Proposed Amendments to the General Regulation (O. Reg. 37/09) of the Taxation Act, 2007 regarding the Ontario Film and Television Tax Credit and the Ontario Production Services Tax Credit
O. Reg. 37/09
Regulation - LGIC
Bill or Act:
Taxation Act, 2007
Summary of Proposal:
The 2022 Ontario Budget announced that the government would extend eligibility for the Ontario Film and Television Tax Credit (OFTTC) and the Ontario Production Services Tax Credit (OPSTC) to professional film and television productions distributed exclusively online. The proposed regulatory amendments would implement this measure.
To ensure the OFTTC only supports professional productions, the 2022 Budget noted that film and television productions distributed exclusively online would be subject to additional eligibility requirements for this credit. These would include, but would not be limited to, requirements that the production:
• Meet a minimum budget threshold of $250,000;
• Have an agreement in writing with an eligible exhibitor service for consideration at fair market value to have the production shown on the internet in Ontario within two years of completion; and
• Not include certain content (e.g., opinion, advice or how-to instructions).
The proposed regulatory amendments provide detail on these and additional new OFTTC requirements for productions distributed exclusively online, including:
• A minimum $2,000 per minute runtime budget requirement;
• A minimum $500,000 budget threshold for productions not exhibited on a third-party platform.
To provide clarity, the new OFTTC requirements would apply to film and television productions commercially released by means other than theatrical distribution or television broadcast: online streaming, digital download, video-on-demand, and physical media (e.g., DVDs).
The expansion of eligibility and accompanying new rules would apply to productions that commence principal photography on or after November 1, 2022.
Additionally, the 2022 Ontario Economic Outlook and Fiscal Review announced that the government would make regulatory amendments to the OFTTC and the OPSTC to require that eligible film and television productions provide on-screen acknowledgement of their receipt of Ontario tax credit support. The proposed regulatory amendments would also implement this measure. The on-screen acknowledgement requirement would be effective for productions that begin principal photography after December 31, 2022.
Analysis of Regulatory Impact:
The 2022 Budget estimated that expanding tax credit eligibility to professional productions distributed exclusively online would provide approximately $39 million in additional support to the film and television industry over the next three years.
The film and television tax credits are claimed by companies on a voluntary basis. As such, they do not inherently place any compliance requirements on companies. However, companies and their productions must meet eligibility criteria to qualify.
The proposed on-screen acknowledgement requirement would require companies claiming the OFTTC or OPSTC to include prescribed logos and text in the production's end credits to acknowledge receipt of Ontario tax credit support. This is a common practice in the industry, is often done on a voluntary basis and is a requirement of many jurisdictions' film and television tax credit programs. As such, it is not anticipated to create additional costs for companies.
The proposed regulatory amendments do not result in new direct compliance costs, so offsetting is not required.
February 21, 2023
Comments Due Date:
April 11, 2023
Senior Legislative Design Specialist
Corporate and Commodity Taxation Branch
Ontario Ministry of Finance
5th Floor Frost South,
7 Queens Park Circle East
Toronto, ON M7A 1Y7