Vancouver: The euphoria of having a domestic tax credit for struggling b.c. film producers was quickly snuffed by the realization that many small features will not qualify.

Film Incentive b.c. requires that 51% of the copyright be controlled by the producer, an initiative meant to build the local industry through increased ownership. However, some features are financed with the maximum Telefilm Canada assistance, which requires a 49% stake in the project. For those projects, producers have no other avenues of equity financing if they still want to qualify for Film Incentive b.c.

By comparison, the equity ownership requirements for the federal tax credit are less rigid and allow for a lower equity stake for filmmakers as long as they maintain ‘producer control.’

For the first small-budget feature producers trying to capitalize on the fibc, interpretations of what constitutes ‘producer control’ are the source of the confusion.

Ranfilm Production’s West of Sarajevo, a $1-million feature about the effects of the Bosnian War on families in Vancouver, is the first to be caught in the quagmire since it is already in production until May 7.

According to associate producer Trevor Hodgson, the film schedule was delayed until after April 1 when the fibc was effective, a move that required the okay from Telefilm since the federal funding was being carried over from the previous fiscal year. However, since the film is owned 49% by Telefilm and 13% by B.C. Film, only 38% equity remains for the producers, which is well under the 51% minimum threshold for the fibc.

As a result, the producers will not get the $110,000 tax rebate they expected.

‘It just means more money that won’t come back to the production company,’ says Hodgson, adding that most small-budget features will not be able to qualify under fibc equity rules. ‘It will be much harder to make a profit. For independent filmmakers, we need [the fibc] the most, yet we are the last people able to access it.’

Lindsay Allen, manager of cultural industries for the provincial government and a key bureaucrat in the development of the fibc, admits West of Sarajevo is in a bad situation and there may be confusion between what is required by the fibc and what is required by the federal tax credit.

But the fibc guidelines were clear when they were published in October, he maintains. ‘We went a different route [than the federal tax credit] to encourage b.c. ownership,’ Allen says.

Even though b.c. producers need to own 51% of a copyright, the fibc rebates taxes based on 100% ownership, which means the province will, in many cases, pay rebates to producers on funding sourced from public agencies, Allen explains. The federal tax credit is based only on what the producer actually owns separate from Telefilm or other government stakes.

Allen suggests affected producers take remedial action including restructuring their financing, getting investors to buy into the production company rather than the project or base investors’ recoupment on resources other than equity.

‘This problem was not unforeseen,’ says Allen. ‘Small-cap features have a lot of agency ownership. But we thought the benefits [of increased ownership] outweighed any hardships.’

The fibc was proclaimed into law late last month.