Author: Michael Duboff, Entertainment Lawyer
Tax Credit Overview – Introduction
It is well known that Toronto and Vancouver are established hubs for film production in Canada. It is perhaps less well known that Manitoba (and Winnipeg in particular) has seen a recent boom in local filmmaking. For example, the 2021 action film, Nobody, was largely filmed in Winnipeg, as well as numerous television series and tentpole films such as Capote (2005), The Assassination of Jesse James by the Coward Robert Ford (2006), The Lookout (2007) and Goon (2011). The recent growth of Manitoba’s film industry can, at least in part, be explained by the province’s lucrative film and media tax credit program. This blog provides an introductory overview of what film and television producers need to know about the Manitoba tax credits available to them.
Film and Media Tax Credits, What Are They?
Film and media tax credits offer financing to eligible productions in the form of fully refundable tax credits. Eligible productions are able to recoup a percentage of their labour costs if they meet certain criteria.
In Manitoba, there are three film and media tax credits: the Manitoba Cost-of-Salaries Tax Credit, the Manitoba Cost-of-Production Tax Credit and the Manitoba Interactive Digital Media Tax Credit. The Manitoba Cost-of-Salaries Tax Credit (which we will refer to as the “MBCOSTC”) is the most established and widely used of the three tax credits, and is the subject of the remainder of this blog.
Manitoba Cost-of-Salaries Tax Credit
The base tax credit for the MBCOSTC is 45% of “Eligible Manitoba Labour Expenditures”. For comparison, the main federal tax credits available from the Canadian Audio-Visual Certification Office (CAVCO) are 15% or 25% of eligible labour expenditures. The two main Ontario tax credits are 21.5% or 35% based on eligible Ontario labour expenditures.
The MBCOSTC is additionally eligible for the following bonuses, which can increase the tax credit to a maximum of 65% of eligible labour costs (a follow-up blog will delve further into the available bonuses):
- Frequent Filming Bonus: a 10% increase on the third film produced within a two-year period. The 10% bonus can be carried on subsequent projects if the three film / two-year ratio is maintained.
- Manitoba Producer Bonus: a 5% increase for co-producing with a Manitoba producer.
- Rural and Northern Bonus: a 5% increase for shooting at least 50% of Manitoba production days at least 35 km from Winnipeg’s center (measured by the most direct driving distance from the intersection of Portage Avenue and Main Street in Winnipeg).
The MBCOSTC may be claimed in addition to CAVCO’s Canadian Film or Video Production Services Tax Credit (CPTC) and the Film or Video Production Services Tax Credit (PSTC), where eligible, further increasing the total tax credit to 70.6% of eligible labour expenditures. This potential tax credit refund far exceeds what is available elsewhere in Canada.
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Tax Credit Overview – Applicant Eligibility
An eligible applicant for the MBCOSTC must be a production company that meets the following four requirements:
- the applicant has a “permanent establishment” in Manitoba, as defined in the Manitoba Income Tax Act and federal Income Tax Regulations.
- the applicant is incorporated in Canada, either federally or provincially;
- the applicant is a taxable Canadian corporation primarily carrying on business that is a film or video production; and
- a minimum of 25% of the applicant’s T4 Summary must be paid to eligible Manitoba employees for work performed in Manitoba (excluding documentaries).
Notably, there is no restriction on who may own the applicant company.
Project Eligibility
Eligible projects include fully financed television movies, documentaries, feature films, dramatic series, variety shows, multimedia, animated series, children’s programming, music programming and informational series, as well as digital and web-based productions.
There are currently no Canadian or Manitoban requirements regarding content. As well, the MBCOSTC does not require that copyright in the production be owned by the Canadian producer or impose limits regarding the number of applications or the amount of tax credits available to a production company.
Tax Credit Overview – Conclusion
The ongoing development of Manitoba’s film and media tax credits have made the province an increasingly attractive location to produce film, television, and other forms of content such as interactive digital media. This blog is an introduction to the Manitoba film and media tax credits. Over the next weeks and months we will publish a series of blogs that provide further information and details about the Manitoba tax credits and how to take advantage of them.
In the meantime, if you have further questions about film and media tax credits, we encourage you to visit the following jurisdictional tax credit websites or to reach out to an entertainment lawyer.
- https://mbfilmmusic.ca/en/film/tax-credits (Manitoba)
- https://ontariocreates.ca/our-sectors/film-tv/tax-credits (Ontario)
- https://www.canada.ca/en/canadian-heritage/services/funding/cavco-tax-credits.html (Federal)
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* This blog is for general informational purposes only and is not to be construed as legal advice. Please contact Edwards Creative Law or another lawyer, if you wish to apply these concepts to your specific circumstances.
