CAVCO Public Notice 2013-02 – Call for Comments
Gatineau, April 19, 2013
Lead Performer Policy and Clarification of the “Documentary Exception”The Department of Canadian Heritage calls for written comments on a lead performer policy that clarifies how CAVCO determines which performers are eligible for lead performer points for the Canadian Film or Video Production Tax Credit (CPTC).This document also outlines how CAVCO interprets subsection 1106(9) of the Regulations for documentary production.
- The purpose of this policy is to clearly outline how CAVCO determines whether a performer in a production is a “lead” performer for the purpose of the Canadian Film or Video Production Tax Credit (CPTC). This policy document will also discuss the “documentary exception” and how the requirement for a Canadian lead performer applies to documentaries. While CAVCO is requesting comments on this document, nothing in this policy constitutes an actual change in the administration of the CPTC. It is intended to very clearly outline actual practice and to ensure uniform understanding and application of these components of the Income Tax Regulations.
- CAVCO has been receiving an increasing number of applications, particularly for productions in the non-fiction genres, where the individuals identified by the applicant as Canadian lead performers are in fact playing minor roles that, in our view, do not qualify as lead performances. Based on feedback from producers on this issue, it has become clear that there is a significant degree of misunderstanding with respect to what qualifies as a lead performance.
- To be eligible for certification under the CPTC, a production must obtain at least 6 out of a possible 10 Canadian content points for the Canadian key creative personnel that are involved in the production. Points are allotted to episodes in a series on a per-episode basis, and each episode in a series must meet the minimum six points. There is an exception to this for documentaries, which is addressed later in this document. There is also a requirement that at least one point be granted for a Canadian lead or second lead performer.
- All relevant sections of the Income Tax Regulations (“Regulations”) can be found in Annex B.
- This policy does not apply to treaty co-productions.
Determination of Lead Performers and Allotment of Points – Live Action
- As per subsection 1106(6) of the Regulations, at least one point must be allotted to either the lead or second lead performer for a production to qualify for the CPTC. These points are allotted to episodes in a series on a per-episode basis, and may vary by episode. Allotting a point to a lead performer is a two-step process.
- It is rare for a non-documentary production to not have a lead performer. In a case where CAVCO reviews a particular production and concludes that there are no lead performers, then there is no requirement to have a lead performer point to be eligible for certification (though the production must still have at least six points).
Step 1 – Are there lead performers?
- Determine who the lead performers are. There may not be any lead performers, or there could be several. There is no ranking at this stage - only a determination of which individuals, if any, are giving lead performances. As per paragraph 1106(8)(a) of the Regulations,
“a lead performer in respect of a production is an actor or actress who has a leading role in the production having regard to the performer’s remuneration, billing and time on screen,”
- It is understood that in the case of non-fiction productions, there may not be an actual “actor or actress”. However, this does not mean there are no performances being given or no leading roles. For example, hosts, narrators, dancers, singers, specialty act performers, featured experts, judges on a panel, and subjects in lifestyle/human interest productions would all be considered performers. The determination that needs to be made in these cases is whether they have a leading role and are, therefore, lead performers.
- In the most basic of terms, a lead performer should be considered the “star” of a production. As such, a performer who has only a minor role, which no reasonable person would consider to be a “starring” role, will not be considered a lead performer by CAVCO. To be clear, it is not acceptable to insert a Canadian performer into a minor role and claim them as a lead performer for the purpose of meeting the requirement of subsection 1106(6) of the Regulations.
- The elements of remuneration, billing, and time on screen are not necessarily weighed equally in making a determination of lead performance. Following are some of the factors that CAVCO considers with respect to each element.
- Remuneration – If the production is claiming more than one lead performer, the relative remuneration for each performer will be taken into consideration. For example, if the claimed first lead is paid $50,000 and the claimed second lead is paid $5,000, this will be taken as one sign that the claimed second lead may not truly be a lead performer. Remuneration includes direct or indirect financial compensation as well as additional benefits, residuals, contingent compensation, travel or living expenses and all similar expenses incurred in relation to an individual. Remuneration must be compensation for a performance, not for other duties related to the production. Likewise, the remuneration for a performance must not be allocated to other duties to make it appear lower.
- Billing – In addition to looking at how the claimed lead performers are billed in the screen credits, CAVCO may consider how the claimed lead performers are promoted in publicity for the production. For example, if the claimed first lead is promoted heavily in connection with the production and the claimed second lead is only promoted minimally or not at all, this will be taken as one sign that the claimed second lead may not truly be a lead performer. The same principle applies where a claimed first lead is not promoted at all while another individual or individuals are heavily promoted as the stars of the production.
- Time on screen – While there is no set minimum time on screen for a performer to be considered a lead performer, CAVCO does consider the total time as well as the actual content of the performance within its assessment of the time on screen element. For example, while a narrator may be considered a performer, if there is minimal time on screen and/or such time consists of little more than providing introductions, recaps, and updates this would not be considered a lead performance. Likewise, if a claimed second lead performer plays a very minor role as compared to the claimed first lead performer, such a performance may not be considered sufficient to qualify as a lead performance.
- Generally speaking, the “time on screen” element as outlined above is a very important factor in the determination of whether a performance is a lead performance. It should be obvious to anyone watching the production who the lead performers are. Remuneration and billing are expected to be roughly in line with what is seen on screen.
- In considering all of the above, CAVCO examines the claims made by the applicant with respect to which performers are leads, but may also consider performers not claimed as leads by the applicant to determine if they should, in fact, be considered lead performers.
Step 2 – Who are the 1st and 2nd lead performers?
- As per subparagraphs 1106(5)(a)(iii) and (iv) of the Regulations, once the lead performers in a production have been established, the remuneration (including direct or indirect financial compensation as well as additional benefits, residuals, contingent compensation, travel or living expenses and all similar expenses) of each individual is used to rank them in order of highest paid to lowest. A point is allotted for any Canadian determined to be 1st and/or 2nd lead performer as per their remuneration.
- In cases where a Canadian and a non-Canadian lead performer are remunerated equally, the non-Canadian lead performer will be ranked above the Canadian. For example, if the total remuneration for Canadian lead performer A is $50,000 and the remuneration for Canadian lead performer B and non-Canadian lead performer C is $40,000 each, the point for the 1st lead will go to Canadian A, and there will be no point allotted for 2nd lead since that position will be deemed to be occupied by the non-Canadian. Canadian B will be ranked 3rd. Likewise, if there are three lead performers all being remunerated equally at $50,000 each but two of them are non-Canadian and one is Canadian, the two non-Canadians will be ranked 1st and 2nd, with the Canadian 3rd. Therefore no lead performer points will be allotted and the production will be ineligible. This position is in line with the policy intent of the CPTC and consistent with the long-standing requirement that a Canadian lead performer receive higher remuneration than a non-Canadian to obtain a lead performer point.
- Important Note: Before remuneration is used to determine the first and second lead performers, it must first be established that the performance itself is a lead performance, as per Step 1. If a performer receives higher remuneration than other performers but is not determined to have given a lead performance, they will not be allotted a lead performer point. Likewise, if there are only two performers in a production and they are not of equal importance, the secondary performer is not automatically considered a lead performer.
Determination of Lead Performer/Lead Voice and Allotment of Point – Animation
- For animation productions there is only one point available for the lead voice, which can be allotted to the lead voice that was paid either the highest or second highest remuneration. As per paragraph 1106(7)(b) of the Regulations, one point must be allotted to either the lead or second lead voice for the production to qualify.
- If there is no lead voice in an animated production, then there is no requirement to have the lead voice point to be eligible for certification (though the production must still have at least six points).
- As with live action productions, allotting a point to a lead voice is a two-step process. Step one of determining who the lead voices are is the same as the determination of lead performances for live action productions, except that billing is not one of the considerations. As per paragraph 1106(8)(b) of the Regulations,
“a lead voice in respect of an animation production is the voice of the individual who has a leading role in the production having regard to the length of time that the individual’s voice is heard in the production and the individual’s remuneration”.
- As per subparagraph 1106(5)(b)(ii) of the Regulations, allotment of the point is based on remuneration of the lead voice(s), as with step two for live action productions. Please note that there is only one point available for first or second lead voice; even if both the first and second lead voice are Canadian, only one point can be allotted. As outlined in paragraph 18 above for live action productions, in a case where a Canadian and a non-Canadian lead voice are remunerated equally, the non-Canadian will be ranked ahead of the Canadian.
Cameos and Guest Appearances
- A cameo is a brief appearance of a known person in a production, generally in a single scene. By definition this would be a minor role and the individual in question would not be considered a lead performer.
- A guest appearance is a more substantial role in a series with the participation of a performer who is not a part of the regular cast in one or a few episodes. A guest performer will be evaluated using the same criteria as other performers outlined above to determine whether the performance in question is a lead performance. If the performance is a lead performance, then the remuneration of that individual will be compared to the remuneration of the other lead performers to determine if they are the first or second lead for the purpose of allotting key creative points. Points are allotted on a per episode basis.
Lead Performer Issues Related to Non-Fiction Genres
- In a non-fiction series where the same individuals are followed in multiple episodes such that they would be considered as “characters” or “stars” in the show, these individuals will generally be considered lead performers. This is the case even if their performances are unscripted and/or if they are being followed going about their regular lives or doing their jobs.
- In a non-fiction series where individuals are receiving help from a specialist (for example a home design show with different individuals being helped in each episode) or where they are a participant in a lifestyle/human interest production with a competitive element, they will not be considered lead performers.
- The lead performer(s) for live theatre, musicals, opera, dance, and other similar productions are determined in the same fashion as for other live action productions. Please also see paragraph 30 with respect to remuneration for live performances.
- In a performing arts production featuring a single solo artist, that artist will be a lead performer. For a performance by a single band, the band leader (as determined by contract) is the lead. For performances by an orchestra (with no featured solo artist) the lead is generally the concert master. Please also see paragraph 30 with respect to remuneration for live performances.
- If a production is a recording of a live performance that is taking place regardless of the fact that it is being recorded, the remuneration that can be claimed for the production and considered for the purpose of assigning lead performer points is the amount that the performer is receiving for being recorded, not for the actual live performance.
Lead Performer Points for Productions with different versions
- Where two or more versions of a production are produced concurrently (prior to the end of the post-production stage), the lead performers for all versions must be Canadian to receive the required lead performer point(s). For example, the narrators of a documentary with both a French and an English version must both be Canadian.
Clarification of the “Documentary Exception”
- Subsection 1106(9) of the Regulations states that if a documentary production has less than six points due to the fact that certain key creative positions are unoccupied, then that production is still eligible for certification if all occupied key creative positions are held by Canadians.
- This provision of the Regulations applies only to documentary productions that have less than six points, and has no bearing on the requirement for a Canadian lead performer. Documentaries can, and often do, have lead performers. For example, a host, narrator, or other individual that leads you through the storyline of a documentary in a significant way is usually considered a lead performer. Irrespective of the number of points, if there is a lead performer in a documentary, then that lead performer must be Canadian. If there is more than one lead performer, then at least one of the two highest paid lead performers must be Canadian.
- While the subject of a biographical documentary would not be considered a performer, subjects in lifestyle/human interest productions generally are, even if they are being followed as they go about their “real life”.
- As stated previously, if there is no lead performer then there is no requirement to have a lead performer point to be eligible for certification.
Provision of DVDs for a Part A CPTC Application
- While a DVD of a production is generally only required at the Part B stage, CAVCO does reserve the right to request a DVD at the Part A application stage should there be any questions that can only be resolved by viewing the actual production. With the release of this clarification policy, it will become more common for tax credit officers to request a DVD copy of at least one episode (if that is all that is available at the time) for any non-fiction series applying for a Part A certificate. This is to ensure that the production is certified as the correct genre, and that there are no lead performer issues that could lead to the revocation of a certificate at the Part B stage.
Coming Into Force
- CAVCO will set a coming into force date based on the start date of principal photography once comments on this policy have been reviewed and a final version has been published.
- CAVCO will continuously monitor the effectiveness of this policy to ensure it is meeting the CPTC program objectives.
Call for Comments
- The Department requests written comments on this policy from concerned stakeholders. All comments must be received by CAVCO by June 28, 2013. Submissions must include the name of the person or organization providing comments. Paragraphs should be numbered, and submissions longer than five pages should include a summary. All comments received will be given due consideration and a final version of the policy will be published.
- We would prefer to receive all submissions by email at PCH.bcpacsa-cavcosa.PCH@canada.ca. Paper submissions may also be sent to Director, CAVCO, 25 Eddy Street, 8th Floor, Gatineau, QC K1A 0M5. Please note that FEDEX clients must use the postal code J8X 4B5.
- Any questions about this public notice can be sent to CAVCO by email (PCH.bcpacsa-cavcosa.PCH@canada.ca) or you may call us toll-free at 1-888-433-2200 (Teletypewriter toll-free: 1-888-997-3123).
Examples of Performances that are not Lead Performances
- Instances in which a co-host is actually an individual operating in a minor role of expertise. For example, the carpenter in a home renovation show, the nutrition expert in a food show, a technical expert on a technology-oriented show, or a clothes/hair/makeup consultant on a fashion or make-over show. These will not be considered lead performances if the individual in question:
- only appears on screen for a short period of time,
- does not interact with the individuals being helped,
- only appears in a short segment with or without the main host, or
- does not make any significant contribution.
- A narrator in a minor role that adds little or no additional information or commentary and does not help advance the story line. For example in a television production where the “narration” serves primarily to maintain continuity or to buffer commercial breaks. This type of “narration” does not provide anything in-depth, but rather serves only to situate or resituate the viewer within the context of the show.
- A host of a performing arts, variety, or stand-up comedy production who does nothing more than introduce the performer(s).
- A minor role in a fiction production, even if that character is crucial to the narrative. A minor role is still a minor role even if the character in question is responsible for a pivotal plot point.
- A participant in an elimination style series.
- Background performers that serve only to add a visual element to a narrated storyline (often re-creations of actual events), particularly when they are not remunerated and billed as lead performers.
- Subjects of and “interviewees” in a documentary.
Examples of Performances that generally are Lead Performances
- In a non-fiction series, individuals that are being followed throughout the course of the series while doing their job or going about their daily lives are likely to be considered lead performers.
- Hosts and judges on elimination style series will often be considered lead performers.
- Hosts, narrators, or stars of a documentary that lead you through the exploration of a subject in a significant way.
Annex B – Relevant sections of the Income Tax Regulations
Canadian Film or Video Production
- (4) Subject to subsections (6) to (9), for the purposes of section 125.4 of the Act, this Part and Schedule II, “Canadian film or video production” means a film or video production, other than an excluded production, of a prescribed taxable Canadian corporation in respect of which the Minister of Canadian Heritage has issued a certificate (other than a certificate that has been revoked under subsection 125.4(6) of the Act) and that is
- (a) a treaty co-production; or
- (b) a film or video production
- (i) whose producer is a Canadian at all times during its production,
- (ii) in respect of which the Minister of Canadian Heritage has allotted not less than six points in accordance with subsection (5),
- (5) For the purposes of this Division, the Minister of Canadian Heritage shall allot, in respect of a film or video production
- (a) that is not an animation production, in respect of each of the following persons if that person is an individual who is a Canadian,
- (i) for the director, two points,
- (ii) for the screenwriter, two points,
- (iii) for the lead performer for whose services the highest remuneration was payable, one point,
- (iv) for the lead performer for whose services the second highest remuneration was payable, one point,
- (v) for the art director, one point,
- (vi) for the director of photography, one point,
- (vii) for the music composer, one point, and
- (viii) for the picture editor, one point;
- (b) that is an animation production, in respect of each of the following persons if that person is an individual who is a Canadian,
- (i) for the director, one point,
- (ii) for the lead voice for which the highest or second highest remuneration was payable, one point,
- (iii) for the design supervisor, one point,
- (iv) for the camera operator where the camera operation is done in Canada, one point,
- (v) for the music composer, one point, and
- (vi) for the picture editor, one point;
- (c) that is an animation production, one point if both the principal screenwriter and the storyboard supervisor are individuals who are Canadians; and
- (d) that is an animation production, in respect of each of the following places if that place is in Canada,
- (i) for the place where the layout and background work is done, one point,
- (ii) for the place where the key animation is done, one point, and
- (iii) for the place where the assistant animation and in-betweening is done, one point.
- (6) A production (other than a production that is an animation production or a treaty co-production) is a Canadian film or video production only if there is allotted in respect of the production two points under subparagraph (5)(a)(i) or (ii) and one point under subparagraph (5)(a)(iii) or (iv).
- (7) An animation production (other than a production that is a treaty co-production) is a Canadian film or video production only if there is allotted, in respect of the production,
- (a) one point under subparagraph (5)(b)(i) or paragraph (5)(c);
- (b) one point under subparagraph (5)(b)(ii); and
- (c) one point under subparagraph (5)(d)(ii).
- (8) For the purposes of this Division,
- (a) a lead performer in respect of a production is an actor or actress who has a leading role in the production having regard to the performer’s remuneration, billing and time on screen;
- (b) a lead voice in respect of an animation production is the voice of the individual who has a leading role in the production having regard to the length of time that the individual’s voice is heard in the production and the individual’s remuneration; and
- (c) where a person who is not a Canadian participates in the writing and preparation of the screenplay for a production, the screenwriter is not a Canadian unless the principal screenwriter is an individual who is otherwise a Canadian, the screenplay for the production is based upon a work authored by a Canadian, and the work is published in Canada.
- (9) A documentary production that is not an excluded production, and that is allotted less than six points because one or more of the positions referred to in paragraph (5)(a) is unoccupied, is a Canadian film or video production if all of the positions described in that paragraph that are occupied in respect of the production are occupied by individuals who are Canadians.
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