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Film and Media Tax Credits Program v3.0

Compliance Programs Branch
Business Tax Incentives Directorate

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Overview & Privacy Impact Assessment (PIA) Initiation 

Government institution

Canada Revenue Agency

Government official responsible for the PIA

Cathy Hawara
Assistant Commissioner
Compliance Programs Branch

Head of the government institution or Delegate for section 10 of the Privacy Act

Anne Marie Laurin
Director General
Access to Information and Privacy Directorate

Name of program or activity of the government institution

Reporting Compliance

Standard or institution specific class of record:

Film and Media Tax Credit Program
Record Number: CRA CPB 150

Standard or institution specific personal information bank:

Film and Media Tax Credit Program
TBS Registration: 20170001
Bank Number: CRA PPU 442

Legal authority for program or activity

Section 125.4 of the Income Tax Act sets out the framework for the Canadian film or video production tax credit.

Section 125.5 of the Income Tax Act sets out the framework for the film or video production services tax credit.

Subsection 150(1) of the Income Tax Act requires a return of income that is in prescribed form and that contains prescribed information to be filed with the Minister without notice or demand for the return for each taxation year of a taxpayer.

Section 162 of the Income Tax Act is a penalty provision in cases where taxpayers do not file or provide certain information.

Section 237 of the Income Tax Act authorizes the collection of the social insurance number (SIN) and is used for identification purposes.

Section 1106 of the Income Tax Regulations sets out the parameters for the certification of a film or video production.

Section 9300 of the Regulations defines the term “accredited production” for the purposes of section 125.5 of the Act.

Subsection 63(1) of the Canada Revenue Agency Act (CRA Act) allows the CRA to enter into or amend an agreement with a provincial, territorial or aboriginal government to administer a tax or

other fiscal measure if the agreement is in accordance with guidelines relating to agreements of that kind established jointly by the Minister (of National Revenue) and the Minister of Finance.

The CRA Act allows the CRA to administer the following provincial tax credits:

Ontario film and television tax credit

Ontario production services tax credit

Ontario interactive digital media tax credit

Ontario book publishing tax credit

Ontario computer animation and special effects tax credit

British Columbia film and television tax credit

British Columbia production services tax credit

British Columbia book publishing tax credit

British Columbia interactive digital media tax credit

Manitoba film and video production tax credit

Summary of the project, initiative or change

Overview of the Program or Activity

The Film and Media Tax Credits (FMTC) Program administers a range of film and media tax credits at both the federal and provincial levels. These tax incentives support the production of films and television programs, digital animation, visual effect activities, interactive digital media products, and book publishing. The film and media tax credits are designed to encourage Canadian content creation, attract international productions to Canada, and promote employment of Canadians in the film and media industry.

The CRA and the Canadian Audio-Visual Certification Office (CAVCO) co-administer two federal tax credits, the Canadian film or video production tax credit and the film or video production services tax credit.

Provincially, the CRA jointly administers:

Five of the provincial tax credits are administered through the tax collection agreements with these provinces as they are similar to the federal credits. However, three of these credits are partially administered on a cost recovery basis through service-level agreements as they contain elements that are significantly different from the federal credits. The other five tax credits are fully administered on a cost recovery basis through service-level agreements.

Under the program, qualified corporations submit their film and media tax credit claims, and if applicable, their eligibility certificate from the certification office(s) with their T2 Corporation Income Tax Return for each year they claim a credit. Once the CRA receives all required documents, each claim is reviewed for risk and a determination is done on whether the claim should be accepted as filed or requires a further review. The CRA ensures that the claims are in line with Canada’s tax laws and the CRA’s policies and procedures and delivers the tax incentives for which the corporations qualify in a timely, consistent, and predictable manner.

The CRA is committed to administering the program with fiscal integrity and ensuring that the legislation is applied correctly, consistently, and fairly so that claimants receive all that they qualify for under the program.

In 2023-2024, the program provided approximately $2.7 billion in tax incentives from almost 8,000 claims. Similar results are expected for 2024-2025.

Each of the tax credits administered by the CRA are refundable tax credits meaning that the claimants receive a refund in the amount of the tax credit. However, the refund will be offset by any taxes that a corporation owes. The refund goes against those taxes first. The film and television tax credits may also be applied to the capital cost of the project, where the film or television program is capitalized.

For more information on each of the tax credits, go to Film and media tax credits.

What’s New

In October 2021, the FMTC program implemented a new system

Scope of the Privacy Impact Assessment

To ensure compliance with the Privacy Act and associated CRA and Treasury Board of Canada Secretariat privacy policies, this privacy impact assessment examined the privacy risks associated with the FMTC program.

Risk identification and categorization

A) Type of program or activity

Compliance / Regulatory investigations and enforcement  

Level of risk to privacy: 3

Details:

The CRA uses personal information to verify citizenship or residency of individuals whose salaries are being claimed by corporations as labour expenses to calculate various film and media tax credits to determine the eligibility of such expenses. Personal information is also used to verify that the salaries paid to the individuals qualify as labour expenditures for the purposes of calculating the tax credits. The claimant’s tax credits may be reduced if the salaries of these individuals are deemed not to qualify. Note: The program focuses on corporate economic entities as opposed to individual taxpayers.

B) Type of personal information involved and context

Social insurance number, medical, financial or other sensitive personal information and/or the context surrounding the personal information is sensitive. Personal information of minors or incompetent individuals or involving a representative acting on behalf of the individual.

Level of risk to privacy: 3

Details:

The personal information collected during an audit of a film or media tax credit claim falls within the definition of taxpayer information or confidential information.  Therefore, the personal information is subject to the provisions of section 241 of the Income Tax Act. The following forms collect the name and contact information of an individual the auditor may contact during the audit: T1131, T1177, T2 SCH 429, T1197, T1196, T2 SCH 388, T2 SCH 558, T2 SCH 560, T2 SCH 556, and T2 SCH 554. No other personal information is collected on these forms.

During the course of the audit, additional information on certain individuals such as name, address, SIN, financial information, or other is collected from the claimant corporation. The auditor does not collect the information directly from the individual. If more information is required about a particular individual, the claimant contacts the individual and then provides the information to the auditor. Occasionally, the individual will send the information directly to the auditor instead of providing it to the claimant corporation.

C) Program or activity partners and private sector involvement

Private sector organizations or international organizations or foreign governments

Level of risk to privacy: 4

Details:

The CRA may share film and media tax credits program information with the Canadian Audio-Visual Certification Office (CAVCO) of the Department of Canadian Heritage in line with:

Information may also be shared with provincial government institutions in line with section 241 of the Income Tax Act and the MOUs that the CRA has with certain provinces for the administration of the film and media tax credits. These institutions include:

The CRA currently has MOUs with:

D) Duration of the program or activity

Long-term program

Level of risk to privacy: 3

Details:

The Film and Media Tax Credits Program has been in place since 1996 and will remain a long-term program.

E) Program population

The program affects certain individuals for external administrative purposes.

Level of risk to privacy: 3

Details:

When reviewing film and media tax credit claims from film or media corporations, the program may collect personal information about individuals involved with those corporations.  This information is used only to determine the company’s eligibility for the tax credit.  It is not used for any purpose related to the individuals themselves.

The requirements for collecting personal information under the film and media tax credit program apply to all claimants but vary depending on the scope of the audit for each claim.

F) Technology & privacy

  1. Does the new or modified program or activity involve the implementation of a new electronic system, software or application program including collaborative software (or groupware) that is implemented to support the program or activity in terms of the creation, collection or handling of personal information?
    Risk to privacy: Yes
  2. Does the new or modified program or activity require any modifications to IT legacy systems and/or services?
    Risk to privacy: No
  3. Does the new or modified program or activity involve the implementation of one or more of the following technologies?

Enhanced identification methods - this includes biometric technology (i.e. facial recognition, gait analysis, iris scan, fingerprint analysis, voice print, radio frequency identification (RFID), etc.) as well as easy pass technology, new identification cards including magnetic stripe cards, "smart cards" (i.e. identification cards that are embedded with either an antenna or a contact pad that is connected to a microprocessor and a memory chip or only a memory chip with non-programmable logic).

Risk to privacy: No

Use of Surveillance - this includes surveillance technologies such as audio/video recording devices, thermal imaging, recognition devices, RFID, surreptitious surveillance/interception, computer aided monitoring including audit trails, satellite surveillance etc.

Risk to privacy: Yes

Use of automated personal information analysis, personal information matching and knowledge discovery techniques - for the purposes of the Directive on PIA, government institutions are to identify those activities that involve the use of automated technology to analyze, create, compare, identify or extract personal information elements. Such activities would include personal information matching, record linkage, personal information mining, personal information comparison, knowledge discovery, information filtering or analysis. Such activities involve some form of artificial intelligence and/or machine learning to uncover knowledge (intelligence), trends/patterns or to predict behavior.

Risk to privacy: No

G) Personal information transmission

The personal information is transmitted using wireless technologies.

Level of risk to privacy: 4

Details:

Corporation Income Tax Returns (T2) that include a federal film tax credit claim and/or a provincial film or media tax credit claim are manually referred to one of the three Film Services Units, depending on the location of the claimant’s books and records and the type of film or media tax credit claimed.

Some employees work on CRA-issued laptops and use agency-issued cell phones. Laptops and cell phones comply to the Government of Canada’s encryption and security standards. Any telework done is through secure remote access.

During audits, information is submitted by the claimant via My Business Account or using Secure Drop Zone and saved. Paper documents are very rarely received, however, if they are, they are digitized and stored on a shared drive and the originals are destroyed.

Information that needs to be shared with CAVCO or a province (providing they have a valid MOU) is conducted through FMTC HQ and by persons who have an external PKI account to transfer the information through encrypted e-mail.

H) Potential risk that in the event of a privacy breach, there will be an impact on the individual or employee

Details:

If an individual’s personal information is compromised, it could cause them financial harm.

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