The financial plans for 13 children’s projects are in limbo in the wake of news that their access to the federal tax credit could be denied because the Shaw Children’s Programming Initiative is one of the investors.

Robert Soucy, chief of the Canadian Audio-Visual Certification Office, says his office is continuing to interpret Revenue Canada’s rules as meaning that Shaw is not an eligible investor.

‘For the time being, any production having investment from Shaw’s fund is ineligible (for the tax credit). For all intents and purposes, these projects have been denied.’

It’s been a rude awakening for producers, some of whom found out as late as last week that the Shaw money makes them ineligible for the federal credit, leaving an unforeseen hole in their budgets. Financing holdups are particularly troublesome as Dec. 31 quickly approaches. If the conflict is not resolved by Revenue Canada’s year-end, producers say they will lose the opportunity for this year’s credit altogether, leaving them to make up the shortfall.

At issue is the Shaw fund’s status as a private investor. Under Revenue Canada’s guidelines, there are three types of eligible investors in order for a project to keep the federal tax credit. Eligible investors must either be a federal or provincial agency, a licensed broadcaster or a non-profit corporation. The Shaw Children’s Programming Initiative, which encompasses equity investment through the Dr. Geoffrey R. Conway Fund is administered through Shaw Communications and not through an independent endowment.

The affected producers are now left with a choice ­ drop the Shaw investment from their financing packages or prepare to count out the tax credit. Some producers are questioning how long Shaw has been aware that its investment would render a production ineligible for the federal tax credit. Gerri Cook, executive administrator for the Shaw Children’s Programming Initiative, says she has been fielding calls from concerned producers for ‘about four months.’

‘I’ve been forwarding the information upstairs,’ says Cook, ‘because it looked like it was going to become an issue.’

From Shaw’s perspective, Heather Shaw, president of dmx and Televisual within Shaw Communications, says the company is waiting on a ruling from Revenue Canada before taking any action. ‘We’ve been talking to Revenue Canada for a couple of months,’ says Shaw. ‘Now we need to wait for that ruling, because everything could be fine.’

However, cavco, the agency responsible for interpreting the criteria set forth by Revenue Canada, says the ball is very much in Shaw’s court.

Soucy says that Shaw has a few options. The company could administer the fund through ytv, which it owns, if the potential for a conflict of interest situation could be erased. It could also create a non-profit corporation much like what has been set up for the Maclean Hunter Television Fund. Soucy says the other option is to have the fund administered through one of its divisions and have that entity deemed a broadcaster.

‘I understand that Shaw still has to present itself to Revenue Canada and consult with the crtc,’ says Soucy.

At press time, there was no confirmation from the crtc that the agency is discussing such a proposal with Shaw. Sources have indicated that Shaw may be looking to garner some leeway in the Revenue Canada regulations because of its ownership of ytv, but there’s also no response from Revenue Canada as to where Shaw’s request for a ruling stands.

Meanwhile it is the producers who are caught in a bind. cftpa president Elizabeth McDonald says she is currently in discussions with Shaw and she’s hoping for a speedy resolution.

Heather Shaw says, should the ruling from Revenue Canada be negative, the company is exploring other options. ‘Our goal in this is to ensure that producers aren’t penalized,’ says Shaw.