Heading into the busy production season, Ontario filmmakers got a boost May 7 when the Ontario government announced its new refundable tax credit, which is expected to return $25 million to the coffers of the province’s producers.

‘We are just thrilled,’ says Alexandra Raffe, ceo of the Ontario Film Development Corporation, which will be administering the credit. ‘We had been working some time on this but we had no idea it would go anywhere that quickly.’

Epitome Pictures’ Linda Schuyler, who has been part of a cftpa lobby to get the credit, was equally elated. ‘What a sigh of relief. We’ve been lobbying for almost 10 months and we took a very low-key but persistent tack. So it felt like all the hard work paid off big time.’

The announcement came at a time when Ontario filmmakers were uncertain of the future, since the Ontario Film Investment Plan had been frozen last July. ‘We’ve never had this kind of stability in our funding before,’ says Schuyler. ‘ofip was only renewable every year so we never knew from one year to the next if in fact there was going to be an ofip. Now the (new) budget has become legislation. Until there is a change to the contrary, we can expect this will be the tax credit for some time to come.’

The cftpa estimates that the tax credit, targeting only those productions that achieve eight or more Canadian content points, will support at least $250 million in production each year.

But the tax credit is actually a lower percentage of production costs than many were hoping for. The cftpa had lobbied for a 12% refund of the total production budget. What they got instead was, for established production companies, 15% of eligible labor costs not to exceed 48% of the budget, and for new producers, 30% of labor expenditures on the first $240,000. The annual cap for any company is a $2 million refund per year, rather than the $2.25 million under ofip. Still, the industry mood is one of gratitude.

‘We were hoping for this but didn’t dare expect it,’ says Michael MacMillan, chairman and ceo of Atlantis Communications. ‘The net impact will be 15% of 48%, which is 7.5% of a production’s budget. It’s not as high as we were hoping for and it’s not as high as ofip, but it’s better than zero. It will be terrific for the Ontario industry and for us.’

Raffe agrees. ‘Frankly, it’s a glass half full and I’m not going to shoot myself in the foot by proposing any criticism at all,’ she says. ‘It is a magnificent validation of the importance of this industry. It’s been a very difficult year and I know the industry has found it hard not knowing if Ontario would be a player coming up to the busiest time of the production year. The doubling of the rate for first-time producers is a marvelous acknowledgement of how difficult it is to get financing together for your first project.’

Some broadcasters, on the other hand, felt they were staring at a glass that was half empty. The new tax credit legislation excludes ‘productions where the initial broadcast is shown by a Canadian broadcaster that is associated with the qualifying production company.’ That means production companies associated with conventional broadcasters would not qualify because of their first-window requirements. On the other hand, production companies affiliated with specialty channels, which typically don’t require a first window, would still qualify.

‘We’re very pleased the government has renewed its commitment to Ontario-based television and film production,’ says Canadian Association of Broadcasters’ vp of television Robert Scarth. ‘We’re also pleased the government adopted a tax credit approach as opposed to the project-driven financing of ofip.

‘However, in our view, the government has put in place a rule which will deny production companies that are affiliated with conventional broadcasters this credit. It’s a bit of a regressive move, particularly because the federal government’s tax credit has no such restriction and it clearly recognizes that the business is moving into increased consolidation and a lot of cross ownership.’

As far as concerns from other provinces that the tax credit will negatively impact their business, Schuyler says, ‘From a cftpa point of view, we look at the fact that we were able to convince a very conservative, dedicated-to-dropping-the-deficit government to see the value of this industry to Ontario. So, why can’t we do the same in b.c. or Alberta or other provinces? I know in Alberta they were watching with great interest as to what was going to happen here because it says a lot about the respect the government has for our industry.’