Production Services Tax Credit Frequently Asked Questions

The following will help answer your questions about the production services tax credit (PSTC).

Can a PSTC be claimed if a Film and Television Tax Credit is being claimed for the same production?

No, only one or the other may be claimed for a single production. Please see the Film and Television Tax Credit for more information.

What does “from the final script stage” mean in the definition of B.C. labour expenditure?

“From the final script stage” means after the final script has been completed.  This is often referred to as the “white draft” of the script.  For the BC Production Services Tax Credit the eligible stages of production are those stages after the end of the final script stage to the end of the post-production stage.

Is there a time limit for applying for an accreditation certificate?

No, there is no time limit for applying for the certificate. However, there is a time limit for claiming the PSTC, and an accreditation certificate is required for the Canada Revenue Agency (CRA) to process the PSTC claim.

Production companies are encouraged to apply for an accreditation certificate as early as possible in the pre-production or production stage. This allows time to correct any items that may put a production offside prior to the start of the production.

Who administers the PSTC?

Creative BC processes the applications for accreditation certificates.

The Canada Revenue Agency (CRA) reviews and audits claims and issues refund cheques where appropriate. If a corporation disagrees with the amount of credit assessed by the CRA, a Notice of Objection should be filed with the CRA within 90 days of the date of the Notice of Assessment.

For more information concerning eligibility, applications and certificates, please contact Creative BC at:

Telephone: 604 736-7997
Fax: 604 736-7290
 

What does the change in the definition of BC–based individual mean?

The definition of B.C.–based individual has been changed for productions with principal photography beginning after February 19, 2008. This change may now permit individuals who were not resident of B.C. in the year prior to the start of principal photography to still have their salary and wages eligible for the film and television tax credits. The revised definition is based on the individual's residency on December 31st of the year preceding the end of the tax year for which a tax credit is being claimed.

Production corporations are still required to gather documentation to support the residency of an individual whose labour is being claimed. In cases where the production is completed in one calendar year and the tax year end falls in the following calendar year, production corporations are not required to gather information from individuals who may no longer be employed with them. Supporting information provided at the start of the production is acceptable in these cases, provided that after reasonable enquiry, the production corporation has no reason to believe the residency status of the individual has changed at the end of the production or calendar year. For example, if a production corporation mails a T4 to an address outside of B.C. or assists the individual in obtaining a temporary work permit in B.C., this would suggest that the individual may be a non B.C.–based individual for the purposes of the film tax credit claim for that taxation year.

Example: A production starts principal photography in April 2008 and wraps production in November 2008. The production corporation's fiscal year end is March 31, 2009. B.C.-based individual would be determined based on residency on December 31, 2008. However, as this date is after the date the production has wrapped, the corporation should obtain residency information at the start of or during the production. The corporation is not required to track residency of their employees or contractors after the completion of the production for the purposes of the B.C. film tax credit programs. In this example, the individual's residency as of December 31, 2007 would apply for existing residents of B.C. In addition, in this example, if an individual moves to B.C. in 2008 and remains a resident of B.C. as of December 31, 2008, their labour would qualify for the B.C. film tax credit programs.

The proof of residency commonly gathered will continue to qualify under the revised rules, for example, resident of B.C. on December 31st in the year prior to principal photography start date. For productions with tax years that straddle December 31st, a corporation would be looking at residency of the individuals for the calendar year prior to the fiscal year they are making their claim. This could mean for multi-year productions, the individual's residency could be determined in the year prior to principal photography start date or it could be determined as of December 31st of the first or second calendar years after principal photography started. For multi-year productions, a corporation is not required to continue gathering supporting documentation on the same individuals for each calendar year, if it has no reason to believe the individual's residency status has changed for any of the years.

If an individual moves to B.C. in the year, their labour would become eligible for the following fiscal year's claim, in other words, an individual moves to B.C. in 2008, the production corporation can claim their labour for the 2009 and subsequent fiscal year claims.

Does 3D or stereoscopic filming or conversion qualify for the Digital Animation or Visual Effects (DAVE) tax credit?

3D or stereoscopic filming or conversion (3D) may be eligible for the DAVE tax credit, provided the shots are manipulated after shooting for depth perception and other visual effect properties. The wages, salaries and remuneration paid to B.C.-based individuals performing the 3D associated post-production functions may qualify as B.C. labour expenditures for the purposes of calculating the DAVE tax credit. However, only the individuals using digital technology for the 3D process will qualify for the "digital" component of the credit for the purposes of determining primarily digital. The fact that a production is made entirely using 3D processes does not make the production automatically 100% DAVE eligible. The primarily digital determination must be performed to determine the amount of DAVE eligible activities for the production.

For more information about DAVE, see the bulletin British Columbia Digital Animation or Visual Effects (DAVE) Tax Credit (CIT 011) (PDF).

What are considered allowable producer fees?

Please refer to CRA’s Application Policy FAS 2009-01, which provides detailed information on allowable producer fees for the purposes of the federal and B.C. film tax credits.

Are kit rentals considered eligible labour expenditures for the film tax credit programs?

No, the kit rental charges are not eligible labour expenditures for the film tax credit. The B.C. film tax credit programs are calculated based on labour expenditures made to B.C.-based individuals. The kit rental charges are not direct labour expenditures as they are paid for the rental of the equipment or tools and not for the individual’s labour.

However, if the kit rental is paid to an employee and is included as a taxable benefit to the employee on their T4 and the relevant source deductions have been taken, kit rentals will be allowed to be included as an eligible labour expenditure. The CRA’s Application Policy FIS 2006-01 provides further information on the inclusion of taxable benefits as labour expenditures.

If an individual is being paid as a contractor, the kit rentals are not permitted as eligible labour expenditures.