Zone3 – Federal Court of Appeal declines to require CAVCO to consider extending favourable certification guidelines to the taxpayer’s TV production

In the Federal Court below, Martineau J had ordered the Canadian Audio-Visual Certification Office (“CAVCO”) to reconsider a decision to reject a leading Quebec TV producer’s application for certification of a TV series. The essential problem was that CAVCO’s advance notice of a negative determination - on the basis that the production was “in respect of a game, questionnaire or contest” and, therefore, ineligible for the Canadian film or video production tax credit under Reg. 1106(1), “excluded production,” (b)(iii) – did not address the taxpayer’s position that the shows’ question-and-answer format merely served as a vehicle for effectively presenting the show’s informational (historical) content, and did not disclose that, in fact, the application had been rejected through the mechanical application of a “decision tree” that the taxpayer did not find out about until later.

In reversing nullifying Martineau J's order (so that the CAVCO rejection stood), Montigny JA stated that “the exclusion of a game, questionnaire or contest is sufficiently broad to encompass the Production in this case, irrespective of the relative importance to be accorded to the quiz-questionnaire aspect compared to that of its historic and informative content,” and (respecting the alleged procedural unfairness in the use of the decision tree) “its application normally has the effect of favouring the producers as it limits the scope of the exclusion under the Regulation” and “the treatment accorded to other productions does not create legitimate expectations for the respondent.”

Neal Armstrong. Summary of A.G. (Canada) v. Zone3-XXXVI Inc., 2016 CAF 242 under Reg. 1106(1) “excluded production” – (b)(iii).