CAVCO Public Notice 2013-01

Administration of Application Deadlines for the CPTC

The Canadian Audio-Visual Certification Office (CAVCO) is implementing a process for confirming directly with the Canada Revenue Agency (CRA) the taxation year end of applicants to the Canadian Film or Video Production Tax Credit (CPTC) and whether valid waivers (CRA form T2029) have been filed. The correct taxation year end is required for the determination of application deadlines, and valid waivers are required when the initial (24-month) deadline for applying for a certificate of completion is not met. This new process results in the elimination of the requirement for applicants to submit CAVCO form 01F15, “Waiver Declaration”.

Purpose

1. CAVCO has undertaken a review of procedures for confirming taxation year ends of applicants (which directly determines application deadlines for the CPTC), and of the need for CAVCO form 01F15 “Waiver Declaration”. We have determined that, through improved coordination with the CRA, we can (1) eliminate the need for applicants to submit the waiver declaration form to CAVCO, and (2) proactively confirm taxation year end dates, thereby improving our ability to remind applicants of an upcoming deadline and ensuring that files past their final deadline are dealt with expediently.

Background

2. Applications for certification under the CPTC are generally done in two phases, Part A (the “Canadian film or video production certificate”) and Part B (the “certificate of completion”). It is also possible to submit a single application, which is then treated as an A/B application. While the CPTC can be claimed with the Part A certificate, Part B certification is also required for the production to remain eligible for the tax credit. If a Part A certificate is issued but the applicant does not apply or does not qualify for the Part B certificate, then the Part A certificate is revoked and deemed never to have been issued. Any previously issued CPTC refunds for a revoked production may be recaptured by the CRA. Please refer to the CPTC guidelines for more information about the process and requirements for applying for certification.
3. The deadlines referred to in this document are for the Part B (or A/B) application. An application for a Part A certificate can be made at any time prior to the Part B application deadline.
4. Subsection 1106 (1) of the Income Tax Regulations outlines the statutory requirements with respect to deadlines and the need to file waivers with the CRA:

“application for a certificate of completion”, in respect of a film or video production, means an application by a prescribed taxable Canadian corporation in respect of the production, filed with the Minister of Canadian Heritage before the day (in this Division referred to as “the production’s application deadline”) that is the later of:

(a) the day that is 24 months after the end of the corporation’s taxation year in which the production’s principal photography began, or

(b) the day that is 18 months after the day referred to in paragraph (a), if the corporation has filed, with the Canada Revenue Agency, and provided to the Minister of Canadian Heritage a copy of, a waiver described in subparagraph 152(4)(a)(ii) of the Act, within the normal reassessment period for the corporation in respect of the first and second taxation years ending after the production’s principal photography began.

[…]
“certificate of completion”, in respect of a film or video production of a corporation, means a certificate certifying that the production has been completed, issued by the Minister of Canadian Heritage before the day (in this Division referred to as “the production’s certification deadline”) that is six months after the production’s application deadline.

[…]
“excluded production” means a film or video production, of a particular corporation that is a prescribed taxable Canadian corporation,

(a) in respect of which

1. the particular corporation has not filed an application for a certificate of completion before the production’s application deadline,
2. a certificate of completion has not been issued before the production’s certification deadline,[…].

5. In other words, the deadline to apply for the certificate of completion (Part B certificate) is two years after the end of the corporation’s taxation year in which principal photography commenced (24-month deadline). If the corporation is not able to apply by this deadline, an additional 18 months will be added to the deadline (42-month deadline), provided that the applicant files a valid waiver (CRA form T2029 – Waiver in Respect of the Normal Reassessment Period) for the relevant taxation years. This waiver must be filed with the CRA within the normal reassessment period for those taxation years, and prior to the final 42-month deadline. The normal reassessment period is three years from the date of mailing the notice of assessment for Canadian-controlled private corporations or four years for other corporations.

Example

Corporate Taxation Year End (TYE):

December 31

Start of Principal Photography:

February 3, 2010

End of taxation year in which principal began: 

December 31, 2010

24-month deadline:

December 31, 2012

42-month deadline:

June 30, 2014

48-month deadline (for issuance of B certificate):

December 31, 2014

6. The 48-month deadline is the date by which CAVCO must issue a Part B certificate. A Part B or Part A/B application must be received by the 42-month deadline, and the applicant must respond to all further inquiries/requests for information from CAVCO in a timely manner so that the analysis can be completed and a certificate issued by the 48-month deadline. CAVCO has no discretion to recommend certification after this deadline if applicants have not met their obligations.
7. As the CPTC is jointly administered by CAVCO and the CRA, and in accordance with subsection 241(4) of the Income Tax Act, these two departments may share information that is relevant to the administration of the program.

Verifying the Taxation Year End

8. While the responsibility for meeting the requirements of the Income Tax Act and the Regulations rests at all times with the applicant, CAVCO issues reminder notices with respect to application deadlines at 22 months, 24 months, 40 months, and 41 months. The taxation year end provided by the applicant with a Part A application is used to calculate the application deadlines and issue these notices. When the taxation year end provided by the applicant is incorrect, or when the applicant changes their taxation year end and does not inform CAVCO, then the notices will also be incorrect.
9. Effective immediately, CAVCO will be coordinating with the CRA to verify the taxation year end of the Qualified Corporation for all productions that have missed the initial 24-month deadline. This will allow CAVCO to ensure that the reminder notices being sent are based on the correct deadline, and will also speed up the process of revoking productions that have missed the 42-month deadline.
10. Please note that this verification with the CRA does not absolve the applicant of their obligation to notify CAVCO if there is a change to their taxation year end.

Verifying that a valid waiver (CRA form T2029) has been filed with the CRA

11. In lieu of providing CAVCO with a copy of the waivers filed with the CRA as stipulated in the Regulations, CAVCO practice has been to require that applicants submit CAVCO form 01F15 – “Waiver Declaration”, attesting to the fact that the waivers have been filed with the CRA, or that the waivers have not been filed because the relevant taxation years have not yet been assessed by the CRA.
12. Effective immediately, CAVCO will be coordinating with the CRA to verify that valid waivers have been filed for productions applying after the 24-month deadline. No action (other than actually filing the waivers with the CRA) is required on the part of the applicant. CAVCO form 01F15 has been removed from CAVCO’s website.

Filing CRA form T2029 - “Waiver in respect of the normal reassessment period”

13. To obtain a copy of form T2029, go to the CRA website. The completed form T2029 must be filed with the CRA within the normal reassessment period for the first and second taxation year end following commencement of principal photography or before the 42-month CPTC application deadline, whichever comes first.
14. Each form T2029 you file with the CRA must meet the following requirements:

• a notice of an original assessment or a notification that no tax is payable must have been issued to the corporation for the tax year indicated on the form T2029;  
• the business number (BN) provided must be valid;
• the corporation name and address, and the tax year end must correspond with the records of the CRA;
• the matter(s) being waived must be specified. For example, “… in respect of: the Canadian Film or Video Production Tax Credit (section 125.4 of the Income Tax Act) for the following production(s):

  Title: (enter title)
  PCH or Case File Number (enter number assigned by CAVCO on the Part A certificate, if applicable)”;

• a separate form T2029 waiver must be filed for each tax year end;
• the waiver must be in respect of the normal reassessment period provided under subparagraph 152(4)(a)(ii) of the Income Tax Act (i.e., the first box within the “Waiver” section of form T2029 must be checked); and
• the signature of a legal representative or authorized officer must be provided.

15. Send the completed form T2029 to: Manager, Film & Media Tax Credits Section
    Canada Revenue Agency
    16th Floor, Canada Building
    344 Slater Street
    Ottawa, ON K1A 0L5

Deadlines for domestic coproductions

16. Where two Canadian companies enter into a domestic coproduction without creating a jointly owned company and do not have the same taxation year end, the deadlines for applying to the CPTC will be determined using the taxation year end of the primary applicant. However, the coproducing partner will also have to file valid waivers with the CRA should a Part B application be received after the 24 month deadline.

Coming Into Force

17. These changes take effect immediately. The elimination of CAVCO form 01F15 – “Waiver Declaration” will not be reflected in the CPTC guidelines until more substantive changes are required to that document.

Enquiries

18. Please contact CAVCO with any questions related to this public notice.