Canadian journalism labour tax credit
Proposed changes to legislation announced
On April 17, 2020, the Department of Finance announced draft legislative proposals that would make adjustments to the journalism tax measures introduced in Budget 2019. These changes will help ensure that the measures achieve their initial objectives. The Canada Revenue Agency will administer the legislation on the basis of these proposed amendments, notwithstanding that the legislation may only be enacted at a later date.
The Canadian journalism labour tax credit is a refundable tax credit that is available to an organization that is a corporation, a trust or a partnership.
The credit is calculated by applying a rate of 25% to the total qualifying labour expenditure incurred for a period in the tax year beginning on or after January 1, 2019, in respect of each eligible newsroom employee of a Qualifying Journalism Organization (QJO), less any amount received from the Aid to Publishers component of the Canada Periodical Fund in the year. Note that other types of assistance can also impact the calculation of the qualifying labour expenditure; additional information can be found below in the Qualifying Labour Expenditure section.
To qualify for the Canadian journalism labour tax credit, an organization must be a QJO. To be a QJO, the organization must first be designated as a qualified Canadian journalism organization (QCJO). It must then meet the following additional criteria:
- it does not hold a licence, as defined in subsection 2(1) of the Broadcasting Act; and
- if it is a corporation with share capital, it meets specific ownership conditions of a Canadian newspaper as defined in the Income Tax Act.
Eligible newsroom employee
An eligible newsroom employee of a QJO means an individual who:
- is employed by the organization in the tax year;
- at any time in the taxation year, has been, or is reasonably expected to be, employed by the organization for a minimum period of 40 consecutive weeks that includes that time;
- works, on average, a minimum of 26 hours per week throughout the portion of the tax year in which the individual is employed by the organization;
- spends at least 75% of their time engaged in the production of original written news content, including researching, collecting information, verifying facts, photographing, writing, editing, designing and otherwise preparing content; and
- meets any other conditions that may be prescribed (currently there are no other prescribed conditions).
Qualifying labour expenditure
A qualifying labour expenditure is generally the amount of salary or wages payable by a QJO to an eligible newsroom employee in respect of the portion of the tax year throughout which the organization is a QJO, less the amount of any assistance received or entitled to be received in the year regarding that employee. Note that the credit does not apply to salaries or wages that are in respect of a period before January 1, 2019.
Generally, assistance includes amounts such as a refund, reimbursement, contribution, or allowance, whether as a grant, subsidy, forgivable loan, deduction from tax, or any other form of inducement. For example, Canada Emergency Wage Subsidy and Temporary Wage Subsidy earned on the same qualifying labour expenditure would generally be considered assistance. For details on how to calculate the labour tax credit with these types of assistance, go to Guidance on the income tax measures to support journalism.
While there is no maximum amount of qualifying labour expenditure that can be incurred by an organization in a given tax year, these expenditures are subject to an annual cap of $55,000 per eligible newsroom employee (prorated for the number of days in the taxation year the organization is a QJO), which provides the organization with a maximum credit of $13,750 per eligible newsroom employee per tax year. For example, an organization that ceases to meet the criteria to qualify as a QJO halfway through the taxation year would be subject to half the annual cap, per eligible newsroom employee.
How to claim the credit
A corporation claiming the Canadian journalism labour tax credit must file a completed Schedule T2SCH58, Canadian Journalism Labour Tax Credit and enter the total amount of the credit on line 798 of the T2 Corporation Income Tax Return.
A member of a partnership that is a corporation must claim the amount of the credit allocated from the partnership on line 130 of the T2SCH58, Canadian Journalism Labour Tax Credit. This amount will be included in the total amount of the credit claimed by the corporation on line 798 of the T2 Corporation Income Tax Return.
A partnership that allocates the Canadian journalism labour tax credit to the eligible members must file a completed T5013 Schedule 58, Canadian Journalism Labour Tax Credit and enter the amounts allocated to each eligible member on line 220 of part 4.
The eligible members can claim their Canadian Journalism Labour tax credit in their respective tax returns (T1, T2 and T3). They can claim the credit on line 47555 of their T1, line 798 of the T2, or line 91 of their T3 return.
Further, with respect to a partnership that is a QJO, the credit will be effectively divided between the members of the partnership, other than members who are partnerships and/or specified members of the partnership, on its specified proportions.
A trust claiming the Canadian journalism labour tax credit must provide supporting documents and enter the total amount of the credit on line 91 of the T3 Trust Income Tax and Information Return. For more information on how to complete the return in go to publication T4013, T3 Trust Guide.
If the trust is not a QJO, but is a member of a partnership that meets the requirements to be a QJO, the Canadian journalism labour tax credit amount allocated to the trust by the partnership can be claimed at line 91 provided it is supported by a valid T5013.
For more information on the Canadian journalism labour tax credit criteria, go to Guidance on the income tax measures to support journalism.
If you have questions about the Canadian journalism labour tax credit, please call the Businesses and self-employed individuals line at 1-800-959-5525.
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