Daily News Friday, June 23, 2006

What Makes Content Canadian?




Film, radio & television and interactive media content creators often cringe when the question is asked. But the answer can significantly affect a program's ultimate success or failure in the marketplace.

What is Canadian content? Under what criteria is a program's Candian content to be assessed?

Canadian Heritage, the federal government agency responsible for national policies and programs that promote Canadian content, is asking for input on its proposed changes to guidelines that go into determining Canadian program content, production financing and tax credits.

As content producers and distributors across the country know, certain criteria have been developed to define a Canadian program, through the Canadian Radio-television and Telecommunications Commission (CRTC, or the Commission).

When a program meets those criteria it is "certified" as a Canadian program and assigned a "certification number".

Conventional television, pay television and specialty television licensees must fulfill regulatory requirements and/or conditions of licence that require them to broadcast a certain percentage of Canadian Content (CanCon).

Among the many industry stakeholders and participants, the Canadian Film and Television Production Association has proposed to replace current Producer Control Guidelines with so-called "Commercially Relevant" controls and new tools for the analysis of Canadian control of the production.

The deadline for comments or submissions to the Department of Canadian Heritage, in regards to proposed changes and revisions to its Canadian Film or Video Production Tax Credit (CPTC) program guidelines is July 21, 2006.

CAVCO says all comments will become part of the public record, and be considered in its deliberations.

The CRTC monitors compliance by requiring licensees to maintain program logs in which all Canadian programming they have broadcast is identified by a certification number for independent programs or a key figure for their own productions. Therefore, a program will require a certification number if it is to be broadcast by a licensee and the licensee will want the program to be recognized as Canadian for the purpose of satisfying its CanCon requirements. Without the number, the Commission's logging system will not recognize the program broadcast as being Canadian.

The Canadian Audio-Visual Certification Office (CAVCO) co-administers two programs with the Canada Revenue Agency (CRA):

- Canadian Film or Video Production Tax Credit (CPTC)
The objective of the CPTC is to encourage Canadian programming and to develop an active domestic production sector. This fully refundable credit is available at the rate of 25 per cent of the qualified labour expenditure of an eligible production.

- Film or Video Production Services Tax Credit (PSTC)
The PSTC is designed to enhance Canada as a location of choice for film and video productions employing talented Canadians, as well as strengthen the industry and secure investment. The PSTC is available at a rate of 16 per cent of qualified Canadian labour expenditures.

The Government of Canada introduced the Canadian Film or Video Production Tax Credit (CPTC) in its 1995 budget, at a rate equal to 25% of the eligible labour costs of a Canadian-controlled production corporation, to a maximum of 48% of the total cost of a production, for films with high Canadian content as evidenced by the presence of Canadians in key creative positions according to the "point" system administered by the Canadian Audio-visual Certification Office (CAVCO) of the Department of Canadian Heritage.

In November 2005, the Auditor General completed its audit of the Government's management practices for cultural industries, including the CPTC. The key risk the Report identified with respect to the CPTC was "that they [CAVCO and the Canada Revenue Agency] might issue tax credits to non-Canadian productions or to productions with significant foreign investment that are not under the effective control of Canadians". The revised CPTC guidelines are intended to respond to these concerns.

CFTPA is a non-profit trade association representing almost 400 media companies across the country. It negotiates and manages labour agreements, and actively lobbies the federal and provincial governments on various policy areas including taxation, trade, copyright, broadcasting and film. The association has offices in Ottawa, Toronto and Vancouver.

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