Canucks sweeten tax hike
New rate goes into effect Jan. 1
To ease the pain, Ottawa is waiving the previous requirement that foreign actors here -- an estimated 80% of whom are American -- must file tax returns in Canada.
The new tax rate will go into effect Jan. 1, but any contracts signed prior to New Year will be grandfathered at the old 15% rate.
The Canadian government had been considering raising the tax rate to as much as 50%.
The Canuck government is gambling that the higher tax rate will not deter foreign film and TV productions from coming here. The revenues from films and TV shows shot in Vancouver and Toronto are expected to reach record levels again this year, largely attributable to runaway U.S. production.
For the second year in a row, production revenue in British Columbia in 2000 will likely exceed C$1 billion ($650 million). and could leap much higher in 2001 if labor disputes in the U.S. drive work here.
"The new tax rate is a one-size-fits-all solution, and we are quite pleased with it," Tom Adair, executive director of the B.C. Council of Film Unions, told Daily Variety.
"While the rate is higher, it is a good Christmas present because it removes the uncertainty that existed previously. It's a win-win compromise and establishes a tax level that is reasonable, complies with the tax act and with international tax treaties."
Adair said the new ruling now allows producers to budget confidently, with full knowledge of tax implications that formerly had been unclear.
Two years ago the federal government had panicked the Canuck film and TV industry by leaking a proposal that it would tax net income by foreign actors by as much as 50%. The film and TV industry here have been lobbying vociferously against the proposed change, certain that U.S. productions shooting here would flee despite the highly favorable exchange rate.
