Montreal: The Quebec government’s March 29 budget includes a number of technical clarifications related to the refundable tax credit for film and television production.

Conformed with industry practices, the budget indicates wages and salaries, as well as remuneration paid other than wages and salaries – including the buyout of a performer’s rights independent of a film’s profits or receipts – are deemed to be admissible as production and labor costs for purposes of the tax credit.

The ruling from Quebec’s Finance Department effectively clarifies a recent Quebec Revenue draft interpretation which would have disqualified the buyout (droits de suite) portion.

While Revenue had not made any claims based on the draft interpretation, the issue was ‘hanging over the head of some producers,’ says Stephane Cardin, SODEC tax credit director.

The $150,000 Fonds de diversification de l’economie de la Capitale, used to support film or TV start-ups in the Quebec City region, has been added to the list of prescribed funds not affecting the tax credit as described in the Quebec Income Tax Act (article 1029.8.34R1).

The four-year moratorium related to subcontracted expenditures on animation production paid to suppliers outside of Quebec is terminated. The tightened definition applies to animation productions for which principal photography or recording work began after March 25.

For purposes of the regional tax credit top-up or bonus, Finance will harmonize the definition of a region with the definition adopted by the STCVQ film technicians union. The Montreal region is now defined to be ‘within less than 25 kilometres, by road, from any point on a circle with a radius of 25 kilometres and its centre at Papineau metro station.’

The admissible rate for labor expenses incurred outside the Montreal region, announced in June 99, is 55.5% up to a maximum of 25% of the production budget. *

-www.finances.gouv.qc.ca