4 August 2000 Internal T.I. 2000-0037687 - Film Tax Creidts; 30 months

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: Which taxation year where film co-production?

Position: Taxation year of each corporation

Reasons: film tax credits and certificates are issued on a corporation by corporation basis per 125.4(3) and definition of "excluded production"

August 4, 2000

	SR & ED Directorate	Partnerships Section
	Financial Legislation Application Section 	Denise Dalphy
	Mel Machado, Manager 	(613) 957-9231

Attention: Alain Marchand
2000-003768

Taxation year end dates for co-productions

This is in response to your memorandum dated of July 13, 2000, wherein you have inquired about the taxation year that should be used to determine the 30-month deadline for issuing a Part B certificate in situations where the production is a co-production of two corporations.

The Canadian film or video production tax credit is provided for in subsection 125.4(3) of the Income Tax Act (the "Act") and it is only available to "qualified corporations". The tax credit is not available to partnerships or individuals. Subsection 125.4(3) of the Act provides that, for the tax credit to be available, the qualified corporation must file , in its return of income for the year, a "Canadian film or video production certificate" issued in respect of a "Canadian film or video production of the corporation" [emphasis added].

Subsection 125.4(1) of the Act defines the term "Canadian film or video production certificate" for the purpose of the tax credit in subsection 125.4(3) of the Act. Subsection 125.4(1) defines the certificate as follows:

"Canadian film or video production certificate" means a certificate issued in respect of a production by the Minister of Canadian Heritage

(a) certifying that the production is a Canadian film or video production, and

(b) estimating amounts relevant for the purpose of determining the amount deemed under subsection (3) to have been paid in respect of the production;

The meaning of the term "Canadian film or video production" is prescribed in subsection 1106(3) of the Income Tax Regulations (the "Regulations"). This subsection provides, inter alia, that the term means " ... a film or video production, other than an excluded production, of a prescribed taxable Canadian corporation" [emphasis added].

The term "excluded production" is also defined in the context of a particular corporation. Subsection 1106(1) of the Regulations provides:

" "excluded production" means a film or video production of a prescribed taxable Canadian corporation [emphasis added]

(a) in respect of which

(i) the Minister of Canadian Heritage has not issued a certificate of completion, within 30 months after the end of the corporation's taxation year [emphasis added] in which the production's principal photography began, certifying that the production was completed within two years after the end of the year,"

Based on the above provisions of the Act and Regulations, a certificate is issued by the Minister of Canadian Heritage in respect of a production of a particular corporation. As such, if certificates are issued in respect of a co-production of two corporations, the 30-month date would be applied separately to the share of the film or video production of each corporation.

Please contact the writer at 957-9231 if we can be of further assistance.

Paul Lynch
for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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