Refundable Labour Tax Credit
Notice to the reader
This measure has received Royal Assent.
We revised these questions and answers for clarification purposes. We replaced some references to a QCJO with the term Qualified Organization.
The following questions and answers are intended to provide a general overview of the new refundable labour tax credit proposed in Budget 2019. They are not a substitute for the law.
1. What is the proposed new refundable labour tax credit?
The budget proposes to introduce a new refundable labour tax credit (Tax Credit) on qualifying labour expenditures (Qualifying Labour) payable to an eligible newsroom employee of a qualifying journalism organization (Qualified Organization).
2. For the purposes of this Tax Credit, what is a Qualified Organization?
Briefly, a Qualified Organization, at any time, means a qualified Canadian journalism organization (QCJO) that meets the following conditions:
- it is primarily engaged in the production of original written news content;
- it does not carry on a broadcasting undertaking as defined in the Broadcasting Act;
- it does not, in the taxation year in which the time occurs, receive an amount from the Aid to Publishers component of the Canada Periodical Fund;
- if it is a corporation having share capital, it meets one of the following additional requirements:
- if it is a public corporation, it must be listed on a stock exchange in Canada and not be controlled by non-Canadian citizens, or
- if it is a private corporation, it must be at least 75% owned by Canadian citizens or by public corporations described above.
3. What is a QCJO?
See the definition of QCJO in Question 1 of the Questions and Answers entitled "Support for Canadian Journalism – General".
4. What is Qualifying labour?
Qualifying Labour for a taxation year includes the salary or wages payable by a Qualified Organization to an eligible newsroom employee in respect of the portion of the taxation year throughout which the organization is a Qualified Organization. The salaries and wages will be reduced by the total of all amounts of assistance that a Qualified Organization received or is entitled to receive in respect of the salary of eligible newsroom employees. The amount of Qualifying Labour will be limited to $55,000 in respect of each eligible newsroom employee.
5. What salary and wages are eligible as Qualifying Labour?
Qualifying Labour will include salary and wages payable to an eligible newsroom employee in respect of a period on or after January 1, 2019. As such, salary and wages that are in respect of a period before January 1, 2019 will not be Qualifying Labour. In addition, salary and wages will be Qualifying Labour of an organization only if they are in respect of a period throughout which the organization is a Qualified Organization.
6. What is an eligible newsroom employee?
An eligible newsroom employee, in respect of a Qualified Organization in a taxation year, means an individual who:
- is employed by the Qualified Organization in the taxation year;
- works, on average, a minimum of 26 hours per week throughout the portion of the taxation year in which the individual is employed by the Qualified Organization;
- at any time in the taxation year, has been, or is reasonably expected to be, employed by the Qualified Organization for a minimum period of 40 consecutive weeks that includes that time;
- spends at least 75% of their time engaged in the production of news content, including researching, collecting information, verifying facts, photographing, writing, editing, designing and otherwise preparing content; and
- meets any prescribed conditions.
7. Who can claim the tax credit?
A Qualified Organization that is a QCJO will be able to claim the Tax Credit.
See the definitions of Qualified Organization and QCJO above to find out more about the requirements to be eligible for this Tax Credit.
Also, a registered journalism organization that meets the definition of a Qualified Organization, may be entitled to this Tax Credit in respect of its Qualifying Labour.
8. How is the tax credit calculated?
The Tax Credit for a taxation year will be calculated by applying a rate of 25% to the amount of Qualifying Labour of a Qualified Organization in respect of an eligible newsroom employee. The amount of Qualifying Labour in respect of an eligible newsroom employee will be limited to $55,000, which will provide a maximum Tax Credit of $13,750 in respect of Qualifying Labour per employee per year.
For the definition of Qualified Labour see Question 4 above.
9. Where can I get more information?
The CRA provides the latest information on the proposed changes on Canada.ca. Taxpayers should check online regularly for updated forms, policies, guidelines, questions and answers, and guidance.
In the meantime, please consult the Department of Finance Canada's Budget 2019 documents for details.
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