Subsection 125.5(1) - Definitions
Eligible production corporation
Administrative Policy
10 November 2014 Internal T.I. 2014-0532801I7 - film or video production services tax credit
In agreeing that the two branches of the "eligible production corporation" test are distinct, the Directorate stated:
whether the production corporation provides services in respect of an accredited corporation, or whether it contracts directly with the copyright owner, is not relevant to the first branch of the test (i.e.,…the "primarily business" test). These facts are relevant in the second branch of the test (i.e., … the copyright ownership test) or the definition of "accredited production" in subsection 125.5(1)… .
Paragraph (d)
Administrative Policy
23 December 2003 External T.I. 2003-0014655 F - article 125.5
Her Majesty in right of a province held more than 50% but less than 90% of all the issued and outstanding shares of Aco (whose taxable income was not exempt under Part I), and Aco held more than 50% of all issued and outstanding shares of Bco (which carried on a film and video production business), so that Her Majesty controlled Bco.
In rejecting an argument that Bco was not excluded from being an "eligible production corporation" by virtue of being a corporation indirectly controlled by Her Majesty in right of a province, because Her Majesty in right of a province is not a taxpayer for the purposes of the Act and does not have taxable income, CCRA stated:
… Braithwaite, 70 DTC 6001 … stated: “Her Majesty is just as capable … of being a "person taxable" as is an ordinary person … as is evidenced by the fact that there are various federal statutes that do impose direct and indirect taxes on Her Majesty in one way or another.” … We believe that Her Majesty in right of a province is a person and a taxpayer for the purposes of the Act. …
Furthermore, we are of the view that the exemption from tax under Part I of the Act referred to in paragraph (d) of the definition of "eligible production corporation" … refers not only to persons whose taxable income is exempt because of section 149 but also to persons whose taxable income is exempt because of, inter alia, the immunity from tax enjoyed by certain persons such as Her Majesty in right of a province.