Trudeau government OK's tax credit for TV talk shows
Decision means tax breaks will be backdated to Feb. 16, 2016
Prime Minister Justin Trudeau's government has quietly moved to make talk shows eligible for a lucrative tax credit, CBC News has learned.
While her office can't say how much the retroactive tax credit will cost Canadian taxpayers, Heritage Minister Mélanie Joly is praising it as a move that will create jobs.
"Talk shows are important platforms for our local talent and give a voice to Canadian diversity. This genre provides a platform to discuss current issues and promote Canadian arts and culture," Joly said in a statement emailed to CBC News. "Opening the tax credits to the talk show genre will certainly stimulate job creation in the sector."
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The decision is likely to resonate the most in Joly's province of Quebec, and her hometown of Montreal, where the tax credit could benefit several popular French-language talk shows produced by independent production companies.
The tax credit has been at the centre of a controversy in recent months after a reinterpretation of the rules by government officials led to shows like Marie-France Bazzo's BazzoTV losing its tax credit.
However, the move could also benefit television production companies in the rest of Canada where talk shows, up until now, have been largely produced in house by television networks.
"It would give those [shows] an opportunity to develop in Canada and be financed — so that is a positive step for the Canadian production community," said Stephen Selznick, a media and entertainment lawyer with Cassels Brock in Toronto.
Selznick said it will be interesting to see whether provincial governments follow the federal government's lead and change their own rules to allow talk shows to be eligible for their programs.
The Canadian Media Producers Association was pleased with the government's move.
"The CMPA welcomes the government's modifications to this tax credit program, as it will provide stakeholders with certainty regarding funding eligibility for a broader range of Canadian content productions," said Andrew Addison, vice-president of communications and marketing.
"Ultimately this move supports the production of content that has a strong audience demand.
Subsidy or cultural investment?
However, tax watchdogs question whether a government running a deficit should be handing out tax money to talk shows.
"It seems like a very strange thing to do at a time when we are short of money to begin with," said Aaron Wudrick, federal director for the Canadian Taxpayers' Federation. "I don't think most Canadians would agree that subsidizing talk shows is a valuable use of their tax money."
The government's move centres on the Canadian film or video production tax credit, a program introduced in 1995 to "encourage the creation of Canadian film and television programming." The fully refundable tax credit is equivalent to 25 per cent of the qualified labour expenditure of an eligible production.
"It's used by a lot of them to finance," said Selznick. "Most of them could not produce their content without that credit."
Backdating the tax credit
Several categories of programming have traditionally been excluded from the tax credit, including talk shows, reality shows, news programming, awards shows, game shows and pornography.
Some shows, particularly in Quebec, received the credit because they were considered more lifestyle or variety shows than talk shows. However, in the fall of 2015, federal government officials tightened the application of the rules and several shows were told they would no longer be eligible for the tax credit that had kept them on the air, sparking a backlash in Quebec.
In February, the Canadian Audio-Visual Certification Office, which decides whether productions will get the tax credit, moved to clarify the definition of the types of shows that were excluded from the tax credit.
Under its proposal, a talk show was defined as a production that consists of "one or more hosts and guests who express their personal or professional viewpoints, opinions or experiences on any subject."
This cabinet decision, dated Sept. 30, to allow talk shows to benefit from the tax credit program could ease the sting of that backlash.
Exceptionally, the decision is backdated to Feb. 16, 2016 — which is also two days before the certification office issued its initial notice.
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In order to be eligible for the tax credit, a show has to be produced in Canada by an independent Canadian production company.
For example, CBC's The Goods or shows like CTV's Your Morning with Ben Mulroney, The Social and ETalk, where the prime minister's wife, Sophie Grégoire Trudeau, used to work, would not qualify because they are all produced in house by the networks.
If, however, production switched to an independent production company, they would qualify for the tax credit under the changes made by the Trudeau government.
"Now that they are not excluded, it would be much better for them to farm them out," said Selznick.
Wudrick says the government decision risks putting some shows at a disadvantage.
"Certain shows that are already in existence, they are going to be eligible for free money and for shows that don't [qualify for] the money, they're going to be at a disadvantage now, because they are going to have competitors that are subsidized by the state."