Ontario Seeks To Lure Back Movie Producers With Added Tax Breaks

by Mike Godfrey, Tax-News.com, Washington

23 December 2004

Ontario is set to increase the tax breaks it offers to movie producers in an effort to arrest a sharp decline in the number of productions taking place in the Canadian province.

Although it is one of the largest film production centres in Canada, the industry in Ontario has been squeezed by a number of factors in the last three years.

Chief among these is a strengthening Canadian dollar in relation to the United States, while increased competition in the form of tax breaks for production firms both from international sources and other Canadian provinces has also contributed to Ontario’s decline in popularity.

Moreover, the American Jobs Creation Act passed by Congress in October has provided an added incentive for movie makers to stay at home, by allowing independent studios to write off the costs of a movie in one year, provided three quarters or more of the budget is spent in the US.

However, on Tuesday, Ontario's culture minister, Madeleine Meilleur unveiled a series of new measures intended to lure back movie makers, which include an increase in the tax credit for foreign productions to 18% from 11%, and for domestic productions from 11% to 18%.

According to reports, since hitting a peak of C$567 million (US$456.3 million) in 2001, spending by US production firms in Toronto had fallen to C$333 million by 2003.

A comprehensive report in our Intelligence Report series describing tax-effective regimes for film production in a number of key countries is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report5.asp .

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