Film Industry Pans Canada's Newest Film Tax Credit

Wes Bentley

American Beauty star Wes Bentley at the premiere of The Hunger Games.

Saskatchewan is replacing its refundable 45 percent production incentive with a 25 percent non-refundable subsidy that is not easily banked, leading to criticism from producers and "Hunger Games" star Wes Bentley.

TORONTO – The Canadian province of Saskatchewan has a new 25 percent film tax credit to replace the existing 45 percent film employment tax credit program.

That’s about all that’s cheering Canadian film and TV producers. The new tax credit covers all production expenses, including labor costs, but is non-refundable.

That means local and foreign producers can use the tax credit to reduce taxation in subsequent years, but the absence of a refund means the province’s replacement subsidy is not easily bankable.

And the new film tax credit, to be introduced in July, will be deducted from taxes paid in Saskatchewan, as the provincial government aims to end fly-by film and TV shoots where talent and crew pay taxes back in Toronto, Vancouver or Los Angeles.

"The old film employment grant program was not serving to develop a strong film industry in Saskatchewan, and it came at a high cost to taxpayers," Saskatchewan culture minister Bill Hutchinson said when unveiling his locally-focused film incentive.

Hutchinson in March rang alarm bells north of the border when his province unveiled plans to cancel its existing film tax credit, which undercut Hollywood's faith in the reliability of Canada's tax credit regime.

The Western Canadian province ignored a local industry request for a refundable film tax credit, in line with rival Canadian provinces.

“This new plan is based upon a non-refundable tax credit program, which has not been successful in other jurisdictions,” Ron Goetz, president of the Saskatchewan Media Production Industry Association, representing local film and TV producers, said on news of the replacement film subsidy. “In fact, Saskatchewan’s program would be the only one in Canada that is not based on refundable tax credits."

Canadian producers rely on the guarantee of a refundable tax credit to secure a banking line of credit to finance production up front.

The Saskatchewan government also ignored major producers in the rest of Canada, and Hollywood voices like Sons of Anarchy star Kim Coates and The Hunger Games star Wes Bentley, who urged the province to restore its film tax credit before its local industry vanishes.

Despite that lobbying, Saskatchewan’s cost-conscious provincial government has aimed instead to stop making never-ending rises in tax incentives to woo Hollywood and other foreign producers.

By contrast, the provinces of British Columbia, Ontario and Quebec, where most foreign production takes place in Canada, have in recent years juiced their tax credits and sold them to foreign producers on their certainty and bankability.