As predicted by some and feared by many, implementation of the new film and video tax credit is still a distant dream. At this late stage, the good news is cavco is expected to release its revised guidelines for ritc eligibility in early February. The bad news is although establishment of the certification office’s rules will satisfy some of the pressing questions producers have regarding the new system, the bulk of industry queries will still be up in the air.

One issue is settled to date: where writer fees were ineligible in legislation released last July, these costs are now eligible labor costs.

Norman Bacal, partner at Heenan Blaikie, says, ‘The big issues now are: when are producers going to get paid and how is (the credit) going to be processed?’

The largest source of uncertainty right now is when Revenue Canada will be in a position to process credits, notes Bacal. ‘It’s largely a question of how quickly they rush (legislation) through Parliament, and then on top of that, whether (the government) will want the law and the regulations in place or just the law. If you require legislation to be enacted, it could take a year or two.’

Bacal estimates it will be at least ‘a good six months’ before the credit is available.

cavco chief Robert Stouci says he is doing everything in his power to move ahead with the regulations as quickly as possible.

‘We will endeavor to find a mechanism to administer the credit nonetheless before it actually becomes law,’ says Stouci. ‘We have approached the Department of Finance to the effect that we would like to start implementing this program right away and we are prepared to do so.’

Stouci adds that he and his staff are prepared to start releasing film and video certificates at any time. To date, cavco has sent out between 400 and 500 applications and has received five completed forms.

John Robinson, Alliance Communications’ senior vp business and legal affairs, says if legislation is delayed for six to eight months, ‘it would be very serious. Practically speaking, it would cause such a huge problem throughout the industry I don’t think Revenue Canada would be able to ignore it.’

The nature of the phone calls Steve Pasternak, Lon Hall and Attorneys partner, has been fielding has changed dramatically since late December (following the Dec. 12 announcement of draft regulations). ‘Even where deals are signed and productions are up and running, people are asking whether rights deals have to change in order to qualify for the credit. There is a lot of uncertainty out there.’

It’s well known the most vulnerable candidates for problems with the ritc are the smaller production houses that have neither the capital for interim financing nor the income tax to offset the waiting period between production and returns.

cftpa president Elizabeth McDonald says a few organizations are looking into the issue of guaranteeing the credit.

One such source is Maclean Hunter. Andra Sheffer, Maclean Hunter Television Fund’s executive director, says there is a guarantee program currently in development to support ‘the middle-range companies and probably dramatic tv series.’ Sheffer emphasizes the program is in the early stages and she won’t know for a couple of months whether or not they will go ahead with it.

Although Telefilm director of finance Danny Chalifour d’es not have a program in development at this stage to address the need for guarantees, he says, ‘We’re trying to see how and if there is something we can do.’ Telefilm d’es not have authority through its new loan guarantee program, announced earlier this month, to support interim financing for banks.

Without a transition period from the former shelter system to the new ritc, Bacal comments, ‘My feeling is that particularly for the small and mid-size corporations, they would probably be in much better shape right now on their production commitments (with a transition period); the gap in financing is harder to bank now than it was a year ago.’

Still up for question is cavco’s discretionary powers, which Pasternak claims can ‘inhibit the producer from going out and making a deal because they’re not sure if it will pass cavco rules or not.’

Souci has implemented a new tax credit committee comprised of members from the Department of Heritage, the apftq, the cftpa, the cab and cafde. He says the idea is ‘to provide advice to us on interpretive matters. We will consult them when things need to be outlined to the industry.’