Production services tax credit frequently asked questions

The following will help answer your questions about the production services tax credit (PSTC).

Who administers the PSTC?

Creative BC processes the applications for accreditation certificates.

The Canada Revenue Agency (CRA) reviews and audits claims and issues refund cheques where appropriate. If a corporation disagrees with the amount of credit assessed by the CRA, a Notice of Objection should be filed with the CRA within 90 days of the date of the Notice of Assessment.

For more information concerning eligibility, applications and certificates, please contact Creative BC at:

Can a PSTC be claimed if a film and television tax credit is being claimed for the same production?

No, only one or the other may be claimed for a single production. Please see the Film and television tax credit for more information.

Regional and distant location production services tax credits for animation productions that start principal photography on or after January 1, 2025

Who is eligible for the regional production services tax credit for animation productions that start principal photography on or after January 1, 2025?

Subject to the approval of the legislature, the regional production services tax credit is available to corporations that produce animation productions that meet the following criteria:

• Principal photography of the production begins on or after January 1, 2025
• The production is produced in a physical office in B.C. outside of the designated Vancouver area
• The production corporation incurs accredited B.C. labour expenditures in respect of services rendered by B.C.-based individuals working in the physical office for at least 50% of their time spent working on the animation production for the taxation year
• The production corporation must receive a valid accreditation certificate for the production
• The production corporation must have claimed or be making an application for the basic production services tax credits

You must file a pre-certification for the animation production within 120 days of incurring your first accredited B.C. labour expenditure to avoid reduced or denied claims.

What is a physical office?

A physical office means a building or part of a building, which is used to produce an animation production, that is not a dwelling unit and that is owned or leased by either the corporation producing the animation production or a taxable Canadian corporation that controls that corporation. The physical office must be owned or leased for twelve consecutive months, or from the principal photography start date of the animation production until the date the animation production is completed, whichever is greater.

How is the regional production services tax credit calculated for animation productions that start principal photography on or after January 1, 2025?

Subject to the approval of the legislature, the regional production services tax credit is a refundable credit, which will be available to animation productions with accredited qualified B.C. labour expenditure in relation to services rendered by B.C.-based individuals in a physical office located outside of the designated Vancouver area. The credit is 6% of the accredited qualified B.C. labour expenditure for the production for the taxation year that is attributable to the portion of the corporation’s accredited BC labour expenditure that is for services provided by B.C.-based individuals working in the physical office for at least 50% of their time spent working on the animation production for the taxation year. 

Who is eligible for the distant location production services tax credit for animation productions that start principal photography on or after January 1, 2025?

Subject to the approval of the legislature, the distant location production services tax credit is available to corporations that produce animation productions that meet the following criteria:

• Principal photography of the production begins on or after January 1, 2025
• The production is produced in a physical office in B.C. in a distant location
• The production corporation incurs accredited B.C. labour expenditures in respect of services provided by B.C.-based individuals working in the physical office for at least 50% of their time spent working on the animation production for the taxation year
• The production corporation must receive a valid accreditation certificate for the production
• The production corporation must be eligible for the production services and regional production services tax credits, and must have claimed or be making an application for the production services and regional production services tax credits

You must file a pre-certification for the animation production within 120 days of incurring your first accredited B.C. labour expenditure to avoid reduced or denied claims.

How is the distant location production services tax credit calculated for animation productions that start principal photography on or after January 1, 2025?

Subject to the approval of the legislature, the distant location production services tax credit is a refundable tax credit, which will be available to animation productions with accredited qualified BC labour expenditure in relation to services rendered by B.C.-based individuals in a physical office in a distant location.  The credit is 6% of the accredited qualified BC labour expenditure for the animation production for the taxation year that is attributable to the portion of the corporation’s accredited BC labour expenditure that is for services provided by B.C-based individuals working in the physical office for at least 50% of their time spent working on the animation production for the taxation year. 

 When does principal photography for animation productions begin?

Principal photography for animation productions begins when key animation begins.

If a production company hires a subcontractor to complete a project, and that company is also in a distant or regional location, do their employees also have to work at least 50% of the time in their physical office?

The employees of the subcontractor must also spend at least 50% of the time that they spend providing services related to the production in the physical office of the animation production corporation that is claiming the tax credit. This office must be located in a regional or distant location.

How will the certifying authority verify that a corporation meets the requirements for these credits?

An inspector for the certifying authority may enter any place used by a corporation to carry on business or keep records at any reasonable time to review the records and make copies. The certifying authority may require that further information or records be provided.

What happens if the certifying authority determines that the requirements for the credits have not been met or records have been falsified?

Non-compliance with the requirements may result in the denial or revocation of the production corporation’s accreditation certificate. If an accreditation certificate is denied or revoked, any production services tax credits received for the animation production must be repaid.

When do I need to file a pre-certification form and what happens if I file late?

Examples of late filing

My eligibility certificate for the FTTC was revoked and I want to claim the PSTC instead. When do I need to file a pre-certification form and what happens if I file the form late?

If a production’s eligibility certificate for the film and television tax credit (FTTC) is revoked and you intend to claim the production services tax credit (PSTC), you must file a pre-certification form within 30 days after the date the eligibility certificate was revoked (the revocation date) to claim all ABCLE incurred on the production.

If the pre-certification form is not submitted within 30 days after the revocation date, you can't claim any ABCLE incurred prior to the date the pre-certification form is submitted and the PSTC available to you may be reduced.

If the production’s first ABCLE was incurred before July 1, 2020, there is no deadline to file the pre-certification form and the production company may claim all its ABCLE.

When should I apply for an accreditation certificate?

Creative BC may require 6 months to process certificate applications.

We strongly recommend you submit your accreditation certificate application to Creative BC as early as possible in the pre-production or production stage or at the latest within 12 months of your corporation’s taxation year end.

For applications submitted later, Creative BC cannot guarantee your certificate application will be processed in time for you to file with the CRA before the filing deadline, which may result in denied claims.

For tax years beginning on or after February 19, 2020, you must submit the accreditation certificate with your claim to CRA no later than 18 months after the end of your corporation’s tax year. For tax years beginning before February 19, 2020, you must submit the accreditation certificate with your claim to CRA no later than 36 months after the end of your corporation’s tax year.

What does “from the final script stage” mean in the definition of B.C. labour expenditure?

“From the final script stage” means after the final script has been completed.  This is often referred to as the “white draft” of the script.  For the B.C. Production Services Tax Credit the eligible stages of production are those stages after the end of the final script stage to the end of the post-production stage.

What does the change in the definition of B.C.–based individual mean?

The definition of B.C.–based individual has been changed for productions with principal photography beginning after February 19, 2008. This change may now permit individuals who were not resident of B.C. in the year prior to the start of principal photography to still have their salary and wages eligible for the film and television tax credits. The revised definition is based on the individual's residency on December 31st of the year preceding the end of the tax year for which a tax credit is being claimed.

Production corporations are still required to gather documentation to support the residency of an individual whose labour is being claimed. In cases where the production is completed in one calendar year and the tax year end falls in the following calendar year, production corporations are not required to gather information from individuals who may no longer be employed with them. Supporting information provided at the start of the production is acceptable in these cases, provided that after reasonable enquiry, the production corporation has no reason to believe the residency status of the individual has changed at the end of the production or calendar year. For example, if a production corporation mails a T4 to an address outside of B.C. or assists the individual in obtaining a temporary work permit in B.C., this would suggest that the individual may be a non B.C.–based individual for the purposes of the film tax credit claim for that taxation year.

Example: A production starts principal photography in April 2008 and wraps production in November 2008. The production corporation's fiscal year end is March 31, 2009. B.C.-based individual would be determined based on residency on December 31, 2008. However, as this date is after the date the production has wrapped, the corporation should obtain residency information at the start of or during the production. The corporation is not required to track residency of their employees or contractors after the completion of the production for the purposes of the B.C. film tax credit programs. In this example, the individual's residency as of December 31, 2007 would apply for existing residents of B.C. In addition, in this example, if an individual moves to B.C. in 2008 and remains a resident of B.C. as of December 31, 2008, their labour would qualify for the B.C. film tax credit programs.

The proof of residency commonly gathered will continue to qualify under the revised rules, for example, resident of B.C. on December 31st in the year prior to principal photography start date. For productions with tax years that straddle December 31st, a corporation would be looking at residency of the individuals for the calendar year prior to the fiscal year they are making their claim. This could mean for multi-year productions, the individual's residency could be determined in the year prior to principal photography start date or it could be determined as of December 31st of the first or second calendar years after principal photography started. For multi-year productions, a corporation is not required to continue gathering supporting documentation on the same individuals for each calendar year, if it has no reason to believe the individual's residency status has changed for any of the years.

If an individual moves to B.C. in the year, their labour would become eligible for the following fiscal year's claim, in other words, an individual moves to B.C. in 2008, the production corporation can claim their labour for the 2009 and subsequent fiscal year claims.

Does 3D or stereoscopic filming or conversion qualify for the digital animation or visual effects (DAVE) tax credit?

3D or stereoscopic filming or conversion (3D) may be eligible for the DAVE tax credit, provided the shots are manipulated after shooting for depth perception and other visual effect properties. The wages, salaries and remuneration paid to B.C.-based individuals performing the 3D associated post-production functions may qualify as B.C. labour expenditures for the purposes of calculating the DAVE tax credit. However, only the individuals using digital technology for the 3D process will qualify for the "digital" component of the credit for the purposes of determining primarily digital. The fact that a production is made entirely using 3D processes does not make the production automatically 100% DAVE eligible. The primarily digital determination must be performed to determine the amount of DAVE eligible activities for the production.

What are considered allowable producer fees?

Please refer to CRA’s Application Policy FAS 2009-01, which provides detailed information on allowable producer fees for the purposes of the federal and B.C. film tax credits.

Are kit rentals considered eligible labour expenditures for the film tax credit programs?

No, the kit rental charges are not eligible labour expenditures for the film tax credit. The B.C. film tax credit programs are calculated based on labour expenditures made to B.C.-based individuals. The kit rental charges are not direct labour expenditures as they are paid for the rental of the equipment or tools and not for the individual’s labour.

However, if the kit rental is paid to an employee and is included as a taxable benefit to the employee on their T4 and the relevant source deductions have been taken, kit rentals will be allowed to be included as an eligible labour expenditure. The CRA’s Application Policy FIS 2006-01 provides further information on the inclusion of taxable benefits as labour expenditures.

If an individual is being paid as a contractor, the kit rentals are not permitted as eligible labour expenditures.

Major production tax credit

What is the major production tax credit?

Subject to approval of the legislature, the major production tax credit is a refundable tax credit that is 2% of accredited qualified BC labour expenditures for a major production.

What is a major production?

A major production is an accredited production that spends at least $200 million on accredited B.C. major production expenditures. If the production is intended for television broadcast as a series, all episodes of the cycle of the series produced in British Columbia can be combined to meet the $200 million accredited B.C. major production expenditures threshold. Principal photography of the major production must start on or after January 1, 2025.

What are accredited BC major production expenditures?

Accredited B.C. major production expenditures are amounts paid for services rendered in B.C. and goods purchased or leased, and used in B.C., that are in relation to pre-production, production, and post-production. However, the eligible expenditures do not include amounts related to advertising, marketing, promotion or market research, the distribution of the production, or in any way to another film or video production. Furthermore, they do not include any amounts that are not a cost of producing the production or amounts determined by reference to profits or revenues. 

Who is eligible for the major production tax credit?

A production corporation is eligible for the major production tax credit if the following requirements are met:

• The production corporation is eligible for, and will claim or has already claimed, the production services tax credit

• If the major production is a television series, at least one episode in the cycle of the series is an accredited production that is eligible for the production services tax credit
• Principal photography for the major production begins after December 31, 2024
• The major production was completed in the taxation year it is claimed
• The production corporation has obtained a major production certificate

When can the major production tax credit be claimed?

The production company will need to apply for a major production certificate with Creative BC once the production is completed. Once a major production certificate has been issued, the major production tax credit can be claimed in the taxation year in which the major production is completed. It cannot be claimed in a taxation year prior to the completion of the production or in any subsequent taxation years.