Saskatchewan announces new film/television and digital tax credit

On a recent blog, we brought you news of Saskatchewan cancelling its film tax credit. Since then, earlier this month in fact, Saskatchewan’s Minister of Tourism, Parks, Culture and Sport announced the introduction of a replacement film/television and digital tax credit.

According to Goodmans Entertainment lawyer, David Zitzerman, the news met with criticism from the attendant industries. Zitzerman highlights the differences between the two regimes:

The gist is that under the former refundable FETC provincial film tax credit program (which was eliminated) , the corporation filed its tax return, was audited and received a refund cheque from the Saskatchewan government less any Saskatchewan  taxes owing. The productions used single purpose corporations which paid out all the production financing to third parties so there would be little or no Saskatchewan taxes owing by the corporations which applied for the refundable tax credit. Typically,  they received a refund cheque from the Saskatchewan government  equal to roughly 45% of the eligible Saskatchewan labour costs.  This refund cheque, a receivable from the Saskatchewan government,  was ‘bankable’ (ie. they could go to a Canadian bank and borrow against the receivable, which was assigned to the bank, and use the loan to finance production). Almost all Canadian provinces’ film tax credits (including Ontario, Quebec and BC) and the two federal film tax credits are similarly ‘refundable’.

The new 25% FTDC tax credit is not refundable. It can only be credited against the applicant corporation’s Saskatchewan tax liability.  But the corporations which produce the films and tv programs  rarely owe Saskatchewan taxes per se.  Therefore, the credit likely cannot be fully used and will have to be carried forward for up to 10 years  against their future Saskatchewan  tax liability (which is also unlikely).   More importantly, because there is no refund cheque from the Saskatchewan government, the credit is not ‘bankable’. Hence the widespread and trenchant criticism.

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