2006 International Film and Video Tax Incentives (Federal)
Notice Under Internal Revenue Service Circular 230

BC Finance Minister Announces Extension of Tax Credit

Since the release of the Film and Television Industry Review report conducted by InterVISTAS and released in early 2005, it was anticipated that the BC film and television tax credits, once it expired at the end of March 2006, would not be extended.  The 2005 report indicated that the government was losing a significant amount of revenue as a result of offering these credits.  This prompted a dialogue between government officials and film industry supporters.  The government was concerned that it could no longer justify offering the credits based on the reported loss in revenue.  Industry proponents countered the report, however, arguing profusely that the indirect benefits far outweighed the seemingly low direct returns on the government investments.

The Finance Minister, Carole Taylor, obviously heard the industries arguments and responded positively in her announcement that the government would extend domestic and foreign location tax credits, valued respectively at 18% and 30% of eligible labor costs, until 2008.  Although the Minister acknowledged that there was a clear competitive advantage to offering the credits, she also emphasized the need for the industry to increase the attractiveness of filming in BC by exploiting other benefits like local expertise and landscaping. 

The announcement has kept the door open for domestic and foreign location productions to continue taking advantage of the BC film tax incentives for at least another two years.  However, it is likely that when this issue is revisited in 2008 industry players will have an increased challenge of trying to justify the industry’s reliance on these credits.  At that point, if they are unable to justify the necessity of these credits, we can expect to see lights out, or at least a dimming of the lights, on the BC film industry.

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