CAVCO Public Notice 2017-03

NOTE: This public notice is for reference only. Please read the Canadian Film or Video Production Tax Credit (CPTC) application guidelines for the most current information on this topic.

Gatineau, March 6, 2017

Definition of “advertising” for the purpose of the federal film or video production tax credit programs

Section A: Preamble


  1. This public notice addresses comments received in response to CAVCO Public Notice 2016-02 and provides the new definition that will be used to determine whether an audiovisual production will be considered “advertising”, an ineligible genre for the purpose of both the Canadian Film or Video Production Tax Credit (CPTC) program and the Film or Video Production Services Tax Credit (PSTC) program.


  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, including "advertising".

  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” for the purpose of the PSTC if its genre falls within a list of ineligible genres of production, which include “advertising”.

Section B: Comments on CAVCO Public Notice 2016-02

  1. CAVCO received 19 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 definition. A number of key issues raised by respondents are discussed in this section, while others have been addressed directly through the final definition found in Section C, below.

Limiting advertising to “commercials” and “infomercials”

  1. Some respondents suggested that the ineligible genre of “advertising” should be restricted to productions that are “commercials” or “infomercials”. While traditional commercials (15-60 seconds in length) and infomercials (30-60 minutes in length) are understood by the industry and by the viewing public as falling under the term “advertising”, it has become increasingly common for film and television productions to include various amounts and forms of similar advertising material embedded throughout a production.

  2. CAVCO recognizes that there are a number of factors causing an evolution in advertising business models, including a decline in traditional ad sales, and the ability of cable viewers to skip commercials in television programming. The integration of advertising material, including the form commonly known as “branded content”, represents a way for advertisers to more effectively target audiences. At the same time, CAVCO has to define when this integration of promotional material becomes unduly prominent.

  3. The revised definition presented in Section C below reflects the fact that advertising includes commercials and infomercials as these terms are understood by the public, while providing additional clarification as to when other types of content will be considered advertising.

Examining the primary intent or financing of a production

  1. Several respondents referred to the importance of assessing the underlying intent or purpose of a production when determining whether the production is “advertising”. Similarly, in the view of many respondents, the presence of significant levels of financing from an advertiser or sponsor should also be a key element leading to a conclusion that a production is “advertising”.

  2. CAVCO does not assess the primary intent or “true nature” of a production in determining whether it is advertising, as neither the Act nor the Regulations indicate that such an assessment is required. In addition, CAVCO has noted from experience that the presence of an agreement between an advertiser or sponsor and a producer or broadcaster, including where the former provides financing to a production, does not necessarily translate into any overt on-screen promotional content in the production.

  3. The mere presence of a contract with an advertiser or sponsor cannot be a determining factor in deciding whether a production is “advertising”. Similarly, the absence or non-disclosure of such contracts does not mean there will be no advertising on-screen. The best indicator to assess whether a production is “advertising” has proven to be its on-screen content.

  4. The involvement of any advertiser or sponsor in a production must be in accordance with CAVCO’s producer control guidelines. They cannot have final creative or editorial control over a production, and are restricted to having customary consultation and approval rights during the production. For more information on CAVCO’s assessment of producer control, see sections 4.09 and 4.10 of the CPTC program guidelines.

Three core elements in the proposed February 2016 definition (Paragraph 5 of Public Notice 2016-02)

  1. “Call to action”: A few respondents expressed a concern over the broad interpretation of what could constitute a “call to action” in the proposed definition. The final definition will now specifically state that the call to action must be for the purpose of soliciting viewers to purchase a good or service.

  2. “Brand name in the title”:  The main issue raised by respondents was that the presence of a brand name in the title does not necessarily mean that a production should be deemed “advertising”, especially where the brand may not be linked to a production creatively or financially. CAVCO agrees that this is particularly true for documentary productions and has removed this element from the final definition.

  3. “Maximum permissible time on screen”: Some respondents argued that the use of an objective qualifier on its own in this part of the definition could be difficult to work with, and only a few respondents provided suggestions for a percentage of screen time. CAVCO improved the definition by defining what is measured and by clearly stating what constitutes “maximum permissible time on screen”.

Nine indicators listed in the proposed February 2016 definition (Paragraph 6 of Public Notice 2016-02)

  1. The purpose of these indicators was to clarify that the presence of one or more of these elements would not automatically lead to a determination that a production was “advertising”. However, the majority of respondents read it to mean the exact opposite. In light of the confusion it raised, and suggestions from respondents to remove the indicators, this list is not included in the final version of the definition.

Section C: Definition

  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, including “advertising”.

  2. Subsection 9300(2) of the Regulations lists genres of production that are not eligible for the PSTC, including “advertising”.

  3. Below is the final definition of “advertising” applicable to both the CPTC and PSTC programs:


    A production:

    • that is a commercial or infomercial;
    • that includes a call to action soliciting the viewer to purchase a good or service (e.g., directing the viewer to a store or website other than the production’s website);
    • that promotes broadcast schedules or programming; or
    • where more than 15% of the running time consists of:
      • extolling the virtues of one or more products, services, events, organizations or businesses, and/or
      • logos or other brand identifiers.

Section D: 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 E: Administration of new definition

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 a determination as to whether a production falls under the definition of “advertising” can only be made by viewing the actual production. 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 series can be on the same device.

Coming Into Force

  1.  This definition is 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 ( or call toll-free at 1-888-433-2200 (Teletypewriter toll-free: 1-888-997-3123).

Page details

Date modified: