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Ontario government delivers Film and Television tax credits

December 21, 2004

WHAT WAS ANNOUNCED TODAY?

The Government of Ontario today announced a significant increase in provincial tax credits for both domestic and foreign production.

For domestic Canadian production:

• Productions shot in the Greater Toronto Area will now qualify for a 30% tax credit (up from 20%).

• Productions shot outside of the GTA will quality for a 40% tax credit (up from 30%).

• Certain caps built into the old tax credit system have been lifted, adding about 3% to both incentives.

For foreign service production:

• Productions shot anywhere in Ontario will now quality for an 18% tax credit (up from 11% in the GTA and 14% outside of it).

WHAT DO THESE ANNOUNCEMENTS MEAN?

They mean the Government of Ontario has increased its support for domestic Canadian production by more than 50%, and for foreign service production by more than 60% -- a very significant investment in our industry.

The result should be an end to the present exodus of Ontario-based productions to other provinces, and to a return to growth on the domestic side.

What happens to foreign service work depends on the Canadian dollar and what other jurisdictions do in the weeks and months to come. But assuming nothing fundamental changes, this significant increase in the foreign service tax rate should protect Ontario’s current work, and put us in position to compete for more.

DID THE GOVERNMENT KEEP ITS ELECTION PROMISES WITH THIS ANNOUNCEMENT?

For domestic television production, they surpassed their election commitments. The government has delivered its promised 30% rate – without caps (their election platform contemplated caps).

See below on Canadian feature films.

The 2003 Ontario Liberal platform contained no commitments on foreign service production at all. So the increase to 18% is incremental to their platform.

DIDN’T THE GOVERNMENT PROMISE A HIGHER LEVEL OF SUPPORT FOR DOMESTIC FILM?

In the last election the government committed to a 40% rate for domestic film, with caps. Outside of the GTA we’re there, without caps.

This discriminates against Toronto (films shot in Toronto will get a 30% credit) – something that will have to be addressed in the future.

IS 18% ENOUGH TO KEEP FOREIGN SERVICE WORK IN ONTARIO?

We’ll see.

Ontario earned up to $550 million a year in foreign service work with an 11% credit. With the dollar’s rise slowing, 18% might work very well.

Other provinces are offering higher rates (Manitoba, Nova Scotia, New Brunswick and Saskatchewan are all over 30%) but have limited facilities and crews – adding substantial travel and other costs to budgets.

The government committed to review Ontario’s foreign service rate every year, to monitor its competitiveness.

WHO WAS INVOLVED IN THIS ANNOUNCEMENT?

Many people worked in the campaign to make this happen, over many months.

Among others, we owe our thanks to:

Premier Dalton McGuinty, Finance Minister Greg Sorbara, and Culture Minister Madeleine Meilleur, who included a strong pro-film plank in their 2003 election platform, and then (give or take domestic feature films shot in Toronto) delivered more than they committed.

NDP MPP Marilyn Churley, who is a relentless advocate for our industry at Queen’s Park. Ms. Churley kept our issue four-square before the government until it was acted on. She played a critical role in advising the industry on how to put its case in public. And she played an equally crucial role behind the scenes in getting the government to meet with us at all. At exactly the right time, she literally walked across the floor to speak to the Finance Minister about our industry’s issues, and to urge the minister to address them – beginning with an early meeting. Two hours later, his office called to book it.

Conservative Party Leader John Tory and Finance Critic Jim Flaherty, who mounted a ferocious Question Period campaign for us on this topic and held events in support. Mr. Tory, a former executive at Rogers Cable, is a long-time supporter and friend of our industry. The strong support from the Official Opposition made this an all-party issue, and therefore one that could be quickly addressed.

Toronto Mayor David Miller, who put film industry issues on the Toronto-Ontario agenda and pursued them with the government – helping create an environment that got results.

Business representative Mimi Wolch and all of our sisters and brothers at IATSE, who led a strong letter-writing campaign this fall and then provided the core of the organizing committee for the powerful November 2004 rally at Queen’s Park. That demonstration underlined the urgency of the issues and helped ensure early action. As several government MPPs told us, although there had been plenty of media coverage, they hadn’t really appreciated how big this issue was until they heard all those truck horns outside their windows.

Robert Lantos, who worked closely with the Ontario Liberals in opposition to encourage a progressive, pro-film platform in 2003.

Alex Raffe and Scott Garvie, co-chairs of the CFTPA Ontario Producers’ Panel. The OPP/CFTPA worked in close harmony with the rest of the industry; helped finance the key research work; and helped lead the presentation of our case to government. Ms Raffe, a former President and CEO of the former Ontario Film Development Corporation and now a Canadian domestic producer, provided the Finance Department with some of the key arguments for change – and for how the new tax credits should be structured.

MCPDA President Hon. Doug Frith, an extremely effective advocate of Canadian and service production, who provided the government with critical information about federal and provincial incentives and helped make the case for change.

Sarah Ker-Hornell, the managing director of Film Ontario, who worked patiently and relentlessly with the consulting firm Ernst & Young and with Finance Department officials for more than a year to prove the case for enhancing tax credits; to nail down the design; and to answer numerous dauntingly-complex questions and challenges throughout this process.

Ontario Media Development Corporation CEO Michel Frappier, who led an OMDC team that lobbied patiently and worked closely with us and with the Department of Finance on the details of the new program.

And, last but perhaps not least:

The Board members of Film Ontario, who for more than two years have helped lead this campaign and its presentation to Government. The Film Ontario board includes Patrick Whitley (co-chair, from Dufferin Gate Productions), Mark Prior (Comweb), Andy Sykes (Deluxe), Nick Gray (7th Man Films), Susan Murdoch (Pebblehut), Ron Haney (DGC-Ontario), Rick Perotto (IATSE Cinematographers), David Hardy (NABET), and Mimi Wolch (IATSE 873). ACTRA Toronto is represented on this Board by our Executive Director, Brian Topp, who serves as Film Ontario co-chair.

IS EVERYTHING NOW SETTLED?

Today’s announcement represents a very important signal about our industry and gives its financing a very significant boost.

There are still issues that need to be addressed in our industry – there probably always will be.

Here’s a few for us all to work on in the months to come:

• In Toronto: Now that we have a new Film Board chaired by our Mayor, much remains to be done to make the City a film-friendly location. Centralized permitting would be a good start. Getting a competitive studio built is a key priority.

• In Ontario: Much still needs to be done to improve how Ontario is marketed as a film location (we’ve made a start with the joint Ontario/Toronto/Film Ontario L.A. office). The province’s animation credits need to be more competitive. That feature film commitment needs to be implemented. The competitiveness of the service tax credit will need to be closely monitored as other jurisdictions react to Ontario’s announcement.

• At the federal level: Anti-Toronto federal film policies need to be reversed. The mis-regulation of the broadcasting industry by the CRTC needs to fixed. And the new CEO of Telefilm has his work cut out for him getting his agency back on track after several misguided years.

THE BOTTOM LINE:

A very good day indeed for Ontario’s film and television industry.

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