28 September 1998 Ministerial Letter 9822428 - CANADIAN FILM OR VIDEO PRODUCTION TAX CREDIT

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:

Will distributors be viewed as having acquired copyright ownership in a film?

PositionS:

Not in a normal commercial arrangement. Question of fact, based on documents and agreements. We are still developing guidelines for less than obvious situations.

Reasons:

Guidelines provided in paragraph 4 of IT-441 and in our draft investor rule guidelines issued June 17, 1998.

982242
XXXXXXXXXX Allan Nelson
(613) 957-9768

Attention: XXXXXXXXXX

September 28, 1998

Dear Sir:

Re: Canadian Film or Video Production Tax Credit - Investor Rules

Thank you for your letter dated July 30, 1998, wherein you expressed concerns about our Directorate’s June 17, 1998, draft interpretive position on the meaning of the term “investor”, as it relates to the Canadian film or video production tax credit.

I understand you are particularly concerned about when a distributor will be treated as having an equity interest in a production and the effects on the producer’s Canadian film or video production tax credit.

Generally, it is our view that in normal commercial distribution arrangements the contracts and agreements between the parties do not indicate that there has been a disposition of a portion of the copyright in the production to the distributor. In those circumstances, there would be no impact on the producer’s eligibility to claim the Canadian film or video production tax credit. However, in determining whether there has been a disposition of copyright or a portion thereof, we will use the principles referred to in paragraph 4 of Interpretation Bulletin IT- 441.

I appreciate your request, among many others which we have received, that we wait for a full response from all industry sectors, and have discussions with associations such as yours, before finalizing our position.

We hope to issue a revised and clarified draft of our June 17 interpretive guidelines, early in the new year. In any revised draft of this paper, consideration will be given to the comments and suggestions received from interested industry participants, and from consultations with officials at both CAVCO and the Department of Finance. After issuing the revised draft guidelines, opportunity will be given for further representations and discussions, prior to finalizing the Department’s position.

I hope the above clarifies this matter and is of assistance to you.

Yours truly,

Director
Resources, Partnerships and Trusts Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch