such as the distribution of films and videos, it may not be considered an eligible production corporation for the PSTC. Thus, a corporation may be denied the tax credit by reason of its activities in the year. Production companies should seek to ensure that they are eligible for the PSTC program by contacting their regional Film Services Unit of the CRA, in advance of submitting an application to CAVCO.
Note that the eligible production corporation must either own the copyright in the accredited production throughout the period during which the production is produced in Canada, or have contracted directly with the copyright owner of the production to provide production services for the production. Where the copyright owner is an eligible production corporation, it must claim the PSTC.
To qualify as an "accredited production", the film or video production or series must meet the two requirements of Section 9300 of the Regulations: it must meet a prescribed cost minimum and must be an eligible genre.
Note that each episode in a series is treated as an individual production and must qualify with respect to meeting the cost minimum and being an eligible genre.
The cost for a production for the period ending 24 months after principal photography has begun must exceed C$1,000,000, except in the case of a series consisting of two or more episodes or a pilot for such a series. The cost for each episode in a series, which has a running time of less than 30 minutes, must exceed C$100,000 per episode. The cost for episodes with a longer running time must exceed C$200,000 per episode.
About the funding
The Film or Video Production Services Tax Credit (PSTC) is a refundable tax credit designed to encourage the employment of Canadians by a taxable Canadian corporation or a foreign-owned corporation (the "eligible production corporation"), the activities of which in the year are primarily the carrying on, through a permanent establishment in Canada, of a film or video production business or a film or video production services business. In return for hiring Canadian residents to perform work in Canada, the corporation may be entitled to a credit against taxes payable in Canada.
The PSTC is available at a rate of 16% of the "qualified Canadian labour expenditure" incurred by an eligible production corporation for services provided in Canada by Canadian residents or taxable Canadian corporations (for amounts paid to employees who are Canadian residents) for the production of the accredited production. The qualified Canadian labour expenditure for a production includes all amounts which are "Canadian labour expenditures" less assistance received (such as other provincial tax credits) for these expenditures. There is no cap on the amount of PSTC which can be received for a production. The PSTC is not available where a production has received the Canadian Film or Video Production Tax Credit, under section 125.4 of the Act.
Any PSTC receivable by a corporation for a particular year will be reduced by any other taxes owing by the corporation, including corporate income tax, payroll source deductions and Goods and Services Tax/Harmonized Sales Tax (GST/HST). Where there is a surplus credit, a refund cheque will be issued in this amount.
The first step in determining the qualified Canadian labour expenditure of a corporation is to determine the amount of "Canadian labour expenditure" incurred. To qualify as a Canadian labour expenditure, an amount incurred by an eligible production corporation must be:
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- a) reasonable in the circumstances;
- b) directly attributable to the production;
- c) incurred after October 1997;
- d) incurred for the stages of production from the final script stage to the end of the post-production stage;
- e) paid in the year or within 60 days after the end of the year;
- f) paid to persons who were resident in Canada at the time the payments were made; and
- g) paid for services provided in Canada.
5.02 Types of Canadian Labour Expenditure
The total Canadian labour expenditure for an eligible production corporation is the total of the following three amounts:
- Salary or wages paid to employees of the corporation;
- Remuneration, other than salary or wages, paid to a person or partnership; and
- Reimbursement by a wholly-owned corporation to its parent.
The Act provides a specific rule governing the eligibility of Canadian labour expenditures of a corporation incurred during the post-production stage. Eligible production corporations may only include those services that are rendered by a person who performs a function during post-production that is listed in paragraph 125.5(2)(b) of the Act.
Similar programs
| Program | Type | Amount | Status |
|---|---|---|---|
| Canadian Film or Video Production Tax Credit (CPTC) | Tax Credit | Fully refundable tax credit at 25% of the qualified labour expenditure (labour capped at 60% of total production cost net of assistance), so a maximum of 15% of the total cost of production net of assistance, per production | Open |
| Canadian Journalism Labour Tax Credit | Tax Credit | Refundable tax credit of 35% (January 1, 2023 to December 31, 2026 | Open |
| Livestock Tax Deferral Provision | Tax Credit | Where the breeding herd has been reduced by at least 15%, but less than 30%, 30% of income from net sales can be deferred | Open |
