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AR 11/2020 FILM AND TELEVISION TAX CREDIT REGULATION

(no amdt)

alberta regulation 11/2020

Film and Television Tax Credit Act

FILM AND TELEVISION TAX CREDIT REGULATION

Table of Contents

                1       Definitions

                2       Completion of production

                3       Prescribed production

                4       Required information

                5       Production plan

                6       Excluded productions

                7       Reapplication

                8       Prescribed amounts for authorization letter

                9       Prescribed criteria for authorization letter

              10       Prescribed dates for authorization letter

              11       Revised authorization letter

              12       Prescribed information for tax credit certificate

              13       Issuance of new tax credit certificate

              14       Prescribed percentage and prescribed circumstances

              15       Copyright residency requirements

              16       Collection of information

              17       Coming into force


Definitions

1(1)  In this Regulation,

                                 (a)    “Act” means the Film and Television Tax Credit Act;

                                 (b)    “eligibility period” means the period beginning on the date that preproduction begins and ending on the date that the requirements under section 6(2) of the Act are met; 

                                 (c)    “eligible Alberta costs” of an eligible corporation in respect of a project means the production costs determined by the Minister, to the extent that they are reasonable in the circumstances and do not exceed fair market value, that

                                           (i)    are directly attributable to the portion of the project that occurs in Alberta,

                                          (ii)    are incurred in Alberta by the eligible corporation during the eligibility period,

                                         (iii)    are paid in full by the eligible corporation during the eligibility period, and

                                         (iv)    are not eligible Alberta salary or wages, eligible non-Alberta salary or wages, eligible Alberta service contract expenditures, eligible non-Alberta service contract expenditures or eligible Alberta tangible property expenditures;

                                 (d)    “eligible Alberta parent-subsidiary amount” of an eligible corporation in respect of a project means the eligible Alberta costs, eligible Alberta salary or wages, eligible non-Alberta salary or wages, eligible Alberta service contract expenditures, eligible non-Alberta service contract expenditures and eligible Alberta tangible property expenditures paid by the eligible corporation to a parent corporation as a reimbursement of the expenditures of the parent corporation

                                           (i)    that the eligible corporation and the parent corporation have agreed to treat as expenditures of the eligible corporation, and

                                          (ii)    that would be eligible Alberta costs, eligible Alberta salary or wages, eligible non-Alberta salary or wages, eligible Alberta service contract expenditures, eligible non-Alberta service contract expenditures or eligible Alberta tangible property expenditures of the eligible corporation if the expenditures had been incurred by the eligible corporation for the same purpose, and had been paid by the eligible corporation at the same time and to the same persons, as they were by the parent corporation;

                                 (e)    “eligible Alberta salary or wages” of an eligible corporation in respect of a project means the total salary or wages, to the extent that they are reasonable in the circumstances, that are

                                           (i)    directly attributable to the portion of the project that occurs in Alberta,

                                          (ii)    incurred in Alberta by the eligible corporation during the eligibility period, and

                                         (iii)    paid in full by the eligible corporation during the eligibility period to employees of the eligible corporation who are eligible individuals;

                                 (f)    “eligible Alberta service contract expenditures” of an eligible corporation in respect of a project means the total service contract expenditures, to the extent that they are reasonable in the circumstances and do not exceed fair market value, that are

                                           (i)    directly attributable to the portion of the project that occurs in Alberta,

                                          (ii)    incurred in Alberta by the eligible corporation during the eligibility period, and

                                         (iii)    paid in full by the eligible corporation during the eligibility period;

                                 (g)    “eligible Alberta tangible property expenditures” of an eligible corporation in respect of a project means the total tangible property expenditures, to the extent that they are reasonable in the circumstances and do not exceed fair market value, where

                                           (i)    the property is used in Alberta during the eligibility period in a manner that is directly attributable to the portion of the project that occurs in Alberta,

                                          (ii)    the expenditures are incurred in Alberta by the eligible corporation during the eligibility period, and

                                         (iii)    the expenditures are paid in full by the eligible corporation during the eligibility period;

                                 (h)    “eligible individual” means an individual, other than a trust or estate, who resides in Alberta on December 31 of one of the three years immediately preceding the year in which Alberta principal photography begins;

                                  (i)    “eligible non-Alberta salary or wages” of an eligible corporation in respect of a project means the total salary or wages, to the extent that they are reasonable in the circumstances, that are

                                           (i)    directly attributable to the portion of principal photography of the project that occurs outside Alberta,

                                          (ii)    incurred outside Alberta by the eligible corporation during the eligibility period, and

                                         (iii)    paid in full by the eligible corporation during the eligibility period to employees of the eligible corporation who are eligible individuals;

                                  (j)    “eligible non-Alberta service contract expenditures” of an eligible corporation in respect of a project means the total service contract expenditures, to the extent that they are reasonable in the circumstances and do not exceed fair market value, that are

                                           (i)    directly attributable to the portion of principal photography of the project that occurs outside Alberta,

                                          (ii)    incurred outside Alberta by the eligible corporation during the eligibility period, and

                                         (iii)    paid in full by the eligible corporation during the eligibility period;

                                 (k)    “eligible partnership” means a partnership where each member is,

                                           (i)    in respect of a service contract expenditure or tangible property expenditure paid to the eligible partnership, 

                                                  (A)    an individual who resides in Alberta on December 31 of the year immediately preceding the year in which an eligible corporation pays the service contract expenditure or tangible property expenditure to the eligible partnership, or

                                                  (B)    a corporation that has a permanent establishment in Alberta and is not tax exempt at the time an eligible corporation pays a service contract expenditure or tangible property expenditure to the eligible partnership,

                                          and

                                          (ii)    in respect of the copyright of a project,

                                                  (A)    an individual who resides in Alberta during the applicable periods referred to in section 15, or

                                                  (B)    a corporation that has a permanent establishment in Alberta and is not tax exempt during the applicable periods referred to in section 15;

                                  (l)    “federal Act” means the Income Tax Act (Canada);

                               (m)    “parent corporation” means a corporation in relation to which an eligible corporation is a subsidiary wholly-owned corporation; 

                                 (n)    “salary or wages” has the same meaning as salary or wages in section 248(1) of the federal Act and is computed in the same manner, regardless of whether the federal Act applies to the eligible individual to whom the salary or wages are paid, but does not include

                                           (i)    an amount described in section 7 of the federal Act, or

                                          (ii)    an amount determined by reference to profits or revenues;

                                 (o)    “service contract expenditure” means an amount paid by an eligible corporation under a service contract to

                                           (i)    an eligible individual, other than an employee of the eligible corporation, where the amount is attributable to services personally rendered by

                                                  (A)    the eligible individual, or

                                                  (B)    an employee of the eligible individual who is an eligible individual, to the extent that the amount paid under the service contract does not exceed the salary or wages paid to the employee for rendering the services,

                                          (ii)    an eligible partnership, where the amount is attributable to services personally rendered by

                                                  (A)    a member of the eligible partnership who is an eligible individual, or

                                                  (B)    an employee of the eligible partnership who is an eligible individual, to the extent that the amount paid under the service contract does not exceed the salary or wages paid to the employee for rendering the services,

                                                  or

                                         (iii)    a corporation that has a permanent establishment in Alberta at any time during the eligibility period and is not tax exempt, where the amount is attributable to services personally rendered by an employee of the corporation who is an eligible individual, to the extent that the amount paid under the service contract does not exceed the salary or wages paid to the employee for rendering the services;

                                 (p)    “tangible property expenditure” means the non-refundable payments made by an eligible corporation under a lease of tangible property that are paid to an eligible individual, eligible partnership or corporation that

                                           (i)    is ordinarily engaged in the business of leasing tangible property of the type leased by the eligible corporation,

                                          (ii)    carries on business in Alberta, and

                                         (iii)    at the time the eligible corporation makes each payment under the lease,

                                                  (A)    in the case of an eligible individual, the eligible individual is not an employee of the eligible corporation,

                                                  (B)    in the case of an eligible partnership, no member of the partnership is an employee of the eligible corporation, and

                                                  (C)    in the case of a corporation, the corporation has a permanent establishment in Alberta and is not tax exempt;

                                 (q)    “tax exempt” means exempt from tax under the Alberta Corporate Tax Act by virtue of section 35 of that Act;

                                  (r)    “total labour costs” means the portion of the total production costs of a project that is made up of salary or wages, to the extent that they are reasonable in the circumstances, that are

                                           (i)    directly attributable to the project,

                                          (ii)    incurred by the eligible corporation during the eligibility period, and

                                         (iii)    paid in full by the eligible corporation during the eligibility period;

                                 (s)    “treaty co-production project” means a project whose production is contemplated in a co-production treaty entered into between Canada and another country.

(2)  In the Act and this Regulation,

                                 (a)    “designated assistance” means the total amount of assistance an eligible corporation receives or is entitled to receive from an individual, partnership or corporation or from a government, municipality or other public authority that, in the opinion of the Minister, relates to eligible production costs, and such assistance may include

                                           (i)    a grant,

                                          (ii)    a subsidy,

                                         (iii)    a forgivable loan,

                                         (iv)    an advance other than a recoupable advance,

                                          (v)    a loan other than a bona fide loan with a set repayment date,

                                         (vi)    a provincial tax credit, including an Alberta tax credit,

                                        (vii)    a donation in respect of which the donor has received a benefit, and

                                       (viii)    in respect of a sponsorship in which there is an exchange of benefits between the sponsor and the sponsored party other than at fair market value, the difference between the amount for which the benefits were exchanged and the fair market value of the benefits,

but does not include

                                         (ix)    a tax credit under the federal Act,

                                          (x)    a licence fee,

                                         (xi)    an equity investment, or

                                        (xii)    an amount deducted under section 26.94 of the Alberta Corporate Tax Act;

                                 (b)    “eligible production costs” of an eligible corporation in respect of a project means the total of the following:

                                           (i)    eligible Alberta costs;

                                          (ii)    eligible Alberta salary or wages;

                                         (iii)    eligible Alberta service contract expenditures;

                                         (iv)    eligible Alberta tangible property expenditures;

                                          (v)    the eligible Alberta parent-subsidiary amount;

                                         (vi)    eligible non-Alberta salary or wages, if the project is a documentary production;

                                        (vii)    eligible non-Alberta service contract expenditures, if the project is a documentary production.

Completion of production

2   The final project must be delivered to the Minister in a form and for a sufficient period of time to enable the Minister to verify the final project’s compliance with the Act and this Regulation.

Prescribed production

3   For the purposes of sections 1(l) and 2(d) of the Act, digital media is a prescribed type of production.

Required information

4   An application for an authorization letter must contain the following information:

                                 (a)    the date on which Alberta principal photography is expected to begin;

                                 (b)    a commercial distribution plan in respect of the final project;

                                 (c)    a description of any factors that may affect the eligible corporation’s ability to meet the requirements of the Act or this Regulation in respect of the project;

                                 (d)    details of the person or persons that control the eligible corporation;

                                 (e)    a budget in respect of the portion of the project that occurs in Alberta.

Production plan

5   A production plan must contain the following information:

                                 (a)    an overview of the project;

                                 (b)    details of the estimated economic impact of the project on Alberta;

                                 (c)    details of the estimated impact of the project on the film and television industry in Alberta;

                                 (d)    the estimated total production costs of the project;

                                 (e)    the estimated eligible production costs of the project;

                                 (f)    the estimated designated assistance amount in respect of the project;

                                 (g)    the proposed timeline of the project;

                                 (h)    evidence of sufficient financing to enable the project to reach completion of production;

                                  (i)    a copy of the commercial licence agreement for the licensing of the project;

                                  (j)    a copy of the chain of title documentation for the project;

                                 (k)    any other information required by the Minister.

Excluded productions

6   The following types of film or television production are excluded from the application of the Act:

                                 (a)    news, current events or public affairs programming, or a program that includes weather or market reports;

                                 (b)    a talk show;

                                 (c)    a production in respect of a game, questionnaire or contest;

                                 (d)    a sports event or activity;

                                 (e)    a gala presentation or an awards show;

                                 (f)    a production that solicits funds;

                                 (g)    reality television;

                                 (h)    pornography;

                                  (i)    advertising;

                                  (j)    a production that is produced primarily for industrial, corporate or institutional purposes;

                                 (k)    a production, other than a documentary, all or substantially all of which consists of stock footage;

                                  (l)    a video game;

                               (m)    a production for which public financial support would, in the opinion of the Minister, be contrary to public policy.

Reapplication

7(1)  An eligible corporation that applies for an authorization letter in respect of a project may, within 12 months after being notified under section 4(4) of the Act that the Minister refuses to issue an authorization letter, make one additional application for an authorization letter in respect of the project.

(2)  Despite section 3(3) of the Act, an eligible corporation may make an application under subsection (1) after Alberta principal photography begins on the project.

Prescribed amounts for authorization letter

8(1)  For the purposes of section 4(1)(b) of the Act, the prescribed amount is $499 999.

(2)  For the purposes of section 4(3)(b) of the Act, the prescribed amount is $10 000 000.

Prescribed criteria for authorization letter

9   For the purposes of section 4(1)(c) of the Act, the prescribed criteria or requirements to be met are the following:

                                 (a)    the economic impacts of the project on Alberta must be satisfactory to the Minister;

                                 (b)    the impacts of the project on the film and television industry in Alberta must be satisfactory to the Minister.

Prescribed dates for authorization letter

10(1)  For the purposes of section 4(2)(b) of the Act, the prescribed date is

                                 (a)    the date 6 months after the date on which the Minister issues the authorization letter, or

                                 (b)    another date determined by the Minister if the Minister is of the opinion that circumstances warrant it.

(2)  For the purposes of section 4(2)(c) of the Act, the date by which an eligible corporation must provide to the Minister the information required under section 6(2) of the Act is

                                 (a)    the date 42 months after the date on which Alberta principal photography begins or is expected to begin, or

                                 (b)    another date determined by the Minister if the Minister is of the opinion that circumstances warrant it.

Revised authorization letter

11(1)  An eligible corporation shall apply for a revised authorization letter under section 3(4) of the Act if any of the information referred to in section 4 or 5(f) or (g) changes.

(2)  The Minister may issue a revised authorization letter where information contained in the original authorization letter is incorrect or for any other similar reasons the Minister considers appropriate.

Prescribed information for tax credit certificate

12   For the purposes of section 6(2)(c)(iv) of the Act, the following information in respect of a project is prescribed:

                                 (a)    a final report in a form approved by the Minister;

                                 (b)    an audited production cost statement.

Issuance of new tax credit certificate

13(1)  The Minister shall revoke a tax credit certificate and issue a new tax credit certificate where information contained in the original tax credit certificate is incorrect or has changed since the date the original tax credit certificate was issued or for any other similar reasons the Minister considers appropriate.

(2)  A tax credit certificate issued under subsection (1) shall replace the original tax credit certificate.

(3)  A tax credit certificate issued under subsection (1) is deemed to have been issued on the same date that the original tax credit certificate was issued under section 6 of the Act.

(4)  If the Minister issues a new tax credit certificate under subsection (1), the Minister shall promptly give notice to the Finance Minister of the issuance of the new tax credit certificate.

Prescribed percentage and prescribed circumstances

14   For the purposes of sections 1 and 2 of the Schedule to the Act, the prescribed percentage to be used in determining the estimated or actual tax credit amount is

                                 (a)    30% in the following circumstances:

                                           (i)    a project other than a treaty co-production project that meets the following criteria:

                                                  (A)    at least 50% of the project is owned by eligible individuals, whether as individuals, members of a partnership or voting shareholders of a corporation;

                                                  (B)    at least one producer on the project must be an eligible individual;

                                                  (C)    in respect of the copyright of the project, the requirements under section 15 must be met;

                                                  (D)    at least 60% of total production costs for the project must be incurred in Alberta or at least 70% of the total labour costs for the project must be made up of eligible Alberta salary or wages;

                                          (ii)    a treaty co-production project that meets the following criteria:

                                                  (A)    at least one producer on the project must be an eligible individual;

                                                  (B)    at least 60% of total production costs for the project must be incurred in Alberta or at least 70% of the total labour costs for the project must be made up of eligible Alberta salary or wages,

and

                                 (b)    22% in circumstances other than those set out in clause (a).

Copyright residency requirements

15(1)  For the purposes of section 14(a)(i)(C), the copyright of a project must be held, at least in part,

                                 (a)    during the period beginning on the date that an eligible corporation applies for an authorization letter and ending on the date of completion of production,

                                           (i)    by an individual who resides in Alberta on December 31 of the year immediately preceding the year in which the eligible corporation applies for an authorization letter,

                                          (ii)    by a corporation that has a permanent establishment in Alberta and is not tax exempt at the time that the eligible corporation applies for an authorization letter, or

                                         (iii)    by a partnership each member of which must be an individual meeting the requirements of subclause (i) or a corporation meeting the requirements of subclause (ii),

and

                                 (b)    during the period beginning on the date of completion of production and ending 10 years after that date,

                                           (i)    by an individual who resides in Alberta on each December 31 of that period,

                                          (ii)    by a corporation that has a permanent establishment in Alberta during that period and is not tax exempt, or

                                         (iii)    by a partnership each member of which must be an individual meeting the requirements of subclause (i) or a corporation meeting the requirements of subclause (ii).

(2)  For the purposes of section 14(a)(i)(C), if the copyright of a project is transferred during a period of time referred to in subsection (1)(a) or (b), the copyright must be transferred, at least in part, to 

                                 (a)    an individual who resides in Alberta on December 31 of the year immediately preceding the year in which the transfer occurs,

                                 (b)    a corporation that, at the time the transfer occurs, has a permanent establishment in Alberta and is not tax exempt, or

                                 (c)    a partnership each member of which must be an individual meeting the requirements of clause (a) or a corporation meeting the requirements of clause (b).

Collection of information

16   The Minister may collect indirectly under section 18 of the Act the following information about a member or an employee of an eligible partnership, an employee of an eligible corporation or a parent corporation or an individual referred to in section 1(1)(o)(i):

                                 (a)    the member, employee or individual’s name;

                                 (b)    the member, employee or individual’s job description, including position title;

                                 (c)    the member, employee or individual’s salary or wages, including bonuses;

                                 (d)    the member, employee or individual’s unique identification number;

                                 (e)    the member, employee or individual’s work email address;

                                 (f)    the member, employee or individual’s work address;

                                 (g)    the member, employee or individual’s work phone number;

                                 (h)    the amount of designated assistance the eligible corporation has received in respect of the member, employee or individual during the eligibility period;

                                  (i)    the member, employee or individual’s place of residence at the end of December 31 in any year.

Coming into force

17   This Regulation has effect on the coming into force of the Film and Television Tax Credit Act.