Ontario production services tax credit

The Ontario production services tax credit is a refundable tax credit based on qualifying production expenditures incurred for eligible productions by a qualifying corporation in a tax year.

The credit is equal to 21.5% of qualifying production expenditures incurred, including:

  • qualifying labour expenditures
  • purchase or rental of qualifying tangible properties, such as equipment and studio rentals

 

Qualifying expenditures

The qualifying production expenditures include the sum of:

  • eligible wage expenditures
  • eligible service contract expenditures
  • eligible tangible property expenditures
  • reimbursements to the parent company of eligible wage and service contract expenditures

less

  • assistance reasonably related to these expenditures (some exceptions apply – see next and Schedule 558)

Effective March 14, 2017, assistance that is a payment from the 2015 Ontario Production Services and Computer Animation and Special Effects Transition Fund ("Transitional Grant") to a qualifying corporation is not considered government assistance.

The eligible expenditures incurred in the tax year must be reasonable and directly attributable to the eligible production, performed in Ontario and paid to certain persons or entities, within 60 days of the end of the tax year.

Ontario labour expenditures (including labour under a service contract) must amount to at least 25% of the total expenditures. Otherwise, the corporation’s qualifying production expenditure limit for a tax year cannot be more than four times the Ontario labour expenditures (including labour under a service contract). Expenditures incurred through non-arm’s length contracts are limited to expenditures that would have been eligible if incurred directly by the corporation. Only expenditures incurred after the final script stage to the end of the post production stage are eligible for the credit.

Eligible corporations

Note

You cannot claim the Ontario production services tax credit if you claim the Ontario film and television tax credit for that same production for any tax year.

You can get a certificate of eligibility from the Ontario Media Development Corporation. To be eligible for the credit, a corporation must meet certain criteria, including all of the following:

  • be primarily engaged, in the tax year, in the carrying on of a film or video production business, or a film or video production services business, through a permanent establishment in Ontario
  • not be exempt from tax, for the tax year, under Part III of the Taxation Act, 2007 (Ontario) or Part I of the federal Income Tax Act
  • not, at any time in the tax year, be controlled directly or indirectly, in any way, by one or more persons, all or part of whose taxable income was exempt from tax under Part I of the federal Act
  • not be a prescribed labour-sponsored venture capital corporation at any time in the tax year

Claiming the credit

Before claiming the credit, you must apply online to the Ontario Media Development Corporation (OMDC) for a certificate of eligibility. If the production is eligible, the OMDC will issue a certificate of eligibility indicating the estimated amount of the tax credit.

To claim the credit, file the following with your T2 Corporation Income Tax Return for the year for each eligible production:

If you file your return electronically, see T2 Attach-a-Doc.

If you file a paper return, send the return and required attachments to your tax centre.

On line 460 of Schedule 5, Tax Calculation Supplementary – Corporations, enter the total amount of the credit you are claiming.

The CRA will not begin to process the media tax credit claim until it receives all of the required documentation. A claim is considered to be complete when all of the above documentation is filed with the CRA.

For more information, see Schedule 558, section 92 of the Taxation Act, 2007 (Ontario), and After you file your claim.

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