Ontario production services tax credit
The Ontario production services tax credit is a refundable tax credit based on qualifying production expenditures incurred for eligible film or television productions by a qualifying corporation in a tax year.
The corporation can be Canadian of foreign owned.
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
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
- 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 qualifying production 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).
Retroactive to June 4, 2015, eligible service contract expenditures included in determining a corporation's expenditure limit must relate to remuneration paid by the corporation, rather than to salary and wages paid to Ontario‑based individuals.
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.
As a measure due to COVID-19, for productions for which otherwise eligible expenditures were incurred in Ontario in tax years ending in 2020 and 2021, Ontario proposes to temporarily:
- allow certain corporations to claim otherwise eligible expenditures incurred in the two tax years before the year in which principal photography begins
- allow certain corporations an additional 24 months to meet minimum spending requirements
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 Ontario Creates. 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 Ontario Creates for a certificate of eligibility. If the production is eligible, Ontario Creates 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:
- a certificate of eligibility (or copy) issued by Ontario Creates
- a completed Schedule 558, Ontario Production Services Tax Credit
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 for Ontario refundable media tax credits.
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