1106. (1) Definitions — For the purposes of this section and paragraph (x) of Class 10 in Schedule II, “Canadian” means a person that is, (a) a Canadian citizen as defined in the Citizenship Act, (b) a permanent resident within the meaning assigned by the Immigration Act, or (c) a corporation that is Canadian-controlled, as determined for the purposes of sections 26 to 28 of the
Investment Canada Act; “Canadian government film agency” means a federal or provincial government agency the mandate of which is related to the provision of assistance to film productions in Canada; “excluded production” means a film or video production of a prescribed taxable Canadian corporation, (a) in respect of which, (i) the Minister of Canadian Heritage has not issued a certificate of completion, within 30 months after the end of the corporation’s taxation year in which the production’s principal photography began, certifying that the production was completed within two years after the end of the year, (ii) where the production is not a treaty co-production, neither the corporation nor another prescribed taxable Canadian corporation related to the corporation, (A) is, except to the extent of an interest in the production held by a prescribed taxable Canadian corporation as a co-producer of the production or by a prescribed person (within the meaning assigned by subsection 1106 (7)), the exclusive worldwide copyright owner in the production for all commercial exploitation purposes for the 25-year period that begins at the first time the production has been completed and is commercially exploitable, (B) controls the initial licensing of commercial exploitation, and (C) retains a share of revenues, that is acceptable to the Minister of Canadian Heritage, from the exploitation of the production in non-Canadian markets, (iii) there is not an agreement in writing for consideration at the fair market value with, (A) a
corporation that is a Canadian and is a distributor of film or video productions, or (B) a
corporation that holds a broadcasting license issued by the Canadian Radio-television and Telecommunications Commission for television markets, to have the production shown in Canada within the two-year period that begins at the first time the production has been completed and is commercially exploitable, or (iv) a distribution is made in Canada within that two-year period by a person who is not a Canadian, or (b) that is, (i) news, current events or public affairs programming, or a programme that includes weather or market reports, (ii) a talk show, (iii) a production in respect of a game, questionnaire or contest (other than a production directed primarily at minors), (iv) a sports event or activity, (v) a gala presentation or an awards show, (vi) a production that solicits funds, (vii) reality television, (viii) pornography, (ix) advertising, (x) a production produced primarily for industrial, corporate or institutional purposes, (xi) a production, other than a documentary, all or substantially all of which consists of stock footage, or (xii) a production for which public financial support would, in the opinion of the Minister of Canadian Heritage, be contrary to public policy; “producer” of a film or video production does not include a person unless the person is the individual, (a) who controls and is the central decision maker in respect of the production, (b) who is directly responsible for the acquisition of the production story or screenplay and the development, creative and financial control and exploitation of the production, and (c) who is identified in the production as being the producer of the production; “remuneration” does not include an amount determined by reference to profits or revenues. Prescribed Taxable Canadian Corporation (2) For the purposes of section 125.4 of the Act and this section, “prescribed taxable Canadian corporation” means a taxable Canadian corporation that is a Canadian, other than a corporation that is, (a) controlled directly or indirectly in any manner whatever by one or more persons all or part of whose taxable income is exempt from tax under Part I of the Act; or (b) a prescribed labour-sponsored venture capital corporation. Canadian Film or Video Production (3) For the purposes of section 125.4 of the Act, this Part and Schedule II, “Canadian film or video production” means a film or video production, other than an excluded production, of a prescribed taxable Canadian corporation and that is, (a) a treaty co-production; or (b) a film or video production, (i) at all times during the production of which the producer of which is a Canadian, (ii) in respect of which the Minister of Canadian Heritage has allotted not less than six points in accordance with subsection (4), (iii) in respect of which not less than 75 per cent of the total of all costs for services provided in respect of producing the production (other than excluded costs) was payable to, and in respect of services provided by individuals who are, Canadians, and for the purpose of this subparagraph, excluded costs are, (A) costs determined by reference to the amount of income from the production, (B) remuneration payable to, or in respect of, the producer or individuals described in any of clauses (4) (a) (i) (A) to (H) and (ii) (A) to (F) and subparagraph (4) (a) (iii), (C) amounts payable in respect of insurance, financing, brokerage, legal and accounting fees, and similar amounts, and (D) costs described in subparagraph (iv), and (iv) in respect of which not less than 75 per cent of the total of all costs incurred for the post-production of the production, including laboratory work, sound re-recording, sound editing and picture editing (other than costs determined by reference to the amount of income from the production and remuneration payable to, or in respect of, the producer or individuals described in any of clauses (4) (a) (i) (A) to (H) and (ii) (A) to (F) and subparagraph (4) (a) (iii)) was incurred in respect of services provided in Canada, other than a production the certification of which has been revoked under subsection 125.4 (6) of the Act by the Minister of Canadian Heritage. Creative Services (4) For the purposes of subsection (3) and this subsection, (a) there shall be allotted in the case of a film or video production, (i) that is not an animation production, (A) for the director, two points, (B) for the principal screenwriter, two points, (C) for the lead performer for whose services the highest remuneration was payable, one point, (D) for the lead performer for whose services the second highest remuneration was payable, one point, (E) for the art director, one point, (F) for the director of photography, one point, (G) for the music composer, one point, and (H) for the picture editor, one point, if that person is an individual who is a Canadian, (ii) that is an animation production, (A) for the director, one point, (B) for the lead voice for which the highest or second highest remuneration was payable, one point, (C) for the design supervisor, one point, (D) for the camera operator where the camera operation is done in Canada, one point, (E) for the music composer, one point, and (F) for the picture editor, one point, if that person is an individual who is a Canadian, and (iii) that is an animation production, one point where both the principal screenwriter and storyboard supervisor are individuals who are Canadians, and (iv) that is an animation production, (A) for the place where the layout and background work is done, one point, (B) for the place where the key animation is done, one point, (C) for the place where the assistant animation and in-betweening is done, one point, if the place is in Canada; (b) a production that is not an animation production is deemed not to be a Canadian film or video production unless there are allotted in respect of the production two points under clause (a) (i) (A) or (B) and one point under clause (a) (i) (C) or (D); and (c) an animation production is deemed not to be a Canadian film or video production unless there are allotted in respect of the production, (i) one point under clause (a) (ii) (A) or subparagraph (a) (iii), (ii) one point under clause (a) (ii) (B), and (iii) one point under clause (a) (iv) (B). Lead Performer/Screenwriter (5) For the purposes of subsections (4) and (6), (a) a lead performer in respect of a production is an actor or actress who has a leading role in the production having regard to the performer’s remuneration, billing and time on screen; (b) a lead voice in respect of an animation production is the voice of the individual who has a leading role in the production having regard to the length of time that the individual’s voice is heard in the production and the individual’s remuneration; (c) the principal screenwriter of a production is not a Canadian unless, (i) each individual involved in the preparation of the screenplay for the production is otherwise a Canadian, or (ii) the principal screenwriter is an individual who otherwise is a Canadian and, (A) the screenplay for the production is based upon a work authored by a Canadian, and (B) the work is published in Canada. Documentary Production (6) Notwithstanding subsection (4), a documentary production that is not an excluded production is deemed to be a Canadian film or video production if all creative positions in respect of the production are occupied by individuals who are Canadians. Prescribed Person (7) For the purpose of section 125.4 of the Act, “prescribed person” means, (a) a corporation that holds a television broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, (b) a person to whom paragraph 149 (1) (l) of the Act applies where the person has a fund which is used to finance Canadian film or video productions, (c) a Canadian government film agency, or (d) in respect of a film or video production, a non-resident person who does not carry on a business in Canada where the person’s interest in the production is acquired to comply with the certificate requirements of a treaty co-production twinning arrangement. (8) For the purpose of the definition of “assistance” in subsection 125.4 (1) of the Act, “prescribed amount” means an amount paid or payable to a taxpayer under the Licence Fee Program of the Canada Television and Cable Production Fund or the Canada Television Fund. O. Reg. 322/97, Sched. 1; O. Reg. 684/00, s. 2. SCHEDULE 2   PROPOSED AMENDMENTS TO SECTION 125.4 OF THE FEDERAL ACT (NOVEMBER 14, 2003)