The Canadian Film or Video Production Tax Credit (CPTC) plays a pivotal role in the flourishing Canadian film industry offering substantial financial advantages. The involvement of a Notary Public in the CPTC application process adds significant value. From notarizing essential documents to drafting affidavits like the “Official Designee Affidavit,” a Notary Public’s role is integral to the smooth handling of the legal and administrative aspects of CPTC applications. All-Canada Notary can help!
The CPTC is governed under the Income Tax Act, Section 125.4, and the Income Tax Regulations, Section 1106. It offers a refundable tax credit, crucial for reducing production costs. This incentive is designed to encourage film and video production within Canada, fostering both cultural and economic growth.
Eligibility for the CPTC requires an application to the Canadian Audio-Visual Certification Office (CAVCO). Producers must secure a Canadian Film or Video Production Certificate (Part A) and/or a Certificate of Completion (Part B). Applications and information are accessible on CAVCO’s website (www.pch.gc.ca/cavco).
The CPTC offers a 25% refundable tax credit on qualified labor expenditures. The labor expenditure is the lesser of the actual labor costs and 60% of the net production cost. This feature makes the CPTC particularly attractive, as there is no upper limit on the credit a production can receive.
Besides the CPTC, productions may be eligible for the Film or Video Production Services Tax Credit (PSTC). However, it’s important to note that claiming the CPTC precludes eligibility for the PSTC. Further details about the PSTC are available on the Canada Revenue Agency’s website (www.cra.gc.ca/filmservices)..
Provincial or territorial incentives can provide additional financial benefits. These vary regionally and can significantly enhance the feasibility of film and video projects. More information is available on the Canada Revenue Agency’s regional incentives page www.cra.gc.ca/tx/nnrsdnts/flm/lnks-eng.html..
There is no specific deadline for obtaining a Part A certificate. However, to claim a CPTC refund, required documents must be filed with the Canada Revenue Agency no later than three years post the corporation’s tax year-end. The deadline for a Part B application is 24 months after the tax year-end in which principal photography began.
Failure to adhere to application deadlines can lead to the revocation of certificates. This results in the recapture of previously issued CPTC refunds, a significant financial setback.
To claim the CPTC, include the Canadian Film or Video Production Certificate (Part A and, if applicable, Part B) and a completed Form T1131 with the T2 Corporation Income Tax Return. Keeping meticulous records for at least six years is crucial for compliance.
The Canada Revenue Agency aims to review claims within set timeframes. In the event of an audit, a range of documents may be required to substantiate the claim.
