Ontario production services tax credit

The Ontario production services tax credit is a refundable tax credit based on qualifying production expenditures incurred for eligible productions by a qualifying corporation in a tax year.

The credit is equal to 21.5% of qualifying production expenditures incurred after April 23, 2015, including:

• qualifying labour expenditures
• purchase or rental of qualifying tangible properties, such as equipment and studio rentals

The rate was previously 25%.

For expenditures incurred after April 23, 2015, and before August 1, 2016, the rate of the credit is still 25% if all of the following criteria are satisfied:

• Before April 24, 2015, the corporation entered into at least one written agreement for a qualifying production expenditure for the production with a person that deals at arm’s length with the corporation and any of the following criteria are satisfied:
  • the agreement is for the services of a producer, a director, a key cast member, a production crew or a post-production crew;
  • the agreement is for a studio located in Ontario, or a location in Ontario;
  • the agreement shows, in the opinion of the minister of Tourism, Culture and Sport, that the corporation has made a significant commitment to production activities in Ontario.
• Before August 1, 2015, the corporation applied to the Ontario Media Development Corporation for a certificate of eligibility for the production.
• Principal photography or key animation for the production started before August 1, 2015.
  
• Qualifying expenditures
• Eligible corporations
• Claiming the credit

Qualifying expenditures

The qualifying production expenditures include the sum of:

• eligible wage expenditures
• eligible service contract expenditures
• eligible tangible property expenditures
• reimbursements to the parent company of eligible wage and service contract expenditures

less

• assistance reasonably related to these expenditures (some exceptions apply – see Schedule 558)

The eligible expenditures incurred in the tax year must be reasonable and directly attributable to the eligible production, performed in Ontario and paid to certain persons or entities, within 60 days of the end of the tax year.

For tax years beginning after April 23, 2015, Ontario labour expenditures (including labour under a service contract) must amount to at least 25% of the total expenditures. Otherwise, the corporation’s qualifying production expenditure limit for a tax year cannot be more than four times the Ontario labour expenditures (including labour under a service contract). Expenditures incurred through non arm’s length contracts are limited to expenditures that would have been eligible if incurred directly by the corporation.

For expenditures incurred after June 30, 2009, only expenditures incurred after the final script stage to the end of the post production stage are eligible for the credit.

Eligible corporations

You can get a certificate of eligibility from the Ontario Media Development Corporation. To be eligible for the credit, a corporation must meet certain criteria, including:

• be primarily engaged, in the tax year, in the carrying on of a film or video production business, or a film or video production services business, through a permanent establishment in Ontario
• not be exempt from tax, for the tax year, under Part III of the Taxation Act, 2007 (Ontario) or Part I of the federal Income Tax Act
• not, at any time in the tax year, be controlled directly or indirectly, in any way, by one or more persons, all or part of whose taxable income was exempt from tax under Part I of the federal Act
• not be a prescribed labour-sponsored venture capital corporation at any time in the tax year

Claiming the credit

Before claiming the credit, send a completed Ontario Media Development Corporation (OMDC) application form to the OMDC. If the production is eligible, the OMDC will issue a certificate of eligibility indicating the estimated amount of the tax credit. You must apply online to the OMDC.

To claim the credit, file the following with your T2 Corporation Income Tax Return for the year for each eligible production:

• a certificate of eligibility (or copy) issued by the OMDC; and
• a completed Schedule 558, Ontario Production Services Tax Credit.

If you file your return electronically, send a paper copy of the certificate of eligibility issued by the OMDC to the appropriate Film Services Unit (FSU). The location of the production corporation’s books and records usually determines which FSU will handle the review of your claim.

If you file a paper return, send the return and required attachments to your tax centre.

On line 460 of Schedule 5, Tax Calculation Supplementary – Corporations, enter the total amount of the credit you are claiming.

The CRA will not begin to process the media tax credit claim until it receives all of the required documentation. A claim is considered to be complete when all of the above documentation is filed with the CRA.

For more information, see Schedule 558, section 92 of the Taxation Act, 2007 (Ontario), and After you file your claim.

Forms and publications

• Schedule 558, Ontario Production Services Tax Credit
• Schedule 5, Tax Calculation Supplementary – Corporations

Government partners

• Ontario Ministry of Finance

• Ontario e-Laws

Date modified:

2017-04-20