Date:
20111228
Docket:
T-1676-07
Citation: 2011 FC 1520
[UNREVISED
CERTIFIED ENGLISH TRANSLATION]
Ottawa,
Ontario, December 28, 2011
PRESENT: The
Honourable Mr. Justice Scott
BETWEEN:
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PRODUCTIONS TOONCAN
(XIII) INC
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Applicant
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and
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MINISTER OF CANADIAN
HERITAGE
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Respondent
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REASONS FOR
JUDGMENT AND JUDGMENT
I. Introduction
[1]
Productions
Tooncan (XIII) inc. (Tooncan) is asking the Court to review the decision made
by the Minister of Canadian Heritage (respondent) on August 20, 2007, to
revoke Part A of Tooncan’s Canadian film or video production certificate, No.
A081151‑A081176, for the production SNAILYMPICS (II) under
subsection 125.4(6) of the Income Tax Act, RSC 1985, c 1 (5th
Supp), as amended [ITA] and paragraph 1106(1)(ii) of the Income Tax
Regulations, CRC, c 945 [ITR].
[2]
Tooncan
is also asking the Court to make an order compelling the respondent to issue
the Part B certificate of completion under the film production tax credit
program for the series SNAILYMPICS II and to make any other order the Court
deems appropriate.
[3]
For
the following reasons, Tooncan’s application for judicial review is allowed,
but only for costs.
II.
Facts
A. Parties
and administrative operation
[4]
Paul Cadieux
is a business man from the City of Westmount and Tooncan’s duly authorized
representative.
[5]
The
Canadian Audio‑Visual Certification Office [CAVCO] is the directorate of
the Department of Canadian Heritage that administers, for the respondent, the
responsibilities attributed to it with respect to the certification of film or
audio‑visual productions under the ITA and the ITR.
[6]
Notably,
CAVCO determines the status of Canadian productions and works for the purposes
of obtaining tax benefits under the Canadian Film or Video Production Tax
Credit Program. The Canadian film or video production tax credit allows
eligible productions a tax benefit of 25% of eligible labour expenditures. A
Canadian producer that participates in an international coproduction may
receive the same tax benefits as those granted to national productions.
[7]
Telefilm
Canada (Telefilm) is a Crown corporation established under the Telefilm
Canada Act, RSC 1985, c C-16 [TFCA]. The corporation administers, inter
alia, international coproduction treaties that the Government of Canada is
a party to. Section 17 of the TFCA states that Telefilm is an agent of Her
Majesty the Queen.
[8]
Pursuant
to an administrative agreement between the respondent and Telefilm, it must
evaluate coproduction projects and submit a recommendation to the Minister
regarding the status of a production as a coproduction under an agreement.
Telefilm first issues this decision as an advance ruling and then carries out a
final review once the audio‑visual production is completed.
[9]
Ultimately,
the respondent has the authority to grant a certificate where a producer meets
all the requirements set out in the ITA and the ITR. A certificate is issued in
two stages. The Part A certificate is issued after an administrative analysis
of a file in writing confirming that a production satisfies all the criteria
outlined in the ITA and the ITR and may be issued before or during production
to facilitate financing or claiming a tax credit at the end of a fiscal year.
The Part A certificate is subject to a condition precedent because the producer
must obtain the certificate of completion (Part B) within the time period
prescribed by the ITR.
[10]
Once
production is completed, Part B of the certificate may be issued on condition
that the production satisfies all the criteria outlined in the ITA and the ITR.
[11]
Tooncan
is requesting that a certificate be issued entitling it to a tax credit for a
Canadian film or video production for its series SNAILYMPICS II. Accordingly,
SNAILYMPICS II must meet all the criteria outlined in the ITA and the ITR to
qualify as a Canadian film or video production.
B. Steps
taken by Tooncan
[12]
On
December 23, 1998, Tooncan filed an application with Telefilm for an
international coproduction advance ruling with respect to a coproduction
project of a television series between Canada and Spain.
[13]
On
January 19, 1999, Telefilm issued its coproduction status advance ruling
for the series SNAILYMPICS I. Telefilm was of the view that the project would
respect the Agreement between the Government of Canada and the Government of
Spain concerning cinematographic relations (Affidavit of Tooncan’s
representative, Exhibit P‑2).
[14]
On
June 30, 1999, Michael Wernick, Assistant Deputy Minister, Cultural
Development, Heritage Canada, signed a memorandum that was sent with Part A of the
coproduction certificate (Affidavit of the Applicant’s representative, Exhibit
P‑3). Mr. Wernick wrote: [translation]
“Telefilm Canada has assured us that this production complies with the Canada‑Spain
coproduction agreement.” He also stated that it [translation] “[appears] . . . that the completed
production will comply with the requirements outlined in section 1106 of
the Income Tax Regulations.” Finally, the memorandum concluded that [translation] “the producer must submit a
completed application for a certificate of completion (Part B) to CAVCO within
twenty‑five months following the end of the taxation year in which the
principal photography began.”
[15]
On
June 30, 1999, the Minister of Canadian Heritage, Sheila Copps,
signed Part A of the Canadian film or video production certificate for the
series SNAILYMPICS I (Affidavit of Tooncan’s representative, Exhibit P‑4).
[16]
On
August 13, 2001, Telefilm filed its recommendation for final approval for
SNAILYMPICS I (Affidavit of the Applicant’s representative, Exhibit P-5)
following a review of the application for certification submitted on
February 27, 2001 (Affidavit of Tooncan’s representative, Exhibit P‑6).
[17]
On
November 20, 2001, CAVCO sent Tooncan the Part B certificate of completion
for SNAILYMPICS I signed by Michael Wernick, Assistant Deputy Minister,
Cultural Development, on behalf of the respondent (Affidavit of Tooncan’s
representative, Exhibit P‑7).
[18]
On
April 10, 2001, Tooncan filed with Telefilm an application for an
international coproduction advance ruling for the SNAILYMPICS II project.
[19]
On
February 26, 2002, Telefilm issued its advance ruling on coproduction
status for SNAILYMPICS II and accepted Tooncan’s application for an advance
ruling (Affidavit of Tooncan’s representative, Exhibit P‑11).
[20]
On
March 14, 2003, Tooncan filed an application for final approval and
requested its certificate, Parts A and B, from CAVCO (Affidavit of Tooncan’s
representative, Exhibits P‑12 and P‑13).
[21]
On
July 9, 2003, CAVCO authorized the Canadian film or video production
certificate, Part A, signed by Susan Peterson, Assistant Deputy Minister,
Cultural Affairs, Heritage Canada, on behalf of the respondent (Affidavit of
Tooncan’s representative, Exhibit P‑14).
[22]
On
October 15, 2003, Tooncan wrote to CAVCO to confirm that all the documents
required for the Part B review of SNAILYMPICS II had been filed (Affidavit of
Tooncan’s representative, Exhibit P‑15).
[23]
On
March 18, 2004, Tooncan sent an e‑mail to Brigitte Monneau, Telefilm’s
Director, International Coproductions, following a meeting between
Paul Cadieux, its representative, and Ms. Monneau. In his e‑mail
(Affidavit of Applicant’s representative, Exhibit P‑16), Tooncan’s
representative explained to Ms. Monneau that Spain had no obligation to
submit the coproduction’s final accounts. In addition, he stated that the
production had ended very badly. He wrote: [translation]
“In the case of series II, we provided Canada with all the same services as for
series I, and we complied with the task‑sharing that was established at
the time of the advance ruling.”
[24]
Ms. Monneau
replied to Tooncan the same day (Affidavit of Tooncan’s representative, Exhibit
P‑16):
[translation]
The problem we are now facing—which did not exist
when we spoke at the Joint Commission—is that this project was accepted in the
absence of a TV treaty between Canada and Spain. The Department of Heritage is
now questioning this, and ultimately Revenue Canada may also question whether
the project is entitled to tax credits.
Given this situation, it is difficult for us as the
administrator of the Treaty to give final approval by adding another deviation,
i.e., the figures from the coproducing country have not been validated.
Therefore, I regret to inform you that we must leave this project “on ice”
until the treaty situation is resolved.
[25]
On
June 13, 2005, CAVCO wrote to Tooncan, reminding it, inter alia,
about the 48‑month deadline to submit the missing documentation for
purposes of the assessment and issuance of the production certificate
(Affidavit of Tooncan’s representative, Exhibit P‑17).
[26]
On
July 4, 2005, subsequent to CAVCO’s letter of June 13, 2005,
Annie Bourdeau, Tooncan’s representative, contacted Ms. Monneau at
Telefilm and asked her to recommend the coproduction at the certification
stage. In addition, Tooncan wrote that Ms. Monneau had already stated [translation] “that this type of
situation was not a precedent and that, on an exceptional basis, [Telefilm may]
issue a final without the other country’s final agreement” (Affidavit of
Tooncan’s representative, Exhibit P‑18).
[27]
Ms. Monneau
replied the same day and noted in her e‑mail that the Spanish authorities
were not planning at that time to recognize productions completed prior to the
signing of a new treaty that would include television productions. Further on
she wrote:
[translation]
. . . The Department of Heritage is
working actively to resolve the situation, but at this time everything is on
hold. CAVCO is aware of this, and I assume that if the situation is sorted out
after the normal filing deadlines, they could make an exception given the
circumstances.
[28]
On
September 9, 2005, i.e., prior to the deadline of October 31, 2005,
the applicant wrote to Kenny Duggan, case analyst at Telefilm, to explain
the situation to him (Affidavit of Tooncan’s representative, Exhibit P‑19).
[29]
Mr. Duggan
replied by e‑mail on September 12, 2005 (Affidavit of Tooncan’s
representative, Exhibit P‑19):
[translation]
. . . The Department is aware of the
situation and is working to resolve it as quickly as possible, but we cannot
proceed at this time. CAVCO is aware of the situation and, at present, even if
CAVCO received a recommendation from us (which we cannot do), your file would
be on hold at their office.
[30]
On
October 10, 2006, almost eleven months after the critical deadline of
October 31, 2005, an amendment to the Agreement between the Government of
Canada and the Government of Spain concerning cinematographic relations came
into effect. Henceforth, television productions would be covered by the treaty
(Affidavit of Tooncan’s representative, Exhibit P-20).
[31]
Telefilm
did not send a recommendation to CAVCO prior to the October 31, 2005,
deadline.
[32]
On
August 20, 2007, Tooncan received the respondent’s decision (Affidavit of
Tooncan’s representative, Exhibit P‑1). The respondent concluded as
follows:
[translation]
. . . Subsection 1106(1) of the [ITR]
defines an “excluded production” as a “production . . . in respect of
which . . . (ii) a certificate of completion has not been issued
before the production’s certification deadline.”
The Regulations establish a deadline of 48 months
for a Part B certificate to be issued by the Minister of Canadian Heritage. The
deadline is calculated from the date of the end of the first taxation year in
which the principal photography began.
For this production, the date the principal
photography began was May 10, 2001, and the date of the end of the first
taxation year was October 31, 2001. The 48‑month deadline was
October 31, 2005, but the Part B certificate was not issued because CAVCO
had not received all the documentation required to recommend that the
certificate be issued.
. . . SNAILYMPICS (II) is an “excluded
production” under the [Canadian film or video production tax credit].
. . .
[33]
On
August 24, 2007, Tooncan’s representative filed two access to information
requests to obtain the complete files for SNAILYMPICS I and SNAILYMPICS II. By
means of these requests, he sought to demonstrate that the respondent, through
his agent Telefilm, makes final recommendations on coproduction status that are
contrary to the Act or are made in the absence of formal treaties.
[34]
On
September 21, 2007, Tooncan’s representative filed a third access to
information request to obtain the coproduction catalogues in order to establish
that some productions are certified even in the absence of treaties.
[35]
On
October 19, 2007, Pierre‑Yves Marchand, a paralegal at Telefilm,
sent copies of the two public coproduction catalogues for the years 1999 and
2001.
[36]
On
December 14, 2007, Tooncan’s representative received a response to his
first two access to information requests.
[37]
During
the 2007‑2008 Christmas holidays, Tooncan’s representative turned his
attention to the documents he had received pursuant to his access to
information requests. He noted that, in the case of SNAILYMPICS I, the Spanish
authorities did not communicate their agreement with the coproduction status
until preliminary approval was given, i.e., September 22, 1998
(Supplementary Affidavit of Tooncan’s representative, Exhibit P‑28). The
same situation occurred for SNAILYMPICS II on February 1, 2002 (Affidavit
of Tooncan’s representative, Exhibit P‑22). He also maintains that at
least 33 productions received certificates, Parts A and B, in the absence of
treaties, between the years 1987 and 1999 (Affidavit of Tooncan’s
representative, Exhibit P‑33).
III. Legislation
[38]
The
relevant sections of the Income Tax Act [ITA] and the Income Tax
Regulations [ITR] are reproduced in the annex to these reasons.
IV. Issues
and standards of review
A. Issues
[39]
This
application for judicial review raises the following issues:
1. Did
the respondent breach his duty to comply with the principles of procedural
fairness?
2. Is
the respondent’s decision to revoke Tooncan’s coproduction certificate reasonable?
B. Standards
of review
[40]
In
Tricon Television29 Inc v Canada (Minister of Canadian
Heritage), 2011 FC 435, [2011] FCJ No 547, Mr. Justice Hughes
wrote the following at paragraph 31 of his decision:
In
general the applicable principles of law as enunciated by the Supreme Court of
Canada in cases including Dunsmuir v New Brunswick, [2008] 1 S.C.R. 190; Canada
(Minister of Citizenship and Immigration) v Khosa, [2009] 1 S.C.R. 339; and Baker
v Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817 are
not in dispute:
1. On
a judicial review of a decision of a federal board, the standard of review of
correctness is applied in considering questions of law;
2. On
a judicial review of a decision of a federal board which has acted within its
legal mandate, the matter is to be determined on a standard of reasonableness,
with a deference being afforded to the board particularly where the decision is
within the scope of its unique experience;
3. Where
issues of natural justice, fairness and bias arise, the standard is one of
proper adherence to those principles; and
4. Reasons
given by the board must be intelligible and transparent, sufficient so as to
inform the intended recipient of the result and how it was achieved.
[41]
The
standard of review applicable to questions involving the doctrine of legitimate
expectations, promissory estoppel and rules of procedural fairness is
correctness.
[42]
The
standard of review applicable to the respondent’s decision to revoke Tooncan’s
coproduction certificate is reasonableness.
V. Position
of the parties
A. Tooncan’s
position
[43]
Tooncan
alleges that the respondent’s decision is unreasonable, was made in a perverse
and capricious manner and does not comply with the Act or administrative
practices. The decision to revoke the certificate is flawed in fact and in law
because none of the grounds for revocation set out in the ITA are present in
this case. The applicant did not make an omission or incorrect statement for
the purpose of obtaining the Part A certificate.
[44]
Tooncan
maintains that it has completed all the steps in the production and has
complied with the proportions of financial contributions that it committed to.
[45]
The
reason for revocation given in the decision (Affidavit of Tooncan’s
representative, Exhibit P‑1) is without merit because the respondent had
in hand all the information required to issue the Part B certificate of
completion. In granting the Part A production certificate on July 9, 2003,
the respondent must have known that the coproduction treaty with Spain did not
formally include television productions. The respondent could not therefore
justify revoking the part A certificate and refusing to issue the Part B
certificate of completion on the ground that the treaty with Spain did not
formally include television productions.
[46]
After
reviewing Tooncan’s application for an advance ruling , Telefilm took the
position in its recommendation of February 26, 2002, that the project [translation] “will comply with the
standards in the Agreement [between the Government of Canada and the Government
of Spain concerning cinematographic relations], subject to [certain]
conditions” (Affidavit of Tooncan’s representative, Exhibit P‑11).
[47]
Tooncan
also submits that the SNAILYMPICS II production respects the spirit of the treaty
with Spain. The government programs and statutory provisions that apply in this
case are intended to promote the creation of Canadian products by the private
sector for distribution in local and international markets. In fact, Tooncan
relies on the parameters of the cinema treaty with Spain and contends that they
apply by analogy to television productions, without further formalities.
[48]
Tooncan
has done nothing wrong because it followed through on its commitments and
complied with the directives of both the respondent and Telefilm.
[49]
Tooncan
points out that Telefilm made the final recommendation for the
SNAILYMPICS I series without any contact with the Spanish authorities and,
therefore, without any confirmation of the Spanish coproducer’s final accounts.
Tooncan notes, moreover, that in the case of SNAILYMPICS II, Telefilm
emphasized, however, that the Spanish coproducer had no obligation to file its
final accounts with the Spanish authorities.
[50]
Telefilm’s
actions as the respondent’s agent bind the respondent. In its recommendations
for issuing the Part A certificate, Telefilm wrote that the SNAILYMPICS II
production complied with the provisions of the coproduction treaty with Spain.
At the risk of abusing his authority, the respondent must issue the Part B
certificate of completion because he did so previously with the SNAILYMPICS I
production. The respondent must be consistent in making his decisions.
[51]
According
to Tooncan, the lack of a television amendment or coproduction treaty between
the two countries is not an obstacle to issuing the certificate of completion.
The respondent has granted certificates of completion to other coproductions
even without a television amendment to a treaty (Affidavit of Tooncan’s
representative, Exhibit P‑33).
[52]
By
comparing the dates when the treaties were signed with the production dates
indicated in the Telefilm catalogues (see the coproductions listed at
paragraphs 18 to 21 of the supplementary affidavit of Tooncan’s
representative), Tooncan submits that the respondent signed certificates under
Parts A and B, in accordance with the ITA and the ITR, in the absence of formal
treaties between Canada and other foreign countries.
[53]
The
respondent could have signed the Part B certificate of completion after the
television amendment was made in the treaty with Spain, which was signed on
October 10, 2006 (Affidavit of Tooncan’s representative Exhibit P‑20).
[54]
On
the other hand, Tooncan argues that the wording of subsection 125.4(6) of the
ITA suggests that the certification process is not formal but is subject to a
flexible decision‑making process.
B. Respondent’s
position
[55]
The
respondent submits that he has complied with all the principles of procedural
fairness in his relations with Tooncan. The decision to revoke the certificate
is not discriminatory.
[56]
Moreover,
Tooncan benefited from an extension of time to produce the documents required
for reviewing its application (Affidavit of Tooncan’s representative, Exhibit P‑17).
The additional time given to Tooncan was the result of an amendment to the ITR,
specifically, Section VII.
[57]
Tooncan
was aware of the difficulties Telefilm encountered in including previous
projects in the new agreement with Spain (Affidavit of Tooncan’s
representative, Exhibit P‑18, Reply by Brigitte Monneau, Telefilm’s
Manager, Coproductions, to the e‑mail sent by Annie Bourdeau of
Productions Tooncan). Despite this knowledge, Tooncan introduced no evidence to
establish that its productions qualified as a film or video production under
the ITA.
[58]
Tooncan
knows and cannot disregard the fact that its production did not qualify for the
tax credit.
[59]
The
respondent cannot be forced to sign a certificate for a production that does
not meet the requirements of the ITA and its Regulations. The Minister has no
obligation to grant a certificate, especially where the requirements of the ITA
and the ITR have not been satisfied. Moreover, Tooncan recognized this in its
written representations; the respondent’s decision is within his discretion.
[60]
The
respondent notes that in the Khadr decision the Federal Court stated
that the term “may” in a statute can, in certain circumstances, be tantamount
to an obligation of refusal (see Khadr v Canada (Attorney
General), 2006 FC 727 at paragraph 109).
[61]
Finally,
the respondent contends that Tooncan cannot expect to be granted substantive
rights outside of the certification procedure (see Cinémas Guzzo Inc v
Canada (Attorney General), 2005 FC 691).
[62]
The
Court took two objections under advisement:
1. First,
counsel for Tooncan objected to the production of Exhibits P‑21 and P‑23
in the respondent’s record because these exhibits were not introduced in
accordance with the Rules of the Court. As a result, they cannot be part of the
Court record. Those exhibits are Telefilm’s coproductions guide and a Telefilm
document entitled “Official Coproductions: Mandate, Policies and Requirements”.
The Court upholds the applicant’s objection; these exhibits were not the
subject of an affidavit in accordance with the Rules of the Court.
2. Counsel
for the respondent objected to Tooncan’s submissions on the necessity for prior
notice and on the inadequacy of the reasons for decision because these two
arguments were not specifically mentioned in Tooncan’s memorandum. The Court
dismisses the respondent’s objection because Tooncan is relying, inter alia,
on promissory estoppel and the doctrine of legitimate expectations, which give
rise to procedural fairness obligations. Tooncan’s arguments as to the
necessity for prior notice and the inadequacy of the reasons are simply a
result of applying these doctrines and are admissible as such.
VI. Analysis
1. Did
the respondent breach his duty to comply with the principles of procedural
fairness?
[63]
The
Court finds, for the following reasons, that the respondent in this case failed
to comply with the principles of procedural fairness.
[64]
In
Baker v Canada (Minister of Citizenship and Immigration),
[1999] 2 S.C.R. 817 at paragraph 21 [Baker], the Supreme Court of Canada
stated that “the
concept of procedural fairness is eminently variable and its content is to be
decided in the specific context of each case” (see also Knight
v Indian Head School Division No 19, [1990] 1 S.C.R. 653).
[65]
In
Island Timberlands LP v Canada (Minister of Foreign Affairs),
2009 FC 258, [2009] FCJ No 335 at paragraph 33, Justice de Montigny stated as
follows:
A purely ministerial decision, on broad grounds of public policy,
will typically afford the individual no procedural protection, and any attack
upon such a decision will have to be founded upon abuse of discretion.
Similarly, public bodies exercising legislative functions may not be amenable
to judicial supervision.
(See also Martineau v Matsqui
Institution Disciplinary Board, [1980] 1 S.C.R. 602)
[66]
In
this case, the Minister’s decision is analogous to a purely administrative
decision. On the recommendation of Telefilm and under the ITA and the ITR, the
respondent may issue a coproduction certificate. Thus, the duty to subject the
decision‑making process to the rules of procedural fairness is normally
minimal.
[67]
Tooncan
argues legitimate expectations to justify the intervention of our Court. On
this issue, it is interesting to read what Madam Justice L’heureux‑Dubé
of the Supreme Court wrote at paragraph 26 of Baker:
. . .
Our Court has held that, in Canada, this doctrine is part of the doctrine of
fairness or natural justice, and that it does not create substantive rights: Old
St. Boniface, supra, at p. 1204; Reference re Canada
Assistance Plan (B.C.), [1991] 2 S.C.R. 525, at p. 557. As
applied in Canada, if a legitimate expectation is found to exist, this will
affect the content of the duty of fairness owed to the individual or
individuals affected by the decision. If the claimant has a legitimate
expectation that a certain procedure will be followed, this procedure will be
required by the duty of fairness: Qi v. Canada (Minister of Citizenship and
Immigration) (1995), 33 Imm. L.R.
(2d) 57 (F.C.T.D.); Mercier-Néron v. Canada (Minister of National
Health and Welfare), (1995), 98 F.T.R. 36; Bendahmane v. Canada
(Minister of Employment and Immigration), [1989] 3 F.C. 16 (C.A.).
Similarly, if a claimant has a legitimate expectation that a certain result
will be reached in his or her case, fairness may require more extensive
procedural rights than would otherwise be accorded: D. J. Mullan, Administrative
Law (3rd ed. 1996), at pp. 214-15; D. Shapiro, “Legitimate Expectation
and its Application to Canadian Immigration Law” (1992), 8 J.L. &
Social Pol’y 282, at p. 297; Canada (Attorney General) v. Human Rights
Tribunal Panel (Canada), (1994), 76 F.T.R. 1. Nevertheless, the
doctrine of legitimate expectations cannot lead to substantive rights outside
the procedural domain. This doctrine, as applied in Canada, is based on
the principle that the “circumstances” affecting procedural fairness take into
account the promises or regular practices of administrative decision-makers,
and that it will generally be unfair for them to act in contravention of
representations as to procedure, or to backtrack on substantive promises
without according significant procedural rights.
[68]
Thus,
the application of this doctrine depends on two factors: “(i) whether the
tribunal made an undertaking to follow set procedures; and (ii) whether the
undertaking was not in conflict with the tribunal’s statutory duty” (see Addy
v Canada (Commissioner and Chairperson, Commission of Inquiry into
the Deployment of Canadian Forces in Somalia), [1997] 3 FC 784, [1997] FCJ
No 796 at paragraph 49).
[69]
Tooncan
argues that the context of the application for the SNAILYMPICS I production
supports applying the doctrine of legitimate expectations. Toucan also argues
that promissory estoppel should apply. In Toucan’s view, the respondent’s
decision not to issue the Part B certificate of completion and to revoke the Part
A production certificate for SNAILYMPICS II is unfair and constitutes an abuse
of right.
[70]
In
summary, Tooncan is asking that a second certificate be issued, in
contravention of the applicable rules, because Telefilm recommended that a certificate
be issued the first time in the absence of a television treaty between Canada
and Spain, and the respondent acted on this recommendation for SNAILYMPICS I.
[71]
The
television agreement between the two countries came into effect on
October 10, 2006. The Spanish producer had no obligation to file its final
production accounts with the Spanish authorities prior to that date. CAVCO
maintains that accordingly it could not recommend that the certificate be
issued even though it did so in SNAILYMPICS I. Given the failure to submit
certain documents, the most important of which was Telefilm’s recommendation,
the respondent submits that he had no choice but to revoke the film or video
production certificate because SNAILYMPICS II is an excluded production under
the ITA.
[72]
In
principle, the doctrine of legitimate expectations “ can create a right to make
representations or to be consulted. It does not fetter the decision following
the representations or consultation” (see Canada (Minister of Employment and
Immigration) v Lidder, [1992] FCJ No 212, [1992] 2 FC 621 at
paragraph 4 [Lidder]). In addition, a public authority is bound as to
its procedure, “but in no case can it place itself in conflict with its duty and
forego the requirements of the law” (see Lidder at paragraph
4).
[73]
In
this case, Tooncan saw the respondent treat the two applications it submitted
differently. First, in the SNAILYMPICS I case, the respondent, based on
documents that his agent, Telefilm, sent to him, certified a coproduction that
clearly did not meet the criteria outlined in the ITA and the ITR because there
was no treaty between Canada and Spain that applied to television productions.
Second, the respondent’s agent, Telefilm, on the basis of a new direction at
CAVCO, did not file a recommendation. As a result, the respondent revoked the
Part A certificate, which had already been issued, but for a purely technical
reason. In fact, he alleged that Telefilm had not given a recommendation within
the time allowed under the Act in order to avoid dealing with the real issue,
i.e., its change in policy. In an e‑mail on March 18, 2004,
Brigitte Monneau, Telefilm’s Manager, Coproductions, wrote to Tooncan’s
representative (Affidavit of Tooncan’s representative, Exhibit P-16):
[translation]
The problem we are now facing—which did not exist
when we spoke at the Joint Commission—is that this project was accepted in the
absence of a TV treaty between Canada and Spain. The Heritage Minister is now
questioning this, and ultimately Revenue Canada may also question whether the
project is entitled to tax credits.
Given this situation, it is difficult for us as the
administrator of the Treaty to give final approval by adding another deviation,
i.e., the figures from the coproducing country have not been validated.
Therefore, I regret to inform you that we must put this project “on ice” until
the treaty situation is resolved.
[74]
This
e‑mail confirms a major change compared with previous practices of the
respondent and his agent. First, it establishes that the respondent questioned
the fact that coproduction projects were accepted in the absence of treaties
(Affidavit of Tooncan’s representative, Exhibit P‑33) although he had
already accepted a certain number of coproductions, notwithstanding the lack of
treaties in the past.
[75]
This
change in direction and policy when the SNAILYMPICS II production was finished
should have led the respondent to send at least a draft decision dealing with
his real reasons. He should have advised Tooncan of his intentions and invited it
to make representations. Especially since on July 4, 2004,
Brigitte Monneau wrote to Tooncan’s representative: [translation] “The Department of Heritage
is working actively to resolve the situation, but at this time everything is on
hold. CAVCO is aware of this, and I assume that if the situation is sorted out
after the normal filing deadlines, they could make an exception given the
circumstances.”
[76]
On
September 12, 2005, in the absence of Brigitte Monneau, her
assistant, Mr. Duggan, wrote to Tooncan’s representative, who was
pressuring him to act and to file a recommendation given the October 31,
2005, deadline:
[translation]
. . . We understand the position you are
in, but we cannot make a recommendation for this project knowing that the Agreement
in force does not include television. As for Snailympics I, our office dealt
with that file before the Department informed us that there was a problem
. . .
[77]
On
August 20, 2007, the Department of Heritage wrote to Tooncan’s
representative, informing him that SNAILYMPICS II was an excluded production
because a certificate of completion had not been issued before the
certification deadline. The Department stated: [translation]
“For this production, the date the principal photography began was May 10,
2001, and the date of the end of the first taxation year was October 31,
2001. The 48‑month deadline was October 31, 2005, but the Part B
certificate was not issued because CAVCO had not received all the documentation
required to recommend that the certificate be issued.”
[78]
This
evidence leads us to conclude that the respondent should have at least
permitted Tooncan to make representations prior to making this decision that
contravened the respondent’s policy or, at least, the respondent’s previous
practice in the SNAILYMPICS I file.
[79]
Counsel
for Tooncan relies primarily on the Supreme Court decision in Mount Sinai
Hospital Center v Quebec (Minister of Health and Social Services),
2001 SCC 41. In that case, Mount Sinai Hospital was requesting that a permit be
issued in accordance with the promises made by numerous ministers over the
years to persuade it to move to Montréal. The hospital had been encouraged to
continue its vocation as a long‑term and short‑term care facility
although its original permit provided for long‑term care beds only. It is
important to point out that Mr. Justice Binnie stated, at paragraph 47 of
that decision, that “[p]ublic
law estoppel clearly requires an appreciation of the legislative intent
embodied in the power whose exercise is sought to be estopped. The legislation
is paramount. Circumstances that might otherwise create an estoppel may have to
yield to an overriding public interest expressed in the legislative text. As
stated in St. Ann’s Island Shooting and Fishing Club Ltd. v. The King,
[1950] S.C.R. 211, per Rand J., at p. 220: ‘there can be no estoppel in
the face of an express provision of a statute’.”
Mr. Justice Strayer in Aurchem
Exploration Ltd v Canada, [1992] FCJ 427, noted that one must look at the
Act and consider the power granted to the decision‑maker, in this case
the scope of the discretion granted to the respondent. In this case, the
respondent asserts that the Minister has no discretion in tax matters. He
relies on the decision of the Supreme Court of Canada in Canada (Minister of
National Revenue) v Inland Industries Limited, 1974 SCR 514, and Placer
Dome Canada Ltd v Ontario (Minister of Finance), 2006 1 SCR 715 to support
this position. The Court concurs with the respondent’s position. Furthermore,
Pierre‑André Côté writes at page 525, paragraph 1758, of the Interpretation
of Legislation in Canada:
However, two principles can be drawn from the
present case law of the Supreme Court. First, the fact that the literal meaning
is clear, that it is free of any ambiguities or imprecisions, does not
constitute a justifiable reason to ignore the objectives of the provision:
these must always be borne in mind as a contextual element. Second, when
establishing the meaning of a rule of tax law, arguments drawn from the
objectives of a provision could tip the balance where the literal meaning is
obscure; on the other hand, their weight would be noticeably reduced in the
presence of a text whose literal meaning, when analysed contextually, appears
plain.
[80]
The
Court recognizes that the respondent cannot act in a manner contrary to the
Act. The provisions of the ITA and the ITR are clear and unambiguous, as are
the objectives of the Act. There is no place for interpretation. The Minister
must apply the Regulations correctly: he cannot, in the absence of a treaty,
certify a production.
[81]
The
respondent should have at least received Tooncan’s representations and made the
decision he deemed appropriate in the circumstances while respecting the limits
that the Act imposes on him. In the past, the respondent had never made these
arguments to refuse to issue a Part B certificate. The change in practice and
policy should have been brought to Tooncan’s attention. Thus, in principle, it
is for the respondent to correct this defect, which breaches his duty to act
fairly.
[82]
The
entire history of this file convinces us that the respondent breached his duty
of procedural fairness. He did not permit Tooncan to put forward its point of
view prior to making his decision and, moreover, he based his decision on
technical considerations rather than the real reasons that were the basis for
it.
2. Is
the respondent’s decision to revoke Tooncan’s coproduction certificate
reasonable?
[83]
The
advance decision of February 26, 2002 (Affidavit of Tooncan’s representative,
Exhibit P‑11), is clear and unequivocal. Telefilm undertook [translation] “[to view] the final
version of the production and [to review] the project’s final data to [ensure]
that it was produced in accordance with the documentation submitted; [TLFC will]
then be able to recommend SNAILYMPICS II to the Minister of Canadian Heritage
for final approval of official coproduction status.”
[84]
However,
referring to paragraph 1106(1)(ii) of the ITR, Jean‑François Bernier,
Director General, Cultural Industries, determined that SNAILYMPICS II was an
excluded production. CAVCO did not receive all the documentation required to
grant the Part B certificate within the time limits prescribed by the ITR.
Thus, Telefilm could not recommend SNAILYMPICS II to the Minister of Canadian
Heritage for final approval. The respondent revoked the coproduction
certificate because the Part B certificate was not issued within the time
limits set out in the Act.
[85]
The
respondent’s decision is not reasonable in this case because the respondent did
not comply with the principles of procedural fairness. Normally, when the Court
makes this finding, it remits the file to the Minister. However, in this case,
the Minister cannot grant a certificate in contravention of the Act since the
production is excluded under the Regulations given that the treaty that was in
force did not apply to television productions. Even if he had received the
representations he should have received, he cannot issue a certificate
retroactively or grant a certificate if there is no television agreement in
place during the relevant period. The provisions of the ITA and the ITR
establish a strict time limit (see Granger v Canada (Employment and
Immigration Commission), [1986] 3 FC 70 at paragraph 34). Tooncan is
asking us to make an order compelling the respondent to issue the Part B
certificate. The Court cannot agree to this request because it would be
contrary to the applicable provisions of the ITA (see Satinder v Canada
(Attorney General), 2002 FCA 491 at paragraph 9). The Court is sympathetic
to Tooncan, which is in a difficult situation as a result of Telefilm and CAVCO’s
actions, which can only be deplored, but the Court cannot order that a
certificate be issued in contravention of the clear provisions of the Act.
VII. Conclusion
[86]
The
respondent in this case has not complied with his duty of procedural fairness,
and his decision to revoke the coproduction certificate is therefore not
reasonable. However, the application for judicial review is allowed for costs
only since the Minister cannot make any other decision than the one he made.
JUDGMENT
THE
COURT RULES that it allows the application for judicial review but
for costs only.
“André F.J. Scott”
Certified
true translation
Mary
Jo Egan, LLB
Annex
·
Section
125.4 of the Income Tax Act, RSC 1985, c. 1, 5th Supp, as amended:
Canadian Film or Video Production Tax Credit
Definitions
125.4 (1) The definitions in this
subsection apply in this section.
·
“assistance”
«
montant d’aide »
“assistance”
means an amount, other than a prescribed amount or an amount deemed under
subsection 125.4(3) to have been paid, that would be included under paragraph
12(1)(x) in computing a taxpayer’s income for any taxation year if that
paragraph were read without reference to subparagraphs 12(1)(x)(v) to
12(1)(x)(vii).
·
“Canadian film or video production”
« production
cinématographique ou magnétoscopique canadienne »
“Canadian
film or video production” has the meaning assigned by regulation.
·
“Canadian film or video production
certificate”
« certificat
de production cinématographique ou magnétoscopique canadienne »
“Canadian film or video production certificate” means
a certificate issued in respect of a production by the Minister of Canadian
Heritage
o (a) certifying that the production is a Canadian film or video
production, and
o (b) estimating amounts relevant for the purpose of determining
the amount deemed under subsection 125.4(3) to have been paid in respect of the
production.
·
“investor”
« investisseur »
“investor”
means a person, other than a prescribed person, who is not actively engaged on
a regular, continuous and substantial basis in a business carried on through a
permanent establishment (as defined by regulation) in Canada that is a Canadian
film or video production business.
·
“labour expenditure”
« dépense de
main-d’oeuvre »
“labour
expenditure” of a corporation for a taxation year in respect of a property of
the corporation that is a Canadian film or video production means, in the case
of a corporation that is not a qualified corporation for the year, nil, and in
the case of a corporation that is a qualified corporation for the year, subject
to subsection 125.4(2), the total of the following amounts to the extent that
they are reasonable in the circumstances and included in the cost or, in the
case of depreciable property, the capital cost to the corporation of the
property:
o (a) the salary or wages directly attributable to the production
that are incurred after 1994 and in the year, or the preceding taxation year,
by the corporation for the stages of production of the property, 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 (other than amounts incurred
in that preceding year that were paid within 60 days after the end of that
preceding year),
o (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 of property, that relates
to services rendered after 1994 and in the year, or that preceding year, to the
corporation for the stages of 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
§ (i) an
individual who is not an employee of the corporation, to the extent that the
amount paid
§
(A) attributable to services personally
rendered by the individual for the production of the property, or
§
(B) is attributable to and does not exceed
the salary or wages of the individual’s employees for personally rendering
services for the production of the property,
§ (ii) another
taxable Canadian corporation, to the extent that the amount paid is
attributable to and does not exceed the salary or wages of the other
corporation’s employees for personally rendering services for the production of
the property,
§ (iii) another
taxable Canadian corporation all the issued and outstanding shares of the
capital stock of which (except directors’ qualifying shares) belong to an
individual 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 by the individual for the production of the
property, or
§ (iv) a
partnership that is carrying on business in Canada, to the extent that the
amount paid
§
(A) is attributable to services personally
rendered by an individual who is a member of the partnership for the production
of the property, or
§
(B) is attributable to and does not exceed
the salary or wages of the partnership’s employees for personally rendering
services for the production of the property, and
o (c) where
§ (i) the
corporation is a subsidiary wholly-owned corporation of another taxable
Canadian corporation (in this section referred to as the “parent”), and
§ (ii) the
corporation and the parent have agreed that this paragraph apply in respect of
the production,
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 that production and that would be included in the
labour expenditure of the corporation in respect of the property 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 by
the parent and were paid at the same time and to the same person or partnership
as it was by the parent.
·
“qualified corporation”
«
société admissible »
“qualified
corporation” for a taxation year means a corporation that is throughout the
year a prescribed taxable Canadian 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 business that is a Canadian film or video
production business.
·
“qualified labour expenditure”
« dépense de
main-d’oeuvre admissible »
“qualified
labour expenditure” of a corporation for a taxation year in respect of a
property of the corporation that is a Canadian film or video production means
the lesser of
o (a) the amount, if any, by which
§ (i) the
total of
§
(A) the labour expenditure of the
corporation for the year in respect of the production, and
§
(B) the amount by which the total of all
amounts each of which is the labour expenditure of the corporation for a
preceding taxation year in respect of the production exceeds the total of all
amounts each of which is a qualified labour expenditure of the corporation in
respect of the production for a preceding taxation year before the end of which
the principal filming or taping of the production began
exceeds
§ (ii) where
the corporation is a parent, the total of all amounts each of which is an
amount that is the subject of an agreement in respect of the production
referred to in paragraph (c) of the definition “labour expenditure”
between the corporation and its wholly-owned corporation, and
o (b) the amount determined by the formula
A - B
where
is 48% of the amount by which
§ (i) the
cost or, in the case of depreciable property, the capital cost to the
corporation of the production at the end of the year,
exceeds
§ (ii) the
total of all amounts each of which is an amount of assistance in respect of
that cost that, at the time of the filing of 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 cost), and
is the total of all amounts each of which is the
qualified labour expenditure of the corporation in respect of the production
for a preceding taxation year before the end of which the principal filming or
taping of the production began.
·
“salary or wages”
« traitement ou
salaire »
“salary or
wages” does not include an amount described in section 7 or any amount
determined by reference to profits or revenues.
Rules governing labour expenditure of a corporation
(2) For the purpose of the definition
“labour expenditure” in subsection 125.4(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 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; and
·
(c) that definition does not apply
to an amount to which section 37 applies.
Tax credit
(3) Where
·
(a) a qualified corporation for a
taxation year files with its return of income for the year
o (i) a Canadian film or video production certificate issued in
respect of a Canadian film or video production of the corporation,
o (ii) a prescribed form containing prescribed information, and
o (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,
the corporation 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 25% of its qualified labour expenditure for the
year in respect of the production.
Exception
(4) This section does not apply to a
Canadian film or video production where an investor, or a partnership in which
an investor has an interest, directly or indirectly, may deduct an amount in
respect of the production in computing its income for any taxation year.
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 125.4(3) to have paid for a taxation
year is assistance received by the corporation from a government immediately
before the end of the year.
Revocation of a certificate
(6) A Canadian film or video
production certificate in respect of a 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 a
Canadian film or video production,
and, for the purpose of
subparagraph 125.4(3)(a)(i), a certificate that has been revoked is
deemed never to have been issued.
·
Section
1106 of the Income Tax Regulations, CRC c 945 (ITR):
Division VII
Certificates Issued by the
Minister of Canadian Heritage
Interpretation
1106. (1) The following definitions
apply in this Division and in paragraph (x) of Class 10 in Schedule II.
·
“application for a certificate of completion”
« demande de
certificat d’achèvement »
“application
for a certificate of completion”, in respect of a film or video production,
means an application by a prescribed taxable Canadian corporation in respect of
the production, filed with the Minister of Canadian Heritage before the day (in
this Division referred to as “the production’s application deadline”) that is
the later of
o (a) the day that is 24 months after the end of the corporation’s
taxation year in which the production’s principal photography began, or
o (b) the day that is 18 months after the day referred to in
paragraph (a), if the corporation has filed, with the Canada Revenue
Agency, and provided to the Minister of Canadian Heritage a copy of, a waiver
described in subparagraph 152(4)(a)(ii) of the Act, within the normal
reassessment period for the corporation in respect of the first and second
taxation years ending after the production’s principal photography began.
·
“Canadian”
« Canadien »
“Canadian”
means a person that is
o (a) an individual who is
§ (i) a
citizen, as defined in subsection 2(1) of the Citizenship Act, of
Canada, or
§ (ii) a
permanent resident, as defined in subsection 2(1) of the Immigration and
Refugee Protection Act, or
o (b) a corporation that is a Canadian-controlled entity, as
determined under sections 26 to 28 of the Investment Canada Act.
·
“Canadian
government film agency”
« agence
cinématographique d’État »
“Canadian
government film agency” means a federal or provincial government agency whose
mandate is related to the provision of assistance to film productions in Canada.
·
“certificate of completion”
« certificat
d’achèvement »
“certificate
of completion”, in respect of a film or video production of a corporation,
means a certificate certifying that the production has been completed, issued
by the Minister of Canadian Heritage before the day (in this Division referred
to as “the production’s certification deadline”) that is six months after the
production’s application deadline.
·
“excluded production”
« production
exclue »
“excluded
production” means a film or video production, of a particular corporation that
is a prescribed taxable Canadian corporation,
o (a) in respect of which
§ (i) the
particular corporation has not filed an application for a certificate of
completion before the production’s application deadline,
§ (ii) a
certificate of completion has not been issued before the production’s
certification deadline,
§ (iii) where
the production is not a treaty co-production, neither the particular
corporation nor another prescribed taxable Canadian corporation related to the
particular corporation
§
(A) is, except to the extent of an interest
in the production held by a prescribed taxable Canadian corporation as a
co-producer of the production or by a prescribed person, the exclusive
worldwide copyright owner in the production for all commercial exploitation
purposes for the 25-year period that begins at the earliest time after the
production was completed that it is commercially exploitable, and
§
(B) controls the initial licensing of
commercial exploitation,
§ (iv) there
is not an agreement in writing, for consideration at fair market value, to have
the production shown in Canada within the 2-year period that begins at the
earliest time after the production was completed that it is commercially
exploitable,
§
(A) with a corporation that is a Canadian
and is a distributor of film or video productions, or
§
(B) with a corporation that holds a
broadcasting license issued by the Canadian Radio-television and
Telecommunications Commission for television markets, or
§ (v) distribution
is made in Canada within the 2-year period that begins at the earliest time
after the production was completed that it is commercially exploitable by a
person that is not a Canadian, or
o (b) that is
§ (i) news,
current events or public affairs programming, or a programme that includes
weather or market reports,
§ (ii) a
talk show,
§ (iii) a
production in respect of a game, questionnaire or contest (other than a
production directed primarily at minors),
§ (iv) a
sports event or activity,
§ (v) a
gala presentation or an awards show,
§ (vi) a
production that solicits funds,
§ (vii) reality
television,
§ (viii) pornography,
§ (ix) advertising,
§ (x) a
production produced primarily for industrial, corporate or institutional
purposes, or
§ (xi) a
production, other than a documentary, all or substantially all of which
consists of stock footage.
·
“producer”
« producteur »
“producer”
means a producer of a film or video production, except that it does not include
a person unless the person is the individual who
o (a) controls and is the central decision maker in respect of the
production;
o (b) is directly responsible for the acquisition of the production
story or screenplay and the development, creative and financial control and
exploitation of the production; and
o (c) is identified in the production as being the producer of the
production.
·
“remuneration”
« rémunération
»
“remuneration”
means remuneration other than an amount determined by reference to profits or
revenues.
·
“twinning arrangement”
«
convention de jumelage »
“twinning arrangement”
means the pairing of two distinct film or video productions, one of which is a
Canadian film or video production and the other of which is a foreign film or
video production.
Prescribed Taxable Canadian
Corporation
(2) For the purposes of section 125.4
of the Act and this Division, “prescribed taxable Canadian corporation” means a
taxable Canadian corporation that is a Canadian, other than a corporation that
is
·
(a) 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 Part I of the Act; or
·
(b) a prescribed labour-sponsored
venture capital corporation, as defined in section 6701.
Treaty Co-production
(3) For the purpose of this Division,
“treaty co-production” means a film or video production whose production is
contemplated under any of the following instruments, and to which the
instrument applies:
·
(a) a co-production treaty entered
into between Canada and another State;
·
(b) the Memorandum of Understanding
between the Government of Canada and the Government of the Hong Kong Special
Administrative Region of the People’s Republic of China on Film and Television
Co-Production;
·
(c) the Common Statement of Policy
on Film, Television and Video Co-Productions between Japan and Canada;
·
(d) the Memorandum of Understanding
between the Government of Canada and the Government of the Republic of Korea on
Television Co-Production; and
·
(e) the Memorandum of Understanding
between the Government of Canada and the Government of the Republic of Malta on
Audio-Visual Relations.
Canadian Film or Video Production
(4) Subject to subsections (6) to
(9), for the purposes of section 125.4 of the Act, this Part and Schedule II,
“Canadian film or video production” means a film or video production, other
than an excluded production, of a prescribed taxable Canadian corporation in
respect of which the Minister of Canadian Heritage has issued a certificate
(other than a certificate that has been revoked under subsection 125.4(6) of
the Act) and that is
·
(a) a treaty co-production; or
·
(b) a film or video production
o (i) whose producer is a Canadian at all times during its
production,
o (ii) in respect of which the Minister of Canadian Heritage has
allotted not less than six points in accordance with subsection (5),
o (iii) in respect of which not less than 75% of the total of all
costs for services provided in respect of producing the production (other than
excluded costs) was payable in respect of services provided to or by
individuals who are Canadians, and for the purpose of this subparagraph,
excluded costs are
§
(A) costs determined by reference to the
amount of income from the production,
§
(B) remuneration payable to, or in respect
of, the producer or individuals described in any of subparagraphs (5)(a)(i)
to (viii) and (b)(i) to (vi) and paragraph (5)(c) (including any
individuals that would be described in paragraph (5)(c) if they were
Canadians),
§
(C) amounts payable in respect of
insurance, financing, brokerage, legal and accounting fees, and similar
amounts, and
§
(D) costs described in subparagraph (iv),
and
o (iv) in respect of which not less than 75% of the total of all
costs incurred for the post-production of the production, including laboratory
work, sound re-recording, sound editing and picture editing, (other than costs
that are determined by reference to the amount of income from the production
and remuneration that is payable to, or in respect of, the producer or
individuals described in any of subparagraphs (5)(a)(i) to (viii) and (b)(i)
to (vi) and paragraph (5)(c), including any individuals that would be
described in paragraph (5)(c) if they were Canadians) was incurred in
respect of services provided in Canada.
(5) For the purposes of this
Division, the Minister of Canadian Heritage shall allot, in respect of a film
or video production
·
(a) that is not an animation
production, in respect of each of the following persons if that person is an
individual who is a Canadian,
o (i) for the director, two points,
o (ii) for the screenwriter, two points,
o (iii) for the lead performer for whose services the highest
remuneration was payable, one point,
o (iv) for the lead performer for whose services the second
highest remuneration was payable, one point,
o (v) for the art director, one point,
o (vi) for the director of photography, one point,
o (vii) for the music composer, one point, and
o (viii) for the picture editor, one point;
·
(b) that is an animation
production, in respect of each of the following persons if that person is an
individual who is a Canadian,
o (i) for the director, one point,
o (ii) for the lead voice for which the highest or second highest
remuneration was payable, one point,
o (iii) for the design supervisor, one point,
o (iv) for the camera operator where the camera operation is done
in Canada, one point,
o (v) for the music composer, one point, and
o (vi) for the picture editor, one point;
·
(c) that is an animation
production, one point if both the principal screenwriter and the storyboard
supervisor are individuals who are Canadians; and
·
(d) that is an animation
production, in respect of each of the following places if that place is in
Canada,
o (i) for the place where the layout and background work is done,
one point,
o (ii) for the place where the key animation is done, one point,
and
o (iii) for the place where the assistant animation and
in-betweening is done, one point.
(6) A production (other than a
production that is an animation production or a treaty co-production) is a
Canadian film or video production only if there is allotted in respect of the
production two points under subparagraph (5)(a)(i) or (ii) and one point
under subparagraph (5)(a)(iii) or (iv).
(7) An animation production (other
than a production that is a treaty co-production) is a Canadian film or video
production only if there is allotted, in respect of the production,
·
(a) one point under subparagraph
(5)(b)(i) or paragraph (5)(c);
·
(b) one point under subparagraph
(5)(b)(ii); and
·
(c) one point under subparagraph
(5)(d)(ii).
Lead performer/screenwriter
(8) For the purposes of this
Division,
·
(a) a lead performer in respect of
a production is an actor or actress who has a leading role in the production
having regard to the performer’s remuneration, billing and time on screen;
·
(b) a lead voice in respect of an
animation production is the voice of the individual who has a leading role in
the production having regard to the length of time that the individual’s voice
is heard in the production and the individual’s remuneration; and
·
(c) where a person who is not a
Canadian participates in the writing and preparation of the screenplay for a
production, the screenwriter is not a Canadian unless the principal
screenwriter is an individual who is otherwise a Canadian, the screenplay for
the production is based upon a work authored by a Canadian, and the work is
published in Canada.
Documentary Production
(9) A documentary production that is
not an excluded production, and that is allotted less than six points because
one or more of the positions referred to in paragraph (5)(a) is
unoccupied, is a Canadian film or video production if all of the positions
described in that paragraph that are occupied in respect of the production are
occupied by individuals who are Canadians.
Prescribed Person
(10) For the purpose of section 125.4
of the Act and this Division, “prescribed person” means any of the following:
·
(a) a corporation that holds a
television, specialty or pay-television broadcasting licence issued by the
Canadian Radio-television and Telecommunications Commission;
·
(b) a corporation that holds a
broadcast undertaking licence and that provides production funding as a result
of a “significant benefits” commitment given to the Canadian Radio-television
and Telecommunications Commission;
·
(c) a person to which paragraph
149(1)(l) of the Act applies and that has a fund that is used to finance
Canadian film or video productions;
·
(d) a Canadian government film
agency;
·
(e) in respect of a film or video
production, a non-resident person that does not carry on a business in Canada
through a permanent establishment in Canada where the person’s interest in the
production is acquired to comply with the certification requirements of a
treaty co-production twinning arrangement; and
·
(f) a person
o (i) to which paragraph 149(1)(f) of the Act applies,
o (ii) that has a fund that is used to finance Canadian film or
video productions, all or substantially all of which financing is provided by
way of a direct ownership interest in those productions, and
o (iii) that, after 1996, has received donations only from
persons described in paragraphs (a) to (e).
Prescribed Amount
(11) For the purpose of the
definition “assistance” in subsection 125.4(1) of the Act, “prescribed amount”
means an amount paid or payable to a taxpayer under the License Fee Program of
the Canada Television and Cable Production Fund or the Canada Television
Fund/Fonds canadien de télévision.
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