Ontario Creates tweaks OPSTC regulations

The organization says the "small but important" change will help streamline the review and certification process for qualifying production expenditures.
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Ontario Creates has introduced a change to the Ontario Production Services Tax Credit (OPSTC) that it says will help streamline the review and certification process for qualifying production expenditures (QPE).

Under the change, which is retroactive to 2015, freelancers will now be included in the calculation of the Qualifying Production Expenditure (QPE) limit. According to Ontario Creates, the update to the regulations allow producers the flexibility to structure their project and worker relationships in the manner that makes most sense for the project. The regulation amendment is part Ontario Creates’ ongoing goal to simplify its processes and is not related to its response to the COVID-19 pandemic.

Under the previous definition of labour, for the purposes of determining the QPE limit, companies could only optimize their OPSTC claim by engaging workers in an employer-employee relationship.

As a result, the restrictive definition of labour in determining the QPE limit placed an artificially low limit on other qualifying expenditures, said Ontario Creates of the need for the change. In turn, companies were not able to optimize their OPSTC claim, or were required to engage workers in an employer-employee relationship, rather than the freelance contractor relationship which may have been preferable for the production or the worker.

“This is a small but important change for affected production companies,” said Jennifer Blitz, director of tax credits and financing programs at Ontario Creates.

In addition, determining the QPE and qualifying expenditures under the previous requirement was complex for Ontario Creates to assess, and created an administrative burden for productions, according to the agency, which added that the change “will allow producers the flexibility to structure their project and worker relationships in the manner that makes most sense for the project and will reduce the administrative burden on both the applicant and Ontario Creates.”

Elsewhere, Ontario Creates confirmed this week that the processing of all cultural media tax credits, including the OPSTC and the Ontario Film & Television Tax Credit (OFTTC), is continuing as usual amid the COVID-19 pandemic. As well, monitoring, reporting and milestone payments will continue as usual for all funds administered by the organization.

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