CAVCO Public Notice 2017-02

Gatineau, March 6, 2017

Definitions for ineligible genres of production for the purpose of the federal film or video production tax credit programs

Section A: Preamble

Purpose

  1. This public notice addresses comments received in response to CAVCO Public Notice 2016-01 and provides new definitions that will be used to determine whether an audiovisual production will be considered an ineligible genre for the purpose of the Canadian Film or Video Production Tax Credit (CPTC) program and the Film or Video Production Services Tax Credit (PSTC) program.

  2. As noted in CAVCO Public Notice 2016-01, no changes have been made to the definition for the ineligible genre of "pornography". The definition for the ineligible genre of "advertising" is addressed through CAVCO Public Notice 2017-03.

Background

  1. The CPTC is administered pursuant to section 125.4 of the Income Tax Act ("Act") and section 1106 of the Income Tax Regulations ("Regulations"). Under subsection 1106(4) of the Regulations, a production will not qualify as a "Canadian film or video production" if it is an "excluded production", a term defined in subsection 1106(1) of the Regulations. Paragraph (b) of this definition lists genres of production that are ineligible for the CPTC.

  2. The PSTC is administered pursuant to section 125.5 of the Act and section 9300 of the Regulations. Under subsection 9300(2) of the Regulations, a production will not qualify as an "accredited production" if its genre falls within the list of genres of production that are ineligible for the PSTC. These genres and their definitions are the same as for the CPTC, with the following exceptions:

    1. The genre "a production, other than a documentary, all or substantially all of which consists of stock footage" is not on the list.

    2. The genre "a production in respect of a game, questionnaire, or contest" does not include the exception found in the CPTC for productions directed primarily at minors.

    3. The genre "talk show" is included on the list of ineligible genres and has a definition specifically for the PSTC.

  3. In February 2016, the Canadian Audio-Visual Certification Office (CAVCO) issued Public Notice 2016-01, which sought written comments on revised definitions for a number of these ineligible genres.

Section B: Comments on CAVCO Public Notice 2016-01

  1. CAVCO received 29 submissions in response to the call for comments, including from production companies, industry associations and broadcasters. All comments were taken into consideration in drafting the final version of the definitions. While most of the key elements of the definitions proposed in Public Notice 2016-01 remain unchanged, the wording in many of them has been adjusted based on the comments received, to add more clarification where necessary.

  2. A number of key issues raised by respondents are discussed in this section, while others have been addressed directly through final definitions found in Section C below.

  3. Definitions for genres of production that are not "ineligible"

    In Public Notice 2016-01, CAVCO announced that it proposed to remove the definitions of all other genres of production which had been included in its program guidelines since 2010. A few respondents commented that these definitions should be retained to assist in the categorization of productions for eligibility purposes. Given that the Regulations clearly stipulate what production genres are ineligible, and make no reference to any genres that should be eligible (with the exception of documentaries), the only genres that are relevant for the purpose of determining eligibility are the ineligible genres.

  4. Definition for "documentary"

    Since there are provisions related specifically to documentaries in the RegulationsFootnote 1, CAVCO always intended to retain the documentary definition in its current form:

    "An original work of non-fiction, primarily designed to inform but which may also educate and entertain, providing an in-depth critical analysis of a specific subject or point of view."

  5. Clarity of definitions

    A number of respondents voiced the concern that some of the proposed definitions were unclear and left too much room for interpretation. CAVCO has modified the definitions to make them more specific, clearer and less subject to misinterpretation. As an example, we have eliminated the use of the auxiliary verb "may" to provide more clarity and certainty for applicants.

  6. Qualifiers like "predominantly" and "primarily"

    Some respondents were seeking more clarity for productions that might combine more than one genre, through the addition of a qualifier such as "predominantly" or "primarily". Since the Regulations already include such qualifiers for specific ineligible genres (i.e., "produced primarily for industrial, corporate or institutional purposes", "all or substantially all of which consists of stock footage", and "directed primarily at minors"), it would not be appropriate to add new qualifiers to genres where none are currently specified.

  7. Definition for "news, current events or public affairs programming"

    Several respondents expressed their concern that the proposed definition included references to certain techniques also used in documentary filmmaking, namely "interviews", "reporting" and "investigative journalism". The final definition was written without referring to these techniques, to avoid any potential overlap with the documentary genre.

  8. Prizes in "a production in respect of a game, questionnaire or contest"

    Some respondents suggested that the definition for this genre should hinge on whether a production that includes game or contest elements awards substantial prizes. Adopting this approach would be a change to current practice that would result in a significant number of productions becoming ineligible. The awarding (or not) of a prize does not change the basic premise of a show and cannot be used as a determining factor for eligibility.

  9. Character development

    Productions that take the form of a contest or a competition but that feature character development over the course of a series are not seen by CAVCO as falling into the "game, questionnaire or contest" genre. A few respondents argued that it is possible to have character development even if participants change in every episode. CAVCO remains of the view that there is insignificant character development in a single episode as compared to productions that feature significant character development over the course of a season where characters become the focal point of the show.

  10. The "intent" behind a production

    Some comments indicated that CAVCO should take into account the "intent" of a production when determining if it is an ineligible genre. However, neither the Act nor the Regulations indicate that an assessment of "intent" is required. Furthermore, in practice it is typically not possible to conclusively determine the true "intent" behind a production.

  11. Definition for "a production, other than a documentary, all or substantially all of which consists of stock footage":

    CAVCO has decided to eliminate the reference to a "best-of" production from this definition. A "best-of" production will continue to not fall under this genre as long as it is not all or substantially all stock footage, and where it otherwise meets all CPTC program requirements, including with respect to minimum key creative points.

Section C: Definitions - CPTC

  1. A production will not qualify as a "Canadian film or video production" if it is an "excluded production" as defined in subsection 1106(1) of the Regulations. Paragraph (b) of this definition lists genres of production which are ineligible for the CPTC. Below are the final definitions for each ineligible genre.

    • (i) News, current events or public affairs programming, or a program that includes weather or market reports

      A production that:

      • presents local, regional, national or international news in the form of a newscast;

      • is presented in the form of specialized news programming, including, but not limited to, business news, sports news or entertainment news;

      • presents live or pre-recorded coverage of current events;

      • presents discussions or analysis of current political or public policy issues in the form of one-on-one, round-table or panel discussions, debates, open forums or town hall meetings;

      • includes weather or market reports; or

      • includes a combination of any of the above elements.

    • (ii) A talk show

      Refer to Canada Gazette Part II, October 19, 2016, Vol. 150, No. 21.

    • (iii) A production in respect of a game, questionnaire or contest (other than a production directed primarily at minors)

      A production where individuals or teams participate in a game, quiz, or contest that has an objective outcome (e.g., right/wrong, complete/incomplete, fastest time, highest score) to determine a winner, whether or not a prize is awarded.

      A production that combines tasks that are measured objectively with tasks that are measured subjectively is included in this genre.

      A production that includes competitive elements but features character development over the course of a series (e.g., by starting with a group of participants who are competing against each other and who are eliminated as the series progresses) is not included in this genre.

    • (iv) A sports event or activity

      A production that consists of:

      • live or pre-recorded coverage of a professional or amateur game, match, competition, or tournament; and/or

      • pre- and post-game shows for sports events or activities.

    • (v) A gala presentation or an awards show

      A production that consists of:

      • live or pre-recorded coverage of a gala presentation or an awards show; and/or

      • pre- and post-event coverage of these events.

    • (vi) A production that solicits funds

      A production that includes a segment of any length aimed at soliciting funds or other contributions from viewers.

    • (vii) Reality television

      A production that consists of:

      • scenes recorded on private or public authority surveillance equipment; or

      • the recording of any sort of official proceedings such as live or live-to-tape coverage of courtroom trials or governmental proceedings.

    • (viii) Pornography

      A production that contains explicit depictions or descriptions of a sexual nature, without regard to artistic merit.

    • (ix) Advertising

      Refer to Public Notice 2017-03.

    • (x) A production produced primarily for industrial, corporate or institutional purposes

      A production primarily made to meet the specific industrial, corporate or institutional needs of a business, organization, government entity, or industrial sector.

      Productions such as, but not limited to, recruitment videos, corporate training videos, public service announcements and promotional videos are included in this genre.

    • (xi) A production, other than a documentary, all or substantially all of which consists of stock footage

      A production, other than a documentary, all or substantially all of which consists of pre-existing footage.

Section D: Definitions - PSTC

  1. Subsection 9300(2) of the Regulations lists genres of production that are not eligible for the PSTC. These genres and their definitions are the same as for the CPTC, with three exceptions as outlined below.

  2. The genre "a production, other than a documentary, all or substantially all of which consists of stock footage" is not on the list.

  3. The genre "a production in respect of a game, questionnaire, or contest" does not include the exception found in the CPTC for productions directed primarily at minors.

  4. The genre "talk show" is ineligible for the PSTC and is defined as follows:

    A production that consists of one or more hosts and guests who share their personal or professional viewpoints, opinions, or experiences on any subject.

    Such a production may:

    • include interviews, panel discussions, or debates;
    • be live or pre-recorded, with or without a live audience;
    • consist purely of "talk" elements, or may incorporate variety or musical acts, comedy routines, information segments, and/or news.

Section E: Order of precedence

  1. The legislation and regulations governing the CPTC and PSTC programs are set out in the Act and the Regulations. In the event of any inconsistency between that Act or Regulations and this document, the Act or the Regulations take precedence.

Section F: Administration of new definitions

Provision of DVD or USB flash drive for a Part A CPTC Application

  1. While a DVD of a production is generally only required at the Part B stage, CAVCO reserves the right to request a DVD at the Part A application stage, if judged necessary to determine if a production falls under the definition of an ineligible genre. Effective immediately, CAVCO will accept the submission of productions on USB flash drives or on DVDs. If you are submitting a USB flash drive, please ensure that the case file number is clearly marked – with a sticker or some other permanent marking – on the outside of the drive. If you are submitting copies of more than one production (i.e., productions with different case file numbers), they must be on separate USB flash drives or DVDs. Episodes of a single season of a series can be on the same device.

Coming Into Force

  1. These definitions are in effect as of the date of publication of this notice.

For more information

  1. Clients with questions about this public notice can send them to CAVCO by email (PCH.bcpac-CAVCO.PCH@canada.ca) or call toll-free at 1-888-433-2200 (Teletypewriter toll-free: 1-888-997-3123).

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