Local producers criticize Saskatchewan’s replacement tax credit

The industry argues that the new non-refundable tax credit, a total 43 percent incentive with all bonuses included, is not a profitable business model.

The Saskatchewan film and TV industry has turned thumbs down to a new, non-refundable tax credit program unveiled by the province, insisting it “won’t work.”

The new Film/TV and Digital Tax Credit (FTDC), unveiled Friday by Saskatchewan Tourism,  Parks, Culture and Sport Minister Bill Hutchinson, is no longer refundable as is the current 45% film tax credit that the province will end on June 30.

“In our proposal to the government, we recommended that the government consider a refundable tax credit on all production expenses, including labour costs. This new plan is based upon a non-refundable tax credit program, which has not been successful in other jurisdictions. In fact, Saskatchewan’s program would be the only one in Canada that is not based on refundable tax credits,” said Ron Goetz, SMPIA President, in a statement.

The FTDC offers a 25 percent non-refundable tax credit on all production expenses, including labour costs, and is fully deductable from taxes paid in Saskatchewan.

Hutchinson argued the Saskatchewan-focused tax credit is designed to support local production.

“The old film employment grant program was not serving to develop a strong film industry in Saskatchewan and it came at a high cost to taxpayers,” Hutchinson said in a statement.

“We are not reversing our decision to end that program. However we do believe there is a promising future for the film industry and in fact the whole creative sector in Saskatchewan if we focus on innovation and growing strong, grassroots, Saskatchewan-based businesses,” he added.

The province is offering local producers additional bonuses for copyright and intellectual ownership, use of Saskatchewan labour, production and post-production that occurs in Saskatchewan, and convergence if film and digital companies collaborate on a project.

With all bonuses included, the total incentive is 43 percent offset to producers.

But the Saskatchewan industry argues that a non-refundable tax credit is a non-starter because it is not easily bankable to help underwrite production.

“Rather than a refundable program, which is industry standard, and what we in Saskatchewan proposed, this new incentive program offered by the provincial government is a non-refundable tax program, which, quite frankly, doesn’t work,” actress Amy Matysio (Single White Spenny, inSecurity) says in a video posted over the weekend on the SMPIA website.

Matysio added local film and TV projects are not typically profitable to the point they can take advantage of a non-refundable tax credit.

“Can anyone name any small business in any Saskatchewan industry that makes that kind of profit? It’s a program without a solid business model. Let’s do good business together. That way we all can benefit. Having a non-refundable tax credit program is like having a car without a motor,” she argues.

“There are several unanswered questions about the government’s new plan, but we look forward to continue working with the government to ensure it will meet the needs of our industry,” said Goetz in a statement.

The three-point plan presented by the government also includes consultations to develop a strategy with greater focus on digital screen production and adapting all creative industries in Saskatchewan to emerging technologies, and repurposing the Canada-Saskatchewan Production studio.

With files from Etan Vlessing