Production Tax Credits in Ontario

The credits are generous and the conditions are unforgiving. Most problems are structural, and by the time principal photography starts they are usually fixed.

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OFTTCOPSTCOCASECPTC

Ontario Credits | Federal Credits | Eligibility | Structure

The Ontario credits at a glance.

OFTTC: 35 per cent of eligible Ontario labour, 40 per cent on the first $240,000 for a first time producer.

OPSTC: 21.5 per cent of qualifying Ontario production expenditures, with no cap.

OCASE: 18 per cent of eligible Ontario labour for animation and visual effects work.

OFTTC and OPSTC are mutually exclusive at the production level.

Quick Answer

Which Ontario film and television tax credits are available, and at what rates?

There are three Ontario credits, all refundable, all certified by Ontario Creates and assessed by the Canada Revenue Agency. The Ontario Film and Television Tax Credit is 35 per cent of eligible Ontario labour expenditures, rising to 40 per cent on the first $240,000 for a first time producer, with a 10 per cent regional bonus where principal photography takes place outside the Greater Toronto Area. It requires a Canadian controlled corporation, six Canadian content points unless the production is an official treaty co-production, and at least 75 per cent of total final costs to be Ontario expenditures. The Ontario Production Services Tax Credit is 21.5 per cent of qualifying Ontario production expenditures with no cap, is open to foreign owned corporations, requires no content points, and has a minimum spend threshold. The Ontario Computer Animation and Special Effects credit is 18 per cent of eligible Ontario labour for animation and visual effects. The two production credits are mutually exclusive at the production level, though a series may split episodes between them.

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OFTTC

The Domestic Credit

The Ontario Film and Television Tax Credit is the credit for Canadian productions. At 35 per cent of eligible Ontario labour, with 40 per cent on the first $240,000 for a first time producer, it is the more valuable of the two production credits on a labour intensive Canadian shoot.

It is also the more demanding. The claimant must be a Canadian controlled corporation with an Ontario permanent establishment, and the individual producer must have been an Ontario resident at the end of both of the two calendar years preceding principal photography. That residency condition is checked and it is not curable after the fact.

Six Canadian content points are required unless the production is an official treaty co-production, and at least 75 per cent of total final costs must be Ontario expenditures, with the production predominantly shot and posted in Ontario. There is a regional bonus of a further 10 per cent on Ontario labour where principal photography is outside the Greater Toronto Area, or where the location day and animation day tests are met.

OPSTC

The Service Credit

The Ontario Production Services Tax Credit exists for service productions and takes an entirely different approach. It is 21.5 per cent of qualifying production expenditures in Ontario, there is no cap, no Canadian content points are required, and the corporation may be foreign owned.

What broadens it considerably is the expenditure base. Unlike the labour based credits, OPSTC includes eligible wages, eligible service contracts and eligible tangible property expenditures such as equipment, studio and software, together with location fees for expenditures after November 2022.

Two limits shape the claim. There is an Ontario labour floor: if Ontario labour falls below 25 per cent of qualifying expenditures, the qualifying expenditure is capped at four times the qualifying labour. And there is a minimum spend, over one million dollars, with lower per episode thresholds for series. Location fees are capped at 5 per cent of the qualifying expenditure net of those costs.

OCASE

The Change Most People Have Not Caught Up With

The Ontario Computer Animation and Special Effects credit is 18 per cent of eligible Ontario labour for eligible animation and visual effects activities: designing, modelling, rendering, lighting, painting, animating and compositing. Audio effects, in camera effects, credit rolls, subtitles and edit only effects are excluded.

The important development is that OCASE was de tethered. For productions where the corporation commences animation or visual effects activities on or after 26 March 2024, the production no longer needs an OFTTC or OPSTC certificate to claim OCASE. Instead the tests are that the content is non interactive audiovisual content produced for theatrical, television or alternative means of exploitation, with more than $25,000 in Ontario labour for that production, and not in an excluded genre.

That change came in the 2024 Ontario Budget and it materially widens who can claim. It is worth flagging that a good deal of published guidance, including some official material, still recites the old tethering rule, so a decision made from a stale page may be wrong.

THE FEDERAL LAYER

CPTC and the Service Equivalent

The federal credits stack with the Ontario ones and are certified separately, by the Canadian Audio Visual Certification Office rather than Ontario Creates. The Canadian Film or Video Production Tax Credit is 25 per cent of qualified labour expenditure, refundable.

The practical figure is lower than 25 per cent sounds, because the qualified labour expenditure is capped at 60 per cent of the cost of production net of assistance, giving an effective maximum of about 15 per cent of net cost. Budgets built on the headline rate come out wrong.

CPTC requires a minimum of six of ten Canadian content points, at least 75 per cent of service costs payable to Canadians and at least 75 per cent of post production costs for services provided in Canada. Note that the point scale is out of ten with a minimum of six, which is the same structure the broadcast regulator uses. Descriptions of a separate six point scale are simply wrong.

Common Questions

Frequently Asked Questions

Can a production claim both OFTTC and OPSTC?

Not at the production level. They are mutually exclusive. A series may in some circumstances split episodes between the two, but a single production claims one or the other. Which is better depends on the ownership structure, the content points available and the proportion of the budget that is Ontario labour rather than equipment and services.

What is the regional bonus?

A further 10 per cent on all Ontario labour under OFTTC where Ontario principal photography is outside the Greater Toronto Area, meaning outside Toronto, Durham, Halton, Peel and York, or where there are at least five Ontario location days with at least 85 per cent outside the GTA, or at least 85 per cent of key animation days outside the GTA for wholly animated productions.

Does OCASE still require an OFTTC or OPSTC certificate?

Not for activities commencing on or after 26 March 2024. The credit was de tethered in the 2024 Ontario Budget. The current tests are non interactive audiovisual content for theatrical, television or alternative exploitation, more than $25,000 in Ontario labour for the production, and not an excluded genre. A number of published guidance pages still describe the old rule.

Who certifies what?

Ontario Creates issues the certificate of eligibility for the Ontario credits and the Canada Revenue Agency assesses the claim. For the federal credits, CAVCO certifies and the CRA assesses. They are separate applications with separate requirements and separate timelines.

When should a lawyer be involved?

Before the corporate structure is settled, and certainly before principal photography. Most credit problems are structural: the wrong entity, a producer residency condition that cannot be met, a co-production that was never properly documented. After the fact these are rarely fixable.

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Call Message

Production Tax Credits in Ontario

Which Ontario film and television tax credits are available, and at what rates?

Speak to an Entertainment Lawyer

The Domestic Credit

The Service Credit

The Change Most People Have Not Caught Up With

CPTC and the Service Equivalent

Frequently Asked Questions

Structure a Production for the Credits

Lexaltico LLP

Ready to Talk? Start My Enquiry

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