Canada tax credits: strings attached


TORONTO -- The Canadian government said Thursday that it has proposed amendments to the federal Income Tax Act that could potentially deny tax credits to film and TV productions considered "offensive" by a committee of bureaucrats.

The censorship measures, outlined in Bill C-10, which is now before Parliament, would enable the federal heritage minister to pull federal financing for film or TV productions deemed "contrary to public policy."

It was not known Thursday whether the censorship plan will extend to include foreign location shoots in Canada whose producers are eligible for tax credits from Ottawa.

An answer to that question was not immediately available from a spokesman for the Canadian Heritage ministry, who confirmed the existence of amendments to the federal Income Tax Act contained in Bill C-10.

The Canadian Motion Picture Distributors Assn., which lobbies on behalf of the major studios in Canada, on Thursday said they were looking into the proposed tax credit changes to see if foreign producers may be impacted.

The proposed censorship caused an immediate outcry Thursday from Canadian artists and content creators who expressed fear that the federal government aims to deny public subisides to any film or TV show that does not meet its standard for public interest.

"The government is overstepping its bounds and interfering in an arms-length process. Witholding public funding for film and television productions it deems offensive is a dangerous direction for this government that smacks of censorship," Stephen Waddell, national executive director of ACTRA, representing 21,000 domestic performers, said.

Currently, the federal heritage department excludes talk shows, game shows, advertising, corporate videos and pornography from receiving tax credit support.

Bill C-10 would extend that programming exclusion to film and TV projects considered overly sexual, violent or hateful.

The heritage minister is expected to release guidelines on what might be considered offensive.

David Zitzerman, an entertainment lawyer with Goodmans LLP, said the Bill C-10 amendments are problematic because domestic film and TV shoots traditionally apply and possibly receive federal subsidies at the script stage, and then go onto to apply for and receive refundable tax credits well after principal photography is completed.

Producers that are denied tax credits by the committee of bureaucrats also would have to repay grants from Telefilm Canada, the federal government's film financier, or bank and distribution advances based on promised tax credits.

"You're not going to know if a film is controversial, whether it's acceptable, until the committee, if it chooses to, reviews and rules on your project," Zitzerman said.