Vancouver: The implementation of new tax policy for foreign actors working on Canadian film sets did not take effect Jan. 1 and has been delayed indefinitely. However, the guidelines for non-Canadian behind-the-camera workers have been refined and are now in place.

According to Norm Bacal, a Toronto-based entertainment lawyer with Heenan Blaikie, it is now more difficult for producers, directors and other behind-the-camera personnel to qualify for waivers for the 15% withholding tax, which continues under the new tax regime.

In guidelines announced Nov. 15 by Canada Customs and Revenue Agency (formerly Revenue Canada), non-residents earning more than $5,000 in Canada in the current year and working more than 180 days in the year will no longer be granted waivers. In addition, if workers have spent more than 240 days working in Canada over the past three years, they are also subject to the withholding tax.

Essentially, any non-resident behind-the-camera crew member working more than the occasional mow in Canada will no longer qualify for the waiver.

In addition, says Bacal, ‘Anyone working in Canada by means of their loan-out corporation will be obligated to file a tax return.’

So, while behind-the-camera workers have a clear understanding of their tax situation, changes to the way actors – some of whom are paid upwards of $20 million – are taxed are still a mystery.

The association Motion Picture Production Industry Canada (mppic) confirms the details of the actor tax are still being debated with ccra and the launch of new guidelines that affect taxation of foreign actors could be put off for another year – as late as Jan. 1, 2001.

‘The ccra is working hard toward a solution,’ says Peter Leitch, a member of mppic and gm of Lions Gate Studios in North Vancouver, which plays host to many u.s.-based productions. ‘It’s in the process of consulting with the industry through its new Film Industry Advisory Committee. We have to figure out administratively how it will work and we won’t notice any changes until the issues being discussed are resolved.’

Of the industry mood regarding the issue, Leitch adds: ‘We’re in a wait-and-see mode. We’re neither optimistic nor pessimistic. We trust that ccra’s decision will not discourage business from coming to Canada.’

Last year, ccra stunned the service production sector by changing the long-standing 15% to ensure better compliance with Canadian tax law – a change that would likely increase substantially the tax paid by foreign actors working on shoots in Canada and the costs of production to u.s. producers and studios.

For Californian actors, specifically, this change meant double taxation because their home state does not have a reciprocal tax agreement that allows tax credits for taxes paid in Canada.

While ccra said the changes would create tax fairness in Canada, service producers and American studios feared the tax change would kill u.s. production in Canada.

To address the crisis, the members of mppic – a hastily struck cross-Canada committee – converged on Parliament Hill and the office of then-Minister of National Revenue Herb Dhaliwal and secured a one-year reprieve.

On July 8, Dhaliwal announced new guidelines that were supposed to come on stream Jan. 1. But with the subsequent reassignment of b.c. mp Dhaliwal to the Ministry of Fisheries and the appointment of Quebec mp Martin Cauchon to the National Revenue portfolio, the roll out of the new actor tax has been slowed.

The further delay, however, adds heat to an already politically tense situation for ccra, because it extends what the tax authority says is an inequity in the way workers are taxed. Meanwhile, mppic says it is being sensitive to ccra’s goals and is alert to ensure that it stays on top of the simmering actor tax issue.

Leitch says the industry expects ccra will allow ample notice before the new actor tax system gets going.

Integral to the new film-sector tax system is the ccra’s Film Services Tax Units that were deployed in separate Vancouver, Toronto and Montreal offices as planned Jan. 1. The film units will initially be handling the behind-the-camera waivers and withholding taxes. They may also handle the continuing withholding tax for actors until the new system gets going.

Eventually, the 20 film unit officers will assess the expenses and revenues of actors prior to production. By vetting the tax requirements beforehand, foreign actors will know how much tax they will pay and the actual cost is not expected to increase significantly, compared to the current 15% withholding tax system.

Two other aspects of Dhaliwal’s film tax system have also begun their roll out. The Film Industry Advisory Committee is already meeting with groups like mppic. Also, an intergovernmental working group from the Ministries of Finance, National Revenue and Heritage was supposed to be set up to streamline the federal film policy, including the Canadian Film or Video Production Tax Credit, which was also supposed to set up by Jan. 1. Ian Edwards