Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: availability of film tax credits
Position: limited to certain corporations
Reasons: 125.4 and 125.5
1999-001150
XXXXXXXXXX Denise Dalphy
(613) 957-9231
Attention: XXXXXXXXXX
June 5, 2000
Dear Sirs:
Re: Corporate Partner
We are writing in reply to your facsimile transmission dated October 22, 1999 wherein you inquire about corporate partners and film production expenses.
The Income Tax Act (the "Act") does not impose restrictions upon which persons may or may not be partners. It merely sets out the income tax rules that apply to various persons, whether individuals or corporations. Although a partnership is not at law a person, for certain purposes, the Act requires that certain computations be made as if the partnership were a separate person resident in Canada, and then provides for the flow-through of income and losses to the partners (whether corporations or individuals) of the partnership. The business income or losses of a partnership are computed at the partnership level and the income or losses are flowed-out by source as provided for in the partnership agreement to the partners (corporate or individual) where the partner, whether corporate or individual, then is subject to the rules in the Act with respect to the taxation of income and the losses of persons.
With respect to the production of films in particular, two tax credits are provided in the Act, namely the Canadian Film or Video Production Tax Credit and the Film or Video Production Services Tax Credit, in sections 125.4 and 125.5 of the Act, respectively. Both tax credits are only available to "qualified corporations" and "eligible production corporations", respectively. These terms are defined in the Act. Although partnerships may be involved in investing in film productions, the tax credits can only be earned by the aforementioned corporations.
The foregoing comments represent our general views with respect to the subject matter. As indicated in paragraph 22 of Information Circular 70-6R3, the above comments do not constitute an income tax ruling and accordingly are not binding on the Canada Customs and Revenue Agency. Our practice is to make this specific disclaimer in all instances in which we provide an opinion.
Yours truly,
Paul Lynch
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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