Vancouver: Vancouver’s best customers in the booming service production sector are now being hit with a 15% Revenue Canada withholding tax on earnings. And most vexing to film boosters in b.c. is that the withholding tax ­ which has been traditionally waived in all Canada film jurisdictions for visiting behind-the-camera workers ­ is now only being applied to service projects shot here.

u.s. producers and directors ­ key decision makers in whether to bring an mow or series, for example, to Vancouver ­ are having 15% taken off the top of their wages earned here if they have previously worked in Canada in the past couple of years.

For example, Karen Moore, a u.s. producer currently working on abc mow Advocate’s Devil, has had her waiver denied because she worked here in 1996 and 1995. Moore has brought about 10 projects here in the past decade.

According to Mary Anne McCarthy, a production manager and former production accountant who has studied the problem, there are about seven cases in b.c. in past couple of months. Shows such as mows The Hunted and Connections have been affected.

Waivers for the 15% non-resident withholding tax have usually been applied to behind-the-camera workers like directors and producers who do not have a fixed base in Canada and who have not worked more than 60 days in a year.

The waiver has been flexible to date.

But producers who pop up on RevCan’s computer system because they have worked several times in Canada in the past 36 months are no longer eligible.

Because of the frequency of their work, RevCan assumes these people have a fixed base and is therefore now denying the waivers.

‘There have never been clear guidelines,’ says McCarthy. ‘[RevCan] now says the waivers are a privilege, not a right. It’s not that [RevCan] is applying the law incorrectly, it’s just that the enforcement has become a lot more rigid.’

Compounding the problem, says McCarthy, is that the u.s. creative people have never been informed that the change in protocol was imminent. The denials have come only after the producers and directors have been working and collecting earnings from a project.

In theory, the withholding tax charge can be claimed on the u.s. income tax returns. But the corporate structures these people have d’esn’t allow that to happen, says McCarthy. ‘They’ve had no time to prepare,’ she says.

According to Pete Mitchell, b.c.’s film commissioner and chief marketer to u.s. producers and studios, the strict interpretation of the non-resident withholding tax is only being applied to b.c. service production, a situation that puts Vancouver at a disadvantage to Toronto as a Canadian service locale.

‘It seems that now someone in the b.c. [RevCan] office has decided to apply the letter of the law,’ says Mitchell.

David Morgan, communications officer for RevCan Vancouver, says ‘the rules are being more stringently applied.’ RevCan has introduced a tracking system to see whether a person has reoccurring employment in Canada.

‘Our main responsibility is to protect revenue. This is a national policy and it should be applied uniformly across the country.’

u.s. producers who are subject to this withholding tax can file Canadian tax returns and this allows RevCan to assess whether or not this person has a fixed base in Canada. They can get the money back if they get audited through RevCan if they are indeed non-residents.