Income Tax Act

Version of section 125.4 from 2004-08-31 to 2014-12-15:

Marginal note:Definitions
  •  (1) The definitions in this subsection apply in this section.

    assistance

    montant d’aide

    assistance means an amount, other than a prescribed amount or an amount deemed under subsection 125.4(3) to have been paid, that would be included under paragraph 12(1)(x) in computing a taxpayer’s income for any taxation year if that paragraph were read without reference to subparagraphs 12(1)(x)(v) to 12(1)(x)(vii). (montant d’aide)

    Canadian film or video production

    production cinématographique ou magnétoscopique canadienne

    Canadian film or video production has the meaning assigned by regulation. (production cinématographique ou magnétoscopique canadienne)

    Canadian film or video production certificate

    certificat de production cinématographique ou magnétoscopique canadienne

    Canadian film or video production certificate means a certificate issued in respect of a production by the Minister of Canadian Heritage

    • (a) certifying that the production is a Canadian film or video production, and

    • (b) estimating amounts relevant for the purpose of determining the amount deemed under subsection 125.4(3) to have been paid in respect of the production. (certificat de production cinématographique ou magnétoscopique canadienne)

    investor

    investisseur

    investor means a person, other than a prescribed person, who is not actively engaged on a regular, continuous and substantial basis in a business carried on through a permanent establishment (as defined by regulation) in Canada that is a Canadian film or video production business. (investisseur)

    labour expenditure

    dépense de main-d’oeuvre

    labour expenditure of a corporation for a taxation year in respect of a property of the corporation that is a Canadian film or video production means, in the case of a corporation that is not a qualified corporation for the year, nil, and in the case of a corporation that is a qualified corporation for the year, subject to subsection 125.4(2), the total of the following amounts to the extent that they are reasonable in the circumstances and included in the cost or, in the case of depreciable property, the capital cost to the corporation of the property:

    • (a) the salary or wages directly attributable to the production that are incurred after 1994 and in the year, or the preceding taxation year, by the corporation for the stages of production of the property, from the final script stage to the end of the post-production stage, and paid by it in the year or within 60 days after the end of the year (other than amounts incurred in that preceding year that were paid within 60 days after the end of that preceding year),

    • (b) that portion of the remuneration (other than salary or wages and other than remuneration that relates to services rendered in the preceding taxation year and that was paid within 60 days after the end of that preceding year) that is directly attributable to the production of property, that relates to services rendered after 1994 and in the year, or that preceding year, to the corporation for the stages of production, from the final script stage to the end of the post-production stage, and that is paid by it in the year or within 60 days after the end of the year to

      • (i) an individual who is not an employee of the corporation, to the extent that the amount paid

        • (A) is attributable to services personally rendered by the individual for the production of the property, or

        • (B) is attributable to and does not exceed the salary or wages of the individual’s employees for personally rendering services for the production of the property,

      • (ii) another taxable Canadian corporation, to the extent that the amount paid is attributable to and does not exceed the salary or wages of the other corporation’s employees for personally rendering services for the production of the property,

      • (iii) another taxable Canadian corporation all the issued and outstanding shares of the capital stock of which (except directors’ qualifying shares) belong to an individual and the activities of which consist principally of the provision of the individual’s services, to the extent that the amount paid is attributable to services rendered personally by the individual for the production of the property, or

      • (iv) a partnership that is carrying on business in Canada, to the extent that the amount paid

        • (A) is attributable to services personally rendered by an individual who is a member of the partnership for the production of the property, or

        • (B) is attributable to and does not exceed the salary or wages of the partnership’s employees for personally rendering services for the production of the property, and

    • (c) where

      • (i) the corporation is a subsidiary wholly-owned corporation of another taxable Canadian corporation (in this section referred to as the “parent”), and

      • (ii) the corporation and the parent have agreed that this paragraph apply in respect of the production,

      the reimbursement made by the corporation in the year, or within 60 days after the end of the year, of an expenditure that was incurred by the parent in a particular taxation year of the parent in respect of that production and that would be included in the labour expenditure of the corporation in respect of the property for the particular taxation year because of paragraph (a) or (b) if

      • (iii) the corporation had had such a particular taxation year, and

      • (iv) the expenditure were incurred by the corporation for the same purpose as it was by the parent and were paid at the same time and to the same person or partnership as it was by the parent. (dépense de main-d’oeuvre)

    qualified corporation

    société admissible

    qualified corporation for a taxation year means a corporation that is throughout the year a prescribed taxable Canadian corporation the activities of which in the year are primarily the carrying on through a permanent establishment (as defined by regulation) in Canada of a business that is a Canadian film or video production business. (société admissible)

    qualified labour expenditure

    dépense de main-d’oeuvre admissible

    qualified labour expenditure of a corporation for a taxation year in respect of a property of the corporation that is a Canadian film or video production means the lesser of

    • (a) the amount, if any, by which

      • (i) the total of

        • (A) the labour expenditure of the corporation for the year in respect of the production, and

        • (B) the amount by which the total of all amounts each of which is the labour expenditure of the corporation for a preceding taxation year in respect of the production exceeds the total of all amounts each of which is a qualified labour expenditure of the corporation in respect of the production for a preceding taxation year before the end of which the principal filming or taping of the production began

      exceeds

      • (ii) where the corporation is a parent, the total of all amounts each of which is an amount that is the subject of an agreement in respect of the production referred to in paragraph (c) of the definition labour expenditure between the corporation and its wholly-owned corporation, and

    • (b) the amount determined by the formula

      A - B

      where

      A
      is 48% of the amount by which
      • (i) the cost or, in the case of depreciable property, the capital cost to the corporation of the production at the end of the year,

      exceeds

      • (ii) the total of all amounts each of which is an amount of assistance in respect of that cost that, at the time of the filing of its return of income for the year, the corporation or any other person or partnership has received, is entitled to receive or can reasonably be expected to receive, that has not been repaid before that time pursuant to a legal obligation to do so (and that does not otherwise reduce that cost), and

      B
      is the total of all amounts each of which is the qualified labour expenditure of the corporation in respect of the production for a preceding taxation year before the end of which the principal filming or taping of the production began.

    salary or wages

    traitement ou salaire

    salary or wages does not include an amount described in section 7 or any amount determined by reference to profits or revenues. (traitement ou salaire)

  • Marginal note:Rules governing labour expenditure of a corporation

    (2) For the purpose of the definition labour expenditure in subsection 125.4(1),

    • (a) remuneration does not include remuneration determined by reference to profits or revenues;

    • (b) services referred to in paragraph (b) of that definition that relate to the post-production stage of the production include only the services that are rendered at that stage by a person who performs the duties of animation cameraman, assistant colourist, assistant mixer, assistant sound-effects technician, boom operator, colourist, computer graphics designer, cutter, developing technician, director of post production, dubbing technician, encoding technician, inspection technician — clean up, mixer, optical effects technician, picture editor, printing technician, projectionist, recording technician, senior editor, sound editor, sound-effects technician, special effects editor, subtitle technician, timer, video-film recorder operator, videotape operator or by a person who performs a prescribed duty; and

    • (c) that definition does not apply to an amount to which section 37 applies.

  • Marginal note:Tax credit

    (3) Where

    • (a) a qualified corporation for a taxation year files with its return of income for the year

      • (i) a Canadian film or video production certificate issued in respect of a Canadian film or video production of the corporation,

      • (ii) a prescribed form containing prescribed information, and

      • (iii) each other document prescribed in respect of the production, and

    • (b) the principal filming or taping of the production began before the end of the year,

    the corporation is deemed to have paid on its balance-due day for the year an amount on account of its tax payable under this Part for the year equal to 25% of its qualified labour expenditure for the year in respect of the production.

  • Marginal note:Exception

    (4) This section does not apply to a Canadian film or video production where an investor, or a partnership in which an investor has an interest, directly or indirectly, may deduct an amount in respect of the production in computing its income for any taxation year.

  • Marginal note:When assistance received

    (5) For the purposes of this Act other than this section, and for greater certainty, the amount that a corporation is deemed under subsection 125.4(3) to have paid for a taxation year is assistance received by the corporation from a government immediately before the end of the year.

  • Marginal note:Revocation of a certificate

    (6) A Canadian film or video production certificate in respect of a production may be revoked by the Minister of Canadian Heritage where

    • (a) an omission or incorrect statement was made for the purpose of obtaining the certificate, or

    • (b) the production is not a Canadian film or video production,

    and, for the purpose of subparagraph 125.4(3)(a)(i), a certificate that has been revoked is deemed never to have been issued.

  • NOTE: Application provisions are not included in the consolidated text;
  • see relevant amending Acts. 1996, c. 21, s. 28;
  • 1997, c. 25, s. 34;
  • 1999, c. 22, s. 46;
  • 2001, c. 17, s. 115.
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