Entertainment

Productions hire quickly, pay people from many places, and depend on tax credits that are claimed long after filming ends. The work is in getting withholding right on the day and keeping the records a credit claim will need.

How money moves through a film or television production

The points where tax and accounting rules come into play are numbered.

Stage 1DevelopRights optioned and script developed.
Stage 2FinanceFunding, tax credits and presales put together.1
Stage 3ProduceCast and crew paid through the shoot.2
Stage 4Post-productionEditing, sound and effects finished to delivery.3
Stage 5DistributeRights licensed to broadcasters, platforms and territories.
Stage 6Royalties and residualsRoyalties received and paid out, with withholding tracked.

Numbered points are explained below.

The three points, explained

At: Finance

The Canadian Film or Video Production Tax Credit

The credit can be a large part of a production’s financing, and it is claimed long after filming ends. The CPTC is a refundable credit of 25% of qualified labour expenditure for Canadian-owned, taxable corporations primarily in Canadian film or video production; it needs a certificate from CAVCO for the production and a certificate of completion, applied for within set deadlines.

How we help

We keep labour costs tracked by production so the claim has the records behind it.

At: Produce

Withholding on non-resident performers and crew

If withholding is missed, the production that paid the fee can be liable for the tax. Anyone paying a non-resident for services rendered in Canada must withhold 15% under Regulation 105; the non-resident can apply for a waiver or reduction, and non-resident artists earning no more than $15,000 in the calendar year can use a simplified waiver process.

How we help

We set up withholding and remittance for each non-resident on the production and help with waiver applications.

At: Post-production

Crew: employee or self-employed

Getting crew status wrong leaves the production owing CPP, EI and income tax deductions it never took. Crew are often engaged as independent contractors, but the CRA looks at the actual working relationship to decide.

How we help

We go through how crew are engaged and set up payroll where the answer is employment.

Services that apply

All services

Bookkeeping & Accounting
Credit claims depend on labour costs tracked by production, and non-resident withholding must be remitted on time.
Tax Returns & Planning
The production company’s T2 carries the credit claim; performers’ T1s carry their own income and expenses.
Cross-Border Tax
Non-resident talent, and Canadian performers working in the US, raise treaty and withholding questions.

Questions

Still have a question?

We are paying a US actor for work in Canada. Do we withhold?

Yes, 15% under Regulation 105 unless the CRA has approved a waiver or reduction. Acting fees for a film or video production are reported on an NR4 slip.

When do we apply for the CPTC certificate of completion?

CAVCO must receive the application no later than 24 months after the end of the corporation’s tax year in which principal photography began.