Rebate for Artistic Works Produced for Export (Revised August 10, 1999)

Please note that the following Policy Statement, although correct at the time of issue, may not have been updated to reflect any subsequent legislative changes.

GST/HST Policy Statement P-195R

Date of Issue

Issued: January 4, 1996
Revised: August 10, 1999


Legislative Reference(s)

Subsections 252(2) and (3), and section 252.2 of the Excise Tax Act (the "Act").

National Coding System File Number(s)


Effective Date

January 1, 1991 for GST
April 1, 1997 for HST


Issue and Decision:

Subsection 252(2) of the Act allows for a rebate of the GST/HST paid by a non-resident, non-registrant person in the manufacture or production of works for which copyright protection exists, where those works are for export (subject to the provisions in subsection 252(3) and section 252.2 of the Act - these provisions are discussed briefly at the end of this policy statement). The property or services on which the GST/HST was paid must have been for consumption or use exclusively in the manufacture or production of the works. In addition, the person must not be a consumer of the property or services.

For the purpose of the rebate provided for in subsection 252(2) of the Act, the Department will accept the meaning of the words contained in the phrase "... original literary, musical, artistic, motion picture or other work in which copyright protection subsists ..." as they are defined in the Copyright Act (Copyright Act. R.S.C., 1985, c. C-30, s. 1). The following definitions are taken from the Copyright Act:

"copyright", in relation to a work, means the sole right to produce or reproduce the work or any substantial part thereof in any material form whatever, to perform the work or any substantial part thereof in public or, if the work is unpublished, to publish the work or any substantial part thereof, and includes the sole right

(a) to produce, reproduce, perform or publish any translation of the work,

(b) in the case of a dramatic work, to convert it into a novel or other non-dramatic work,

(c) in the case of a novel or other non-dramatic work, or of an artistic work, to convert it into a dramatic work, by way of performance in public or otherwise,

(d) in the case of a literary, dramatic or musical work, to make any sound recording, cinematograph film or other contrivance by means of which the work may be mechanically reproduced or performed,

(e) in the case of any literary, dramatic, musical or artistic work, to reproduce, adapt and publicly present the work as a cinematographic work,

(f) in the case of any literary, dramatic, musical or artistic work, to communicate the work to the public by telecommunication,

(g) to present at a public exhibition, for a purpose other than sale or hire, an artistic work created after June 7, 1988, other than a map, chart or plan,

(h) in the case of a computer program that can be reproduced in the ordinary course of its use, other than by a reproduction during its execution in conjunction with a machine, device or computer, to rent out the computer program, and

(i) in the case of a musical work, to rent out a sound recording in which the work is embodied,

and to authorize any such acts.

"artistic work" includes paintings, drawings, maps, charts, plans, photographs, engravings, sculptures, works of artistic craftsmanship, architectural works, and compilations of artistic works;

"choreographic work" includes any work of choreography, whether or not it has any story line;

"cinematographic work" includes any work expressed by any process analogous to cinematography, whether or not accompanied by a soundtrack;

"dramatic work" includes

(a) any piece for recitation, choreographic work or mime, the scenic arrangement or acting form of which is fixed in writing or otherwise,

(b) any cinematographic work, and

(c) any compilation of dramatic works;

"every original literary, dramatic, musical and artistic work" includes every original production in the literary, scientific or artistic domain, whatever may be the mode or form of its expression, such as compilations, books, pamphlets and other writings, lectures, dramatic or dramatico-musical works, musical works, translations, illustrations, sketches and plastic works relative to geography, topography, architecture or science;

"literary work" includes tables, computer programs, and compilations of literary works;

"musical work" means any work of music or musical composition, with or without words, and includes any compilation thereof.

The above definitions reflect amendments made to the Copyright Act as at December 31, 1998.

While the above definitions are taken from the Copyright Act, subsection 252(2) of the Act does not limit the term "copyright protection" to copyright protection under Canada's Copyright Act. If the work being exported is not covered under Canada's Copyright Act, but verifiable copyright protection subsists in the country the work is being exported to, the work would fit within the meaning of paragraph 252(2)(a) of the Act.

Property or services which are reasonably necessary or essential to the manufacture or production of the work in which copyright protection subsists (the "work") will qualify for the rebate provided the "exclusive" test is met (i.e., all or substantially all which is generally interpreted to be at least 90% of the property or services consumed or used). Any determination of whether a property or a service is reasonably necessary or essential to the manufacture or production of the work should be objective and be made "through the eyes of the non-resident manufacturer or producer" submitting the claim, i.e. is it reasonably clear that the non-resident had to incur these expenses in order to get the work manufactured or produced? The Department may deny certain claims where it is determined that the property or service could not reasonably be regarded as used exclusively in the manufacture or production of the artistic work.

The following is a non-exhaustive list of property or services which would be considered by the Department to be acquired for consumption or use exclusively in the manufacture or production of the original literary, musical, artistic, motion picture or other work in which copyright protection subsists (i.e., which the Department views as qualifying for the rebate under subsection 252(2) of the Act):

Hotel accommodation and meals catered at the site where the work is being undertaken, if paid for by the non-resident, non-registrant person, would qualify for the rebate. Subsection 236(1) of the Act, which limits the input tax credit entitlement for food, beverages, and entertainment expenses to 50% of the GST/HST, is not applicable for the purposes of the rebate since its application is limited to registrants.

Hotel accommodation, meals and other business related expenses of the person included in expense claims submitted to the non-resident person by employees, including individuals employed or contracted for finite time periods or specific projects, may be eligible for the rebate. It would be necessary to determine the specific circumstances surrounding the payment of the expense claim. Specifically, one has to determine that the expenses are being reimbursed to the employee pursuant to their employment or service agreements within the manufacturing or production process of an artistic work and that the exclusive test is met.

For example, if it is a contractual obligation of the non-resident person to reimburse employees for all expenses incurred while they are working on the production of the work (such as a television commercial), the taxable property or services (e.g., hotel accommodation, meals) included in these expenses would qualify for the rebate. However, these expenses must relate exclusively to the work.

In another example, the non-resident person may only be obligated to reimburse certain expenses to employees related to the production, such as transportation, meals and emergency repairs to equipment. Other expenses, while they may be reimbursed by the production company such as personal phone calls, entertainment charges and personal souvenirs would not be eligible for the rebate. These expenses, since they are not contractual obligations, do not relate exclusively to the work. This contractual obligation can only be determined on a case-by-case basis. In this example, the non-resident person is not acquiring the property or services exclusively for the production or manufacture of a work. The non-resident is acting gratuitously, and not because of some type of contractual obligation entered into which relates to the work.

It is more often the case that the employee will be paid a per diem allowance to cover travel expenses while in Canada. These allowances are usually paid to cover the employee's personal meal expenses as well as incidental expenses. Under section 174 of the Act, allowances, to the extent that they are (or would be, if the non-resident person was subject to Canadian Income Tax rules) deductible in computing the income of the person for the taxation year for the purpose of the Income Tax Act, are treated as being a payment by the person/employer to receive a taxable supply from the employee. The person paying the allowance is treated as having paid the GST in respect of this supply equal to 7/107ths of the allowance. This amount is eligible for the rebate.

Advances against wages are not eligible for the rebate as these are considered wages and not allowances.

Any expenses paid by independent contractors (e.g., sound engineers, set constructors, etc. who work on a "contract" basis) would not be eligible for the rebate by the non-resident under subsection 252(2), but may be eligible for an input tax credit by the independent contractor if that person is a registrant. These expenses, regardless of any contract requiring reimbursement by the production company, would be considered an expense of the contractor, and not of the production company.

Any rebate applied for under subsection 252(2) of the Act would be subject to the provisions in subsection 252(3) and section 252.2 of the Act. The following briefly discusses these provisions as they relate to subsection 252(2):

Subsection 252(3): This provision permits a non-resident person entitled to a rebate under subsection 252(2) in respect of a supply, to assign the right to the rebate to the supplier. Where an assignment is made and the supplier credits the non-resident an amount equal to the rebate, the supplier is entitled to claim a deduction under subsection 234(2) of the Act equal to the amount so credited and the non-resident person is not entitled to any additional rebate, refund or remission of the tax in respect of the supply.

Section 252.2: This provision restricts the rebate provided for in subsection 252(2) of the Act. The rebate must be filed within one year after the day the tax to which the rebate relates to becomes payable (sub-paragraph 252.2(a)(ii)). As well, if the person is an individual, only one rebate per calendar quarter can be filed; if the person is not an individual, rebates may be filed not more than once per calendar month. In addition, the total amount of consideration for taxable supplies in respect of which the rebate application is made, is at least $200.


Our understanding of the facts and transactions is as follows:

Statement of Facts

1. AdCo is a non-resident, non-registrant American film production company specializing in the production of commercials.

2. AdCo comes to Canada for 4 weeks (28 days) to film a commercial for USCo. The commercial will be exported from Canada.

3. AdCo hires a US actress "J" to feature in the commercial. Her "contract" with the production company states that all costs will be borne by the production company (in lieu of a per diem allowance). This would include, but not be limited to, personal items, entertainment while at the shoot site (movie rentals and so on), and meals. Under US labour laws, the actress is considered an employee.

4. Under union contract guidelines, AdCo must pay its employees a per diem of $50 per day. From this per diem, employees are expected to purchase their own meals if they are not working "on site" i.e. on the set where shooting is taking place.

5. Contract guidelines also state that if employees are in the middle of a "shoot" during normal meal times (e.g., in the middle of a filming session), the employer (AdCo) must provide their meals. AdCo hires a Canadian caterer (who is a registrant) to provide meals while on site.

6. As per usual business practise, craft service (a "craft table" consisting of chips, pop, salads, sandwiches, etc.) is required to be set up at the production site and kept stocked with snacks. This craft service is not part of the catering service.

7. AdCo contracts Zappy Electric Company, a Canadian registrant, to handle all electrical details (installing wires, cables, power hookups, and removal of the same) for the production site.

8. AdCo hires 100 Canadian residents as "extras" and pays them a set fee of $100 per day plus a $25 per day allowance for meals on a contract basis as casual labour (non employee) for the two days they are needed. The "casual employees" are determined not to be "employees" of AdCo. (They are not treated as employees by AdCo, nor would they be defined as employees under Canadian labour legislation.)


1. AdCo is billed directly for the hotel accommodations for all employees for the 28 day period. This amount includes GST and PST.

2. Actress "J" submits receipts to AdCo for expenses she paid for out of her own money and gets reimbursed as per their agreement. These receipts show an amount for GST.

3. The caterer offers to purchase the craft items while he purchases his own items for the meals. AdCo agrees, and gives the caterer petty cash, from which he is to purchase the craft items. All purchases must be accompanied by a receipt. Every day, the caterer gives the receipts to the production manager, who then replenishes the petty cash. This arrangement continues for the duration of the production.

4. The caterer invoices AdCo strictly for the catering service. The caterer's bill is GST included.

5. Zappy Electric Company's invoice to AdCo shows an amount for its services as well as separate amounts for cable and other assorted parts required, electrical hook-up and disconnection costs from the municipality, and the amount of power consumed (for which Zappy Electric Company was charged by the municipality). Zappy included photocopies of the amounts it was charged. Seven percent GST was charged on the full amount.

6. AdCo incurs additional costs for vehicle rentals and other various business-related costs.

7. During the shoot, the weather turns unexpectedly cold. Since this was not foreseen, nobody has appropriate clothing and AdCo buys the appropriate clothing for the employees so that shooting can continue. The employees are free to keep the clothing.

8. Because of the cold weather, special heaters were required. These heaters were acquired from a Canadian branch of an American company specializing in film equipment rentals. The American company is registered for GST. They invoice AdCo for the rentals, including GST, in U.S. dollars.

9. One employee ("B") purchased several items, including meals and clothing from the hotel and paid for them by cheque. The cheque was dishonored, and the hotel requested that AdCo make good on the funds. The employee had since been discharged from his position and returned to the USA. AdCo, while under no obligation to do so, agreed to pay the funds in order to keep the goodwill of the hotel.

10. Another employee ("C") had charged all his meals to his room (even though instructed not to). AdCo agreed to pay the meal charges, but advised "C" that the amount will be considered an advance against his wages, and reduced his paycheque accordingly.

11. AdCo pays their employees their per diem allowances in cash for the 28 days. As the employees pick up their allowance, the are required to sign a voucher indicating they received the money.

12. AdCo pays the "extras" by cheque. Included in the cheque amount was $50 for the person's per diem meal allowance. The company requires the person to sign a voucher indicating they were paid $200 for services and $50 for a per diem allowance.

Rulings Requested

1. Whether all the GST paid out or reimbursed in transactions 1 to 10 qualifies for the rebate under subsection 252(2).

2. Whether AdCo is eligible to receive a rebate of 7/107 of the amount paid to its employees as an allowance as described in transactions 11 & 12.

Rulings Given

Based on the facts and transactions above we rule that:

1. The GST on all expenses in transactions 1 through 8, including reimbursements, is eligible for the rebate under subsection 252(2).

2. AdCo is not eligible to receive a rebate for the GST paid to the hotel to cover the bill for "B" (transaction 9).

3. AdCo is not eligible to receive a rebate for the GST paid to the hotel to cover the meals charged to the room by "C" (transaction 10).

4. AdCo is eligible to receive a rebate of 7/107 of the amount paid to its employees as an allowance as described in transaction 11.

5. AdCo is not eligible to receive a rebate of 7/107 of the amount paid to the extras as an allowance as described in transaction 12.


1. Negative decisions: The extras are treated as independent contractors and not as employees. Under section 174 of the Act, only allowances paid to employees are eligible. The GST on the hotel bill to cover the expenses incurred by "B" are personal costs of employee "B" and are not used exclusively in the production. The amount was paid to sustain goodwill and is not related to the actual commercial being filmed. The amount paid to the hotel on behalf of "C" was an advance on wages - in effect, AdCo did not incur an expense as this amount was reimbursed by employee "C".

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