Canada’s Film and TV Tax Incentives Presented by: David Carter, President Canada Film Capital May 2011 Protected and Confidential

Agenda 1.Quick Overview of Canada 2. Economic-based ‘Production Services’ Tax Credits 3. Cultural-based ‘Canadian Content’ Tax Credits

Key Canadian Markets

For further information on other provinces such as Alberta, Manitoba, Nova Scotia and others please visit CFC’s website and see CFC’s one- sheet which was handed out.

1. Cultural Diversity 2. Cast and Crew large base 3. Post Facilities Deluxe, Technicolor 4. Visual Effects houses Digital Domain, Deluxe/CIS, Moving Picture Co 5. Studio space Advantages

Productions in Canada In Production 1.Total Recall 2.Mission Impossible 4 Past Productions 1.Gnomeo and Juliet 2.Inception 3.Tron 4.Twilight

‘Services’ Tax Credit UK Producers can access without a CDN Co-Producer Stable, reliable and bankable No Canadian ‘cultural tests’ No minimum spend in Canada No shooting days required Post only VFX only 100 % refundable No caps

FEDERAL = 16 % of net Labour PROVINCIAL CREDITS ‘Production Services’ Tax Credit

Federal labour credit (up to 16 %) Provincial Credits (noted below) Ontario QuébecB.C. (Toronto)(Montréal)(Vancouver) Labour 25 % 25 %33 % VFX Labour45 %45 %50 % Local Spend25 %25 %0 % ‘Services’ Credits

Now includes ‘Local Spend’: Goods Services Facilities Locations Visual Effects Post Production Ontario & Quebec ‘Services’ Credit

Approval required by: 1.Federal Government’s –CAVCO office 2.Provincial Governments, one of: –Ontario Media Development Corp. –Québec’s SODEC –British Columbia Film 3.Canada Revenue Agency (‘CRA’)

1.Meet Budget-size test ? 2.Meet Genre test ? 3.Set up Production Company 4.Enter into Production Services Agreement with Rights Holder 5.Optimize Tax Credits by hiring Canadian residents 6.Get Project Certified 7.Tax Returns, CRA Audit, Refund cheque Accessing the ‘Services’ Credit

‘Content’ Credit UK Producer must partner with CDN Producer & project must be certified as a ‘UK-Canada Treaty Co-Production’ No shooting days required Post only 100 % refundable Canadian cultural tests Labour cap

Financing Technical/Creative Distribution ‘Canadian Content’ Credits Government Funding Treaty Co-Production Advantages

1.Minimum 20% 2. Proportionate: Copyright Financing Revenue / Expenditures Creative 3. Calculate creative % through weightings 4. Writer – citizen/permanent resident Co-Production Requirements

5. Non-Participating 3 rd Country can be involved: Property Acquisition Financing Exec Producer Writing Consultants Cast Location Filming Co-Production Requirements

‘Content’ Credit FEDERAL = 25 % of Qualifying Labor PROVINCIAL ‘CONTENT’ CREDITS (Qualifying Labour capped at 60 % of ‘Total Costs less Provincial Credits’)

Federal labour credit (up to 25 %) Provincial Credits (noted below) Ontario QuébecB.C. (Toronto)(Montréal)(Vancouver) Labour 35 % 35 %35 % VFX Labour55 %45 %52 % Local Spendnilnilnil ‘Content’ Credits

1.Budget-size test ? 2.Meet Genre test ? 3.CDN Co-Producer sets up Qualified Corporation 4.Enter into Co-Pro Agreement 5.Optimize Tax Credits by hiring Canadian citizens 6.Certifications 7.Tax Returns, CRA Audit, Refund cheque Accessing the ‘Content’ Credit

Please pick up:  CFC’s one- sheet, and  The ‘Locations Canada’ guide by Goodmans Contact/Other Information: