I-3 - Taxation Act

Section 1029.8.34 Disposition versions

2019-06-19

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraph b.1 of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“eligible online video service” means an online video service that carries other pre-screened or pre-qualified content, is accessible in Québec, has Québec as part of its target audience and is considered to be an acceptable online service for the purposes of Public Notice 2017-01 of the Canadian Audio-Visual Certification Office;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraph b.1 of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation under a contract for services rendered as part of the production of the property to a person or partnership (in this section referred to as a “first-tier subcontractor”) who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable either to services rendered by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who rendered services as part of the production of the property,

ii.  a particular corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation referred to in subparagraph iv, a corporation described in paragraph a.2 or a.4 of the definition of “qualified corporation” (in this definition referred to as an “excluded corporation”), or a corporation that is not dealing at arm’s length with an excluded corporation, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who rendered services as part of the production of the property,

iii.  despite subparagraph ii, a particular corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with an excluded corporation, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who rendered services exclusively at the post-production stage of the property,

iv.  a corporation that has an establishment in Québec all the issued capital stock of which, except directors’ qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered by the individual as part of the production of the property, or

v.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services rendered, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who rendered services as part of the production of the property;

(b.1)  65% of the portion of the remuneration, other than salary or wages, that is incurred in the year by the first-tier subcontractor and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, 65% of the portion of the remuneration that was incurred by the first-tier subcontractor in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the first-tier subcontractor under a contract for services rendered as part of the production of the property to a person or partnership with whom the first-tier subcontractor is dealing at arm’s length at the time the contract is entered into (in this section referred to as a “second-tier subcontractor”) and who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

ii.   a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not an excluded corporation, or a corporation that is not dealing at arm’s length with an excluded corporation, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

iii.  despite subparagraph ii, a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with an excluded corporation, to the extent that that portion of the remuneration is reasonably attributable to services rendered exclusively at the post-production stage of the property, or 

iv.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property;

(b.2)  65% of the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, 65% of the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property, and that is paid by the corporation under a contract for services rendered as part of the production of the property to a first-tier subcontractor with which the corporation is dealing at arm’s length at the time the contract is entered into and who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

ii.  a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not an excluded corporation, or a corporation that is not dealing at arm’s length with an excluded corporation, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

iii.  despite subparagraph ii, a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with an excluded corporation, to the extent that that portion of the remuneration is reasonably attributable to services rendered exclusively at the post-production stage of the property, or

iv.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of any of paragraphs a to b.2 if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“post-production” of a property means the stage of production of the property that includes all the activities that follow the shooting of the property, in particular transcoding and duplication of the property, digitization, compression and duplication of DVDs and CD-ROMs, video-on-demand encoding, subtitling of films, captioning for persons with a hearing impairment and video description for persons with a visual impairment;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying the conversion factor determined in respect of the property under the tenth paragraph by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s computer-aided special effects and animation expenditure or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the corporation’s qualified computer-aided special effects and animation expenditure in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying the conversion factor determined in respect of the property under the tenth paragraph by the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year because of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that relate to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.   the amount by which the aggregate of all amounts each of which is the corporation’s qualified computer-aided special effects and animation expenditure in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying the conversion factor determined in respect of the property under the tenth paragraph by the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of a corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles for the purposes of this division;

(a.4)  a corporation that, at any time in the year or during the 24 months preceding the year, is an eligible online video service provider;

(a.5)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that is an eligible online video service provider, unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles for the purposes of this division; or 

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying the conversion factor determined in respect of the property under the ninth paragraph by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying the conversion factor determined in respect of the property under the ninth paragraph by the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year because of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that relate to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying the conversion factor determined in respect of the property under the ninth paragraph by the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying the conversion factor determined in respect of the property under the twelfth paragraph by the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds the product obtained by multiplying the conversion factor determined in respect of the property under the twelfth paragraph by the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that, for a taxation year preceding the year in respect of the property, is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees, to the extent that the amount has not, under subparagraph iii of subparagraph e of the second paragraph, reduced the amount of the labour expenditure of the corporation for that preceding year in respect of the property; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying the conversion factor determined in respect of the property under the twelfth paragraph by the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation is a regional corporation for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of that definition in respect of an employee referred to in any of subparagraphs i, ii and v of that paragraph b or an individual referred to in subparagraph iv or v of that paragraph b only if that employee or individual is a party to the contract entered into between the employee’s or the individual’s employer, the corporation referred to in that subparagraph iv of which the employee or the individual is a shareholder or the partnership of which the employee or the individual is a member, as the case may be, and the corporation in respect of which that definition applies, under which the employee or the individual, as the case may be, undertakes to personally render services as part of the production of the property referred to in that definition;

(c.1)  the amount included by a particular corporation in computing its labour expenditure for a taxation year under paragraph b.1 or b.2 of that definition, in relation to the portion of the remuneration incurred in respect of a property under a particular contract referred to in that paragraph, must be reduced by the aggregate of

i.  the aggregate of all amounts each of which is the salaries or wages paid by a person or partnership who is a subcontractor party to the particular contract or a subcontract that arises from it, to the person’s or partnership’s employee who is not an eligible employee, unless the salaries or wages are paid

(1)  to an employee of the first-tier subcontractor, where the particular contract is referred to in paragraph b.1 of that definition,

(2)  by a corporation or partnership that does not have an establishment in Québec or does not carry on a business in Québec, for services rendered as part of the production of the property,

(3)  by a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is described in paragraph a.2 or a.4 of the definition of “qualified corporation” (in this subparagraph c.1 referred to as an “excluded corporation”), for services rendered as part of the production of the property, or

(4)  by a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with an excluded corporation for services rendered at a stage of production of the property that is not the post-production stage,

ii.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that is a party to a subcontract arising from the particular contract and that does not have an establishment in Québec for services rendered as part of the production of the property,

iii.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a partnership that is a party to a subcontract arising from the particular contract and that does not carry on a business in Québec for services rendered as part of the production of the property,

iv.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that has an establishment in Québec, that is a party to a subcontract arising from the particular contract and that, at the time that portion of the remuneration is incurred, is an excluded corporation, for services rendered as part of the production of the property, and

v.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that has an establishment in Québec, that is a party to a subcontract arising from the particular contract and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with a corporation that is an excluded corporation, for services rendered at a stage of production of the property that is not the post-production stage;

(c.2)  a corporation that has entered into a contract (in this subparagraph referred to as an “initial contract”) with a first-tier subcontractor for the provision of services as part of the production of a property may not, in computing its labour expenditure for a taxation year in respect of the property under paragraph b or b.1 of that definition, include an amount in relation to the portion of the remuneration that the corporation pays under the initial contract to the first-tier subcontractor and to the portion of any remuneration the first-tier subcontractor pays to a second-tier subcontractor for services rendered as part of the production of the property if, in relation to the portion of the remuneration the corporation pays under the initial contract to the first-tier subcontractor, it includes an amount in computing its labour expenditure for any taxation year in respect of the property under paragraph b.2 of that definition;

(d)  (subparagraph repealed);

(d.1)  (subparagraph repealed);

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property is to be reduced, if applicable, by the aggregate of all amounts each of which is the lesser of the particular amount that corresponds to the salaries or wages described in paragraph a of that definition, or to the amount referred to in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that are included in that labour expenditure of the corporation for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular amount that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular amount that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular amount corresponds to the amount referred to in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the eligible employees of the person or partnership referred to in that subparagraph; and

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, an amount of assistance received by a corporation, another person or a partnership, as the case may be, is deemed to be repaid by the corporation, the other person or the partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, for the purpose of computing an amount that a corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the corporation, the other person or the partnership may reasonably expect to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  (paragraph repealed);

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  an expenditure that would, but for this subparagraph, be a labour expenditure of a corporation for a particular taxation year in respect of a property that is a Québec film production or would constitute production costs directly attributable to the production of such a property, such expenditure being otherwise incurred in the particular year, and that is outstanding at the particular time the corporation first files with the Minister the prescribed form containing prescribed information provided for in the first paragraph of section 1029.8.35 for that particular year, in respect of the property, or, in the absence of such filing with the Minister, on the corporation’s filing-due date for that particular year, is deemed not to be incurred in the particular year and to be incurred in a subsequent taxation year if that expenditure is paid in that subsequent year and after the particular time or after that filing-due date, as the case may be, or in the taxation year that immediately follows that subsequent year and before the time the corporation first files with the Minister that prescribed form for that subsequent year, in respect of the property.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph is to be read as if “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” was inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property; and

(b)  (subparagraph repealed);

(c)  may not be reimbursed if the property is not operated as first anticipated.

For the purpose of determining the qualified expenditure for services rendered outside the Montréal area of a corporation in respect of a property for a taxation year, the conversion factor applicable to the property is the factor determined by the formula

1 / A.

For the purpose of determining the qualified computer-aided special effects and animation expenditure of a corporation in respect of a property for a taxation year, the conversion factor applicable to the property is the factor determined by the formula

1 / B.

For the purpose of determining the qualified labour expenditure of a corporation for a taxation year that ends after 31 December 2008 in respect of a property for which an application for an advance ruling or, in the absence of such an application, an application for a qualification certificate is filed with the Société de développement des entreprises culturelles on or before 4 June 2014 or, if the Société de développement des entreprises culturelles considers that the work on the property was sufficiently advanced on that date, on or before 31 August 2014, the amount of a labour expenditure incurred by the corporation in respect of the property before 1 January 2009 is to be multiplied by

(a)  39.375/45, if subparagraph i of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property; and

(b)  29.1667/35, if subparagraph ii of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property.

For the purpose of determining the qualified labour expenditure of a corporation in respect of a property for a taxation year, the conversion factor applicable to the property is the factor determined by the formula

1 / (C + D).

In the formulas in the ninth, tenth and twelfth paragraphs,

(a)  A is the percentage applicable to the amount of the qualified expenditure for services rendered outside the Montréal area for a taxation year in respect of the property that was used to determine the amount deemed to be paid in respect of the property for that year under subparagraph a.1 of the first paragraph of section 1029.8.35;

(b)  B is the percentage applicable to the amount of the qualified computer-aided special effects and animation expenditure for a taxation year in respect of the property that was used to determine the amount deemed to be paid in respect of the property for that year under subparagraph b of the first paragraph of section 1029.8.35;

(c)  C is the percentage applicable to the amount of the qualified labour expenditure for a taxation year in respect of the property that was used to determine the amount deemed to be paid in respect of the property for that year under subparagraph a of the first paragraph of section 1029.8.35; and

(d)  D is the percentage applicable to the amount of the qualified labour expenditure for a taxation year in respect of the property that was used to determine the amount deemed to be paid in respect of the property for that year under subparagraph c of the first paragraph of section 1029.8.35.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126; 2007, c. 12, s. 147; 2009, c. 15, s. 233; 2010, c. 5, s. 142; 2010, c. 25, s. 125; 2011, c. 1, s. 61; 2011, c. 6, s. 186; 2011, c. 34, s. 73; 2013, c. 10, s. 104; 2015, c. 21, s. 412; 2015, c. 24, s. 135; 2015, c. 36, s. 101; 2019, c. 14, s. 318.

2015-12-04

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraph b.1 of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraph b.1 of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation under a contract for services rendered as part of the production of the property to a person or partnership (in this section referred to as a “first-tier subcontractor”) who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable either to services rendered by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who rendered services as part of the production of the property,

ii.  a particular corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation referred to in subparagraph iv, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who rendered services as part of the production of the property,

iii.  despite subparagraph ii, a particular corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who rendered services exclusively at the post-production stage of the property,

iv.  a corporation that has an establishment in Québec all the issued capital stock of which, except directors’ qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered by the individual as part of the production of the property, or

v.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services rendered, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who rendered services as part of the production of the property;

(b.1)  65% of the portion of the remuneration, other than salary or wages, that is incurred in the year by the first-tier subcontractor and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, 65% of the portion of the remuneration that was incurred by the first-tier subcontractor in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the first-tier subcontractor under a contract for services rendered as part of the production of the property to a person or partnership with whom the first-tier subcontractor is dealing at arm’s length at the time the contract is entered into (in this section referred to as a “second-tier subcontractor”) and who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

ii.  a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

iii.  despite subparagraph ii, a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to services rendered exclusively at the post-production stage of the property, or

iv.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property;

(b.2)  65% of the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, 65% of the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property, and that is paid by the corporation under a contract for services rendered as part of the production of the property to a first-tier subcontractor with which the corporation is dealing at arm’s length at the time the contract is entered into and who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

ii.  a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

iii.  despite subparagraph ii, a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to services rendered exclusively at the post-production stage of the property, or

iv.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of any of paragraphs a to b.2 if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“post-production” of a property means the stage of production of the property that includes all the activities that follow the shooting of the property, in particular transcoding and duplication of the property, digitization, compression and duplication of DVDs and CD-ROMs, video-on-demand encoding, subtitling of films, captioning for persons with a hearing impairment and video description for persons with a visual impairment;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 25/2 of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 25/2 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that relate to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 25/2 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles for the purposes of this division; or

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying 25/2 or 25/4, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 25/2 or 25/4, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that relate to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 25/2 or 25/4, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying the conversion factor applicable to the property, specified in the eleventh paragraph, by the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds the product obtained by multiplying the conversion factor applicable to the property, specified in the eleventh paragraph, by the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that, for a taxation year preceding the year in respect of the property, is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees, to the extent that the amount has not, under subparagraph iii of subparagraph e of the second paragraph, reduced the amount of the labour expenditure of the corporation for that preceding year in respect of the property; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying the conversion factor applicable to the property, specified in the eleventh paragraph, by the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation is a regional corporation for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of that definition in respect of an employee referred to in any of subparagraphs i, ii and v of that paragraph b or an individual referred to in subparagraph iv or v of that paragraph b only if that employee or individual is a party to the contract entered into between the employee’s or the individual’s employer, the corporation referred to in that subparagraph iv of which the employee or the individual is a shareholder or the partnership of which the employee or the individual is a member, as the case may be, and the corporation in respect of which that definition applies, under which the employee or the individual, as the case may be, undertakes to personally render services as part of the production of the property referred to in that definition;

(c.1)  the amount included by a particular corporation in computing its labour expenditure for a taxation year under paragraph b.1 or b.2 of that definition, in relation to the portion of the remuneration incurred in respect of a property under a particular contract referred to in that paragraph, must be reduced by the aggregate of

i.  the aggregate of all amounts each of which is the salaries or wages paid by a person or partnership who is a subcontractor party to the particular contract or a subcontract that arises from it, to the person’s or partnership’s employee who is not an eligible employee, unless the salaries or wages are paid

(1)  to an employee of the first-tier subcontractor, where the particular contract is referred to in paragraph b.1 of that definition,

(2)  by a corporation or partnership that does not have an establishment in Québec or does not carry on a business in Québec, for services rendered as part of the production of the property,

(3)  by a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered as part of the production of the property, or

(4)  by a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered at a stage of production of the property that is not the post-production stage,

ii.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that is a party to a subcontract arising from the particular contract and that does not have an establishment in Québec for services rendered as part of the production of the property,

iii.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a partnership that is a party to a subcontract arising from the particular contract and that does not carry on a business in Québec for services rendered as part of the production of the property,

iv.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that has an establishment in Québec, that is a party to a subcontract arising from the particular contract and that, at the time that portion of the remuneration is incurred, holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered as part of the production of the property, and

v.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that has an establishment in Québec, that is a party to a subcontract arising from the particular contract and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered at a stage of production of the property that is not the post-production stage;

(c.2)  a corporation that has entered into a contract (in this subparagraph referred to as an “initial contract”) with a first-tier subcontractor for the provision of services as part of the production of a property may not, in computing its labour expenditure for a taxation year in respect of the property under paragraph b or b.1 of that definition, include an amount in relation to the portion of the remuneration that the corporation pays under the initial contract to the first-tier subcontractor and to the portion of any remuneration the first-tier subcontractor pays to a second-tier subcontractor for services rendered as part of the production of the property if, in relation to the portion of the remuneration the corporation pays under the initial contract to the first-tier subcontractor, it includes an amount in computing its labour expenditure for any taxation year in respect of the property under paragraph b.2 of that definition;

(d)  (subparagraph repealed);

(d.1)  (subparagraph repealed);

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property is to be reduced, if applicable, by the aggregate of all amounts each of which is the lesser of the particular amount that corresponds to the salaries or wages described in paragraph a of that definition, or to the amount referred to in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that are included in that labour expenditure of the corporation for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular amount that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular amount that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular amount corresponds to the amount referred to in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the eligible employees of the person or partnership referred to in that subparagraph; and

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, an amount of assistance received by a corporation, another person or a partnership, as the case may be, is deemed to be repaid by the corporation, the other person or the partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, for the purpose of computing an amount that a corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the corporation, the other person or the partnership may reasonably expect to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a qualified labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph is to be read as if “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” was inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property; and

(b)  (subparagraph repealed);

(c)  may not be reimbursed if the property is not operated as first anticipated.

For the purpose of determining, for a taxation year, the qualified expenditure for services rendered outside the Montréal area and the qualified computer-aided special effects and animation expenditure of a corporation in respect of a property for which an application for an advance ruling or, in the absence of such an application, an application for a qualification certificate is filed with the Société de développement des entreprises culturelles on or before 4 June 2014 or, if the Société de développement des entreprises culturelles considers that the work on the property was sufficiently advanced on that date, on or before 31 August 2014, the following rules apply:

(a)  the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph is to be read, in respect of the property, as if “25/2 or 25/4” were replaced wherever it appears by,

i.  where the taxation year of the qualified expenditure for services rendered outside the Montréal area in respect of which tax under Part III.1 is to be paid in respect of the property ends before 1 January 2009, “100/9.1875 or 100/19.3958”, or

ii.  where the taxation year of the qualified expenditure for services rendered outside the Montréal area in respect of which tax under Part III.1 is to be paid in respect of the property ends after 31 December 2008, “100/10 or 100/20”; and

(b)  the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph is to be read, in respect of the property, as if “25/2” were replaced wherever it appears by,

i.  where the qualified computer-aided special effects and animation expenditure in respect of which tax under Part III.1 is to be paid in respect of the property is referred to in subparagraph 1 of subparagraph ii of subparagraph b of the first paragraph of section 1029.8.35, “100/10.2083”, or

ii.  where the qualified computer-aided special effects and animation expenditure in respect of which tax under Part III.1 is to be paid in respect of the property is referred to in subparagraph 2 of subparagraph ii of subparagraph b of the first paragraph of section 1029.8.35, “100/10”;

(c)  (subparagraph repealed).

For the purpose of determining the qualified labour expenditure of a corporation for a taxation year that ends after 31 December 2008 in respect of a property for which an application for an advance ruling or, in the absence of such an application, an application for a qualification certificate is filed with the Société de développement des entreprises culturelles on or before 4 June 2014 or, if the Société de développement des entreprises culturelles considers that the work on the property was sufficiently advanced on that date, on or before 31 August 2014, the amount of a labour expenditure incurred by the corporation in respect of the property before 1 January 2009 is to be multiplied by

(a)  39.375/45, if subparagraph i of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property; and

(b)  29.1667/35, if subparagraph ii of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property.

For the purpose of determining the qualified labour expenditure of a corporation in respect of a property for a taxation year, the conversion factor applicable to the property is

(a)  in the case of a property referred to in subparagraph 1 of subparagraph i of subparagraph a of the first paragraph of section 1029.8.35,

i.  where the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, 100/44.72 if section 1029.8.35.1.1 applies in respect of the property or 25/11 in any other case, or

ii.  where subparagraph i does not apply in respect of the property, 100/36.72 if section 1029.8.35.1.1 applies in respect of the property or 25/9 in any other case;

(b)  in the case of a property referred to in subparagraph 1.1 of subparagraph i of subparagraph a of the first paragraph of section 1029.8.35,

i.  where the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, 100/48.8 if section 1029.8.35.1.1 applies in respect of the property or 25/12 in any other case, or

ii.  where subparagraph i does not apply in respect of the property, 100/40.8 if section 1029.8.35.1.1 applies in respect of the property or 5/2 in any other case;

(c)  in the case of a property referred to in subparagraph 2 of subparagraph i of subparagraph a of the first paragraph of section 1029.8.35,

i.  where the qualified labour expenditure in respect of which tax is required to be paid under Part III.1 in respect of the property relates to a taxation year ending before 1 January 2009, 100/39.375, or

ii.  where the qualified labour expenditure in respect of which tax is required to be paid under Part III.1 in respect of the property relates to a taxation year ending after 31 December 2008, 20/11 if the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, or 20/9 in any other case;

(d)  in the case of a property referred to in subparagraph 1 of subparagraph ii of subparagraph a of the first paragraph of section 1029.8.35,

i.  where the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, 100/36.56 if section 1029.8.35.1.1 applies in respect of the property or 25/9 in any other case, or

ii.  where subparagraph i does not apply in respect of the property, 100/28.56 if section 1029.8.35.1.1 applies in respect of the property or 25/7 in any other case;

(e)  in the case of a property referred to in subparagraph 1.1 of subparagraph ii of subparagraph a of the first paragraph of section 1029.8.35,

i.  where the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, 100/40.64 if section 1029.8.35.1.1 applies in respect of the property or 5/2 in any other case, or

ii.  where subparagraph i does not apply in respect of the property, 100/32.64 if section 1029.8.35.1.1 applies in respect of the property or 25/8 in any other case; and

(f)  in the case of a property referred to in subparagraph 2 of subparagraph ii of subparagraph a of the first paragraph of section 1029.8.35,

i.  where the qualified labour expenditure in respect of which tax is required to be paid under Part III.1 in respect of the property relates to a taxation year ending before 1 January 2009, 100/29.1667, or

ii.  where the qualified labour expenditure in respect of which tax is required to be paid under Part III.1 in respect of the property relates to a taxation year ending after 31 December 2008, 20/9 if the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, or 20/7 in any other case.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126; 2007, c. 12, s. 147; 2009, c. 15, s. 233; 2010, c. 5, s. 142; 2010, c. 25, s. 125; 2011, c. 1, s. 61; 2011, c. 6, s. 186; 2011, c. 34, s. 73; 2013, c. 10, s. 104; 2015, c. 21, s. 412; 2015, c. 24, s. 135; 2015, c. 36, s. 101.

2015-10-26

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraph b.1 of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraph b.1 of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation under a contract for services rendered as part of the production of the property to a person or partnership (in this section referred to as a “first-tier subcontractor”) who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable either to services rendered by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who rendered services as part of the production of the property,

ii.  a particular corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation referred to in subparagraph iv, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is associated with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who rendered services as part of the production of the property,

iii.  despite subparagraph ii, a particular corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is associated with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who rendered services exclusively at the post-production stage of the property,

iv.  a corporation that has an establishment in Québec all the issued capital stock of which, except directors’ qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered by the individual as part of the production of the property, or

v.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services rendered, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who rendered services as part of the production of the property;

(b.1)  65% of the portion of the remuneration, other than salary or wages, that is incurred in the year by the first-tier subcontractor and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, 65% of the portion of the remuneration that was incurred by the first-tier subcontractor in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the first-tier subcontractor under a contract for services rendered as part of the production of the property to a person or partnership with whom the first-tier subcontractor is dealing at arm’s length at the time the contract is entered into (in this section referred to as a “second-tier subcontractor”) and who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

ii.  a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is associated with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

iii.  despite subparagraph ii, a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is associated with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to services rendered exclusively at the post-production stage of the property, or

iv.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property;

(b.2)  65% of the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, 65% of the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property, and that is paid by the corporation under a contract for services rendered as part of the production of the property to a first-tier subcontractor with which the corporation is dealing at arm’s length at the time the contract is entered into and who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

ii.  a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is associated with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

iii.  despite subparagraph ii, a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is associated with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to services rendered exclusively at the post-production stage of the property, or

iv.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of any of paragraphs a to b.2 if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“post-production” of a property means the stage of production of the property that includes all the activities that follow the shooting of the property, in particular transcoding and duplication of the property, digitization, compression and duplication of DVDs and CD-ROMs, video-on-demand encoding, subtitling of films, captioning for persons with a hearing impairment and video description for persons with a visual impairment;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 25/2 of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 25/2 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that relate to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 25/2 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is associated with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles for the purposes of this division; or

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying 25/2 or 25/4, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 25/2 or 25/4, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that relate to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 25/2 or 25/4, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 25/9 or 25/7, as the case may be, of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 25/9 or 25/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that, for a taxation year preceding the year in respect of the property, is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees, to the extent that the amount has not, under subparagraph iii of subparagraph e of the second paragraph, reduced the amount of the labour expenditure of the corporation for that preceding year in respect of the property; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 25/9 or 25/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation is a regional corporation for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of that definition in respect of an employee referred to in any of subparagraphs i, ii and v of that paragraph b or an individual referred to in subparagraph iv or v of that paragraph b only if that employee or individual is a party to the contract entered into between the employee’s or the individual’s employer, the corporation referred to in that subparagraph iv of which the employee or the individual is a shareholder or the partnership of which the employee or the individual is a member, as the case may be, and the corporation in respect of which that definition applies, under which the employee or the individual, as the case may be, undertakes to personally render services as part of the production of the property referred to in that definition;

(c.1)  the amount included by a particular corporation in computing its labour expenditure for a taxation year under paragraph b.1 or b.2 of that definition, in relation to the portion of the remuneration incurred in respect of a property under a particular contract referred to in that paragraph, must be reduced by the aggregate of

i.  the aggregate of all amounts each of which is the salaries or wages paid by a person or partnership who is a subcontractor party to the particular contract or a subcontract that arises from it, to the person’s or partnership’s employee who is not an eligible employee, unless the salaries or wages are paid

(1)  to an employee of the first-tier subcontractor, where the particular contract is referred to in paragraph b.1 of that definition,

(2)  by a corporation or partnership that does not have an establishment in Québec or does not carry on a business in Québec, for services rendered as part of the production of the property,

(3)  by a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered as part of the production of the property, or

(4)  by a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is associated with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered at a stage of production of the property that is not the post-production stage,

ii.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that is a party to a subcontract arising from the particular contract and that does not have an establishment in Québec for services rendered as part of the production of the property,

iii.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a partnership that is a party to a subcontract arising from the particular contract and that does not carry on a business in Québec for services rendered as part of the production of the property,

iv.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that has an establishment in Québec, that is a party to a subcontract arising from the particular contract and that, at the time that portion of the remuneration is incurred, holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered as part of the production of the property, and

v.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that has an establishment in Québec, that is a party to a subcontract arising from the particular contract and that, at the time that portion of the remuneration is incurred, is associated with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered at a stage of production of the property that is not the post-production stage;

(c.2)  a corporation that has entered into a contract (in this subparagraph referred to as an “initial contract”) with a first-tier subcontractor for the provision of services as part of the production of a property may not, in computing its labour expenditure for a taxation year in respect of the property under paragraph b or b.1 of that definition, include an amount in relation to the portion of the remuneration that the corporation pays under the initial contract to the first-tier subcontractor and to the portion of any remuneration the first-tier subcontractor pays to a second-tier subcontractor for services rendered as part of the production of the property if, in relation to the portion of the remuneration the corporation pays under the initial contract to the first-tier subcontractor, it includes an amount in computing its labour expenditure for any taxation year in respect of the property under paragraph b.2 of that definition;

(d)  (subparagraph repealed);

(d.1)  (subparagraph repealed);

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property is to be reduced, if applicable, by the aggregate of all amounts each of which is the lesser of the particular amount that corresponds to the salaries or wages described in paragraph a of that definition, or to the amount referred to in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that are included in that labour expenditure of the corporation for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular amount that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular amount that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular amount corresponds to the amount referred to in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the eligible employees of the person or partnership referred to in that subparagraph; and

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, an amount of assistance received by a corporation, another person or a partnership, as the case may be, is deemed to be repaid by the corporation, the other person or the partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, for the purpose of computing an amount that a corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the corporation, the other person or the partnership may reasonably expect to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a qualified labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph is to be read as if “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” was inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property; and

(b)  (subparagraph repealed);

(c)  may not be reimbursed if the property is not operated as first anticipated.

For the purpose of determining, for a taxation year, the qualified expenditure for services rendered outside the Montréal area, the qualified computer-aided special effects and animation expenditure and the qualified labour expenditure of a corporation in respect of a property for which an application for an advance ruling or, in the absence of such an application, an application for a qualification certificate is filed with the Société de développement des entreprises culturelles on or before 4 June 2014 or, if the Société de développement des entreprises culturelles considers that the work on the property was sufficiently advanced on that date, on or before 31 August 2014, the following rules apply:

(a)  the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph is to be read, in respect of the property, as if “25/2 or 25/4” were replaced wherever it appears by,

i.  where the taxation year of the qualified expenditure for services rendered outside the Montréal area in respect of which tax under Part III.1 is to be paid in respect of the property ends before 1 January 2009, “100/9.1875 or 100/19.3958”, or

ii.  where the taxation year of the qualified expenditure for services rendered outside the Montréal area in respect of which tax under Part III.1 is to be paid in respect of the property ends after 31 December 2008, “100/10 or 100/20”;

(b)  the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph is to be read, in respect of the property, as if “25/2” were replaced wherever it appears by,

i.  where the qualified computer-aided special effects and animation expenditure in respect of which tax under Part III.1 is to be paid in respect of the property is referred to in subparagraph 1 of subparagraph ii of subparagraph b of the first paragraph of section 1029.8.35, “100/10.2083”, or

ii.  where the qualified computer-aided special effects and animation expenditure in respect of which tax under Part III.1 is to be paid in respect of the property is referred to in subparagraph 2 of subparagraph ii of subparagraph b of the first paragraph of section 1029.8.35, “100/10”; and

(c)  the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “25/9 or 25/7” were replaced wherever it appears by,

i.  where the taxation year of the qualified labour expenditure in respect of which tax under Part III.1 is to be paid in respect of the property ends before 1 January 2009, “100/39.375 or 100/29.1667”, or

ii.  where the taxation year of the qualified labour expenditure in respect of which tax under Part III.1 is to be paid in respect of the property ends after 31 December 2008,

(1)  “20/11 or 20/9”, if the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, or

(2)  “20/9 or 20/7”, in other cases.

For the purpose of determining the qualified labour expenditure of a corporation for a taxation year that ends after 31 December 2008 in respect of a property for which an application for an advance ruling or, in the absence of such an application, an application for a qualification certificate is filed with the Société de développement des entreprises culturelles on or before 4 June 2014 or, if the Société de développement des entreprises culturelles considers that the work on the property was sufficiently advanced on that date, on or before 31 August 2014, the amount of a labour expenditure incurred by the corporation in respect of the property before 1 January 2009 is to be multiplied by

(a)  39.375/45, if subparagraph i of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property; and

(b)  29.1667/35, if subparagraph ii of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property.

Where a property to which the ninth paragraph does not apply is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “25/9 or 25/7” were replaced wherever it appears by “100/44.72 or 100/36.56” if section 1029.8.35.1.1 applies in respect of the property, or by “25/11 or 25/9” in any other case.

Where section 1029.8.35.1.1 applies in respect of a property that is not referred to in the eleventh paragraph, the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of that property, as if “25/9 or 25/7” were replaced wherever it appears by “100/36.72 or 100/28.56”.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126; 2007, c. 12, s. 147; 2009, c. 15, s. 233; 2010, c. 5, s. 142; 2010, c. 25, s. 125; 2011, c. 1, s. 61; 2011, c. 6, s. 186; 2011, c. 34, s. 73; 2013, c. 10, s. 104; 2015, c. 21, s. 412; 2015, c. 24, s. 135.

2015-10-21

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraph b.1 of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraph b.1 of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation under a contract for services rendered as part of the production of the property to a person or partnership (in this section referred to as a “first-tier subcontractor”) who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable either to services rendered by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who rendered services as part of the production of the property,

ii.  a particular corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation referred to in subparagraph iv, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is associated with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who rendered services as part of the production of the property,

iii.  despite subparagraph ii, a particular corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is associated with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who rendered services exclusively at the post-production stage of the property,

iv.  a corporation that has an establishment in Québec all the issued capital stock of which, except directors’ qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered by the individual as part of the production of the property, or

v.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services rendered, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who rendered services as part of the production of the property;

(b.1)  65% of the portion of the remuneration, other than salary or wages, that is incurred in the year by the first-tier subcontractor and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, 65% of the portion of the remuneration that was incurred by the first-tier subcontractor in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the first-tier subcontractor under a contract for services rendered as part of the production of the property to a person or partnership with whom the first-tier subcontractor is dealing at arm’s length at the time the contract is entered into (in this section referred to as a “second-tier subcontractor”) and who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

ii.  a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is associated with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

iii.  despite subparagraph ii, a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is associated with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to services rendered exclusively at the post-production stage of the property, or

iv.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property;

(b.2)  65% of the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, 65% of the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property, and that is paid by the corporation under a contract for services rendered as part of the production of the property to a first-tier subcontractor with which the corporation is dealing at arm’s length at the time the contract is entered into and who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

ii.  a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is associated with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

iii.  despite subparagraph ii, a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is associated with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to services rendered exclusively at the post-production stage of the property, or

iv.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of any of paragraphs a to b.2 if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“post-production” of a property means the stage of production of the property that includes all the activities that follow the shooting of the property, in particular transcoding and duplication of the property, digitization, compression and duplication of DVDs and CD-ROMs, video-on-demand encoding, subtitling of films, captioning for persons with a hearing impairment and video description for persons with a visual impairment;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 25/2 of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 25/2 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that relate to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 25/2 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is associated with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles for the purposes of this division; or

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying 25/2 or 25/4, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 25/2 or 25/4, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that relate to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 25/2 or 25/4, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 25/9 or 25/7, as the case may be, of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 25/9 or 25/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that, for a taxation year preceding the year in respect of the property, is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees, to the extent that the amount has not, under subparagraph iii of subparagraph e of the second paragraph, reduced the amount of the labour expenditure of the corporation for that preceding year in respect of the property; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 25/9 or 25/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation is a regional corporation for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of that definition in respect of an employee referred to in any of subparagraphs i, ii and v of that paragraph b or an individual referred to in subparagraph iv or v of that paragraph b only if that employee or individual is a party to the contract entered into between the employee’s or the individual’s employer, the corporation referred to in that subparagraph iv of which the employee or the individual is a shareholder or the partnership of which the employee or the individual is a member, as the case may be, and the corporation in respect of which that definition applies, under which the employee or the individual, as the case may be, undertakes to personally render services as part of the production of the property referred to in that definition;

(c.1)  the amount included by a particular corporation in computing its labour expenditure for a taxation year under paragraph b.1 or b.2 of that definition, in relation to the portion of the remuneration incurred in respect of a property under a particular contract referred to in that paragraph, must be reduced by the aggregate of

i.  the aggregate of all amounts each of which is the salaries or wages paid by a person or partnership who is a subcontractor party to the particular contract or a subcontract that arises from it, to the person’s or partnership’s employee who is not an eligible employee, unless the salaries or wages are paid

(1)  to an employee of the first-tier subcontractor, where the particular contract is referred to in paragraph b.1 of that definition,

(2)  by a corporation or partnership that does not have an establishment in Québec or does not carry on a business in Québec, for services rendered as part of the production of the property,

(3)  by a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered as part of the production of the property, or

(4)  by a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is associated with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered at a stage of production of the property that is not the post-production stage,

ii.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that is a party to a subcontract arising from the particular contract and that does not have an establishment in Québec for services rendered as part of the production of the property,

iii.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a partnership that is a party to a subcontract arising from the particular contract and that does not carry on a business in Québec for services rendered as part of the production of the property,

iv.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that has an establishment in Québec, that is a party to a subcontract arising from the particular contract and that, at the time that portion of the remuneration is incurred, holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered as part of the production of the property, and

v.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that has an establishment in Québec, that is a party to a subcontract arising from the particular contract and that, at the time that portion of the remuneration is incurred, is associated with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered at a stage of production of the property that is not the post-production stage;

(c.2)  a corporation that has entered into a contract (in this subparagraph referred to as an “initial contract”) with a first-tier subcontractor for the provision of services as part of the production of a property may not, in computing its labour expenditure for a taxation year in respect of the property under paragraph b or b.1 of that definition, include an amount in relation to the portion of the remuneration that the corporation pays under the initial contract to the first-tier subcontractor and to the portion of any remuneration the first-tier subcontractor pays to a second-tier subcontractor for services rendered as part of the production of the property if, in relation to the portion of the remuneration the corporation pays under the initial contract to the first-tier subcontractor, it includes an amount in computing its labour expenditure for any taxation year in respect of the property under paragraph b.2 of that definition;

(d)  (subparagraph repealed);

(d.1)  (subparagraph repealed);

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property is to be reduced, if applicable, by the aggregate of all amounts each of which is the lesser of the particular amount that corresponds to the salaries or wages described in paragraph a of that definition, or to the amount referred to in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that are included in that labour expenditure of the corporation for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular amount that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular amount that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular amount corresponds to the amount referred to in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the eligible employees of the person or partnership referred to in that subparagraph; and

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, an amount of assistance received by a corporation, another person or a partnership, as the case may be, is deemed to be repaid by the corporation, the other person or the partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, for the purpose of computing an amount that a corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the corporation, the other person or the partnership may reasonably expect to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a qualified labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph is to be read as if “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” was inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property; and

(b)  (subparagraph repealed);

(c)  may not be reimbursed if the property is not operated as first anticipated.

For the purpose of determining, for a taxation year, the qualified expenditure for services rendered outside the Montréal area, the qualified computer-aided special effects and animation expenditure and the qualified labour expenditure of a corporation in respect of a property for which an application for an advance ruling or, in the absence of such an application, an application for a qualification certificate is filed with the Société de développement des entreprises culturelles on or before 4 June 2014 or, if the Société de développement des entreprises culturelles considers that the work on the property was sufficiently advanced on that date, on or before 31 August 2014, the following rules apply:

(a)  the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph is to be read, in respect of the property, as if “25/2 or 25/4” were replaced wherever it appears by,

i.  where the taxation year of the qualified expenditure for services rendered outside the Montréal area in respect of which tax under Part III.1 is to be paid in respect of the property ends before 1 January 2009, “100/9.1875 or 100/19.3958”, or

ii.  where the taxation year of the qualified expenditure for services rendered outside the Montréal area in respect of which tax under Part III.1 is to be paid in respect of the property ends after 31 December 2008, “100/10 or 100/20”;

(b)  the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph is to be read, in respect of the property, as if “25/2” were replaced wherever it appears by,

i.  where the qualified computer-aided special effects and animation expenditure in respect of which tax under Part III.1 is to be paid in respect of the property is referred to in subparagraph 1 of subparagraph ii of subparagraph b of the first paragraph of section 1029.8.35, “100/10.2083”, or

ii.  where the qualified computer-aided special effects and animation expenditure in respect of which tax under Part III.1 is to be paid in respect of the property is referred to in subparagraph 2 of subparagraph ii of subparagraph b of the first paragraph of section 1029.8.35, “100/10”; and

(c)  the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “25/9 or 25/7” were replaced wherever it appears by,

i.  where the taxation year of the qualified labour expenditure in respect of which tax under Part III.1 is to be paid in respect of the property ends before 1 January 2009, “100/39.375 or 100/29.1667”, or

ii.  where the taxation year of the qualified labour expenditure in respect of which tax under Part III.1 is to be paid in respect of the property ends after 31 December 2008,

(1)  “20/11 or 20/9”, if the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, or

(2)  “20/9 or 20/7”, in other cases.

For the purpose of determining the qualified labour expenditure of a corporation for a taxation year that ends after 31 December 2008 in respect of a property for which an application for an advance ruling or, in the absence of such an application, an application for a qualification certificate is filed with the Société de développement des entreprises culturelles on or before 4 June 2014 or, if the Société de développement des entreprises culturelles considers that the work on the property was sufficiently advanced on that date, on or before 31 August 2014, the amount of a labour expenditure incurred by the corporation in respect of the property before 1 January 2009 is to be multiplied by

(a)  39.375/45, if subparagraph i of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property; and

(b)  29.1667/35, if subparagraph ii of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property.

Where a property to which the ninth paragraph does not apply is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “25/9 or 25/7” were replaced wherever it appears by “25/11 or 25/9”.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126; 2007, c. 12, s. 147; 2009, c. 15, s. 233; 2010, c. 5, s. 142; 2010, c. 25, s. 125; 2011, c. 1, s. 61; 2011, c. 6, s. 186; 2011, c. 34, s. 73; 2013, c. 10, s. 104; 2015, c. 21, s. 412.

2013-06-05

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraph b.1 of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraph b.1 of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation under a contract for services rendered as part of the production of the property to a person or partnership (in this section referred to as a “first-tier subcontractor”) who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable either to services rendered by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who rendered services as part of the production of the property,

ii.  a particular corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation referred to in subparagraph iv, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who rendered services as part of the production of the property,

iii.  despite subparagraph ii, a particular corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who rendered services exclusively at the post-production stage of the property,

iv.  a corporation that has an establishment in Québec all the issued capital stock of which, except directors’ qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered by the individual as part of the production of the property, or

v.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services rendered, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who rendered services as part of the production of the property;

(b.1)  65% of the portion of the remuneration, other than salary or wages, that is incurred in the year by the first-tier subcontractor and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, 65% of the portion of the remuneration that was incurred by the first-tier subcontractor in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the first-tier subcontractor under a contract for services rendered as part of the production of the property to a person or partnership with whom the first-tier subcontractor is dealing at arm’s length at the time the contract is entered into (in this section referred to as a “second-tier subcontractor”) and who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

ii.  a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

iii.  despite subparagraph ii, a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to services rendered exclusively at the post-production stage of the property, or

iv.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property;

(b.2)  65% of the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, 65% of the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property, and that is paid by the corporation under a contract for services rendered as part of the production of the property to a first-tier subcontractor with which the corporation is dealing at arm’s length at the time the contract is entered into and who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

ii.  a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

iii.  despite subparagraph ii, a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to services rendered exclusively at the post-production stage of the property, or

iv.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of any of paragraphs a to b.2 if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“post-production” of a property means the stage of production of the property that includes all the activities that follow the shooting of the property, in particular transcoding and duplication of the property, digitization, compression and duplication of DVDs and CD-ROMs, video-on-demand encoding, subtitling of films, captioning for persons with a hearing impairment and video description for persons with a visual impairment;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 100/10 of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 100/10 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that relate to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 100/10 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles for the purposes of this division; or

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying 100/10 or 100/20, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10 or 100/20, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that relate to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10 or 100/20, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 20/9 or 20/7, as the case may be, of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 20/9 or 20/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that, for a taxation year preceding the year in respect of the property, is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees, to the extent that the amount has not, under subparagraph iii of subparagraph e of the second paragraph, reduced the amount of the labour expenditure of the corporation for that preceding year in respect of the property; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 20/9 or 20/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation is a regional corporation for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of that definition in respect of an employee referred to in any of subparagraphs i, ii and v of that paragraph b or an individual referred to in subparagraph iv or v of that paragraph b only if that employee or individual is a party to the contract entered into between the employee’s or the individual’s employer, the corporation referred to in that subparagraph iv of which the employee or the individual is a shareholder or the partnership of which the employee or the individual is a member, as the case may be, and the corporation in respect of which that definition applies, under which the employee or the individual, as the case may be, undertakes to personally render services as part of the production of the property referred to in that definition;

(c.1)  the amount included by a particular corporation in computing its labour expenditure for a taxation year under paragraph b.1 or b.2 of that definition, in relation to the portion of the remuneration incurred in respect of a property under a particular contract referred to in that paragraph, must be reduced by the aggregate of

i.  the aggregate of all amounts each of which is the salaries or wages paid by a person or partnership who is a subcontractor party to the particular contract or a subcontract that arises from it, to the person’s or partnership’s employee who is not an eligible employee, unless the salaries or wages are paid

(1)  to an employee of the first-tier subcontractor, where the particular contract is referred to in paragraph b.1 of that definition,

(2)  by a corporation or partnership that does not have an establishment in Québec or does not carry on a business in Québec, for services rendered as part of the production of the property,

(3)  by a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered as part of the production of the property, or

(4)  by a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, does not deal at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered at a stage of production of the property that is not the post-production stage,

ii.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that is a party to a subcontract arising from the particular contract and that does not have an establishment in Québec for services rendered as part of the production of the property,

iii.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a partnership that is a party to a subcontract arising from the particular contract and that does not carry on a business in Québec for services rendered as part of the production of the property,

iv.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that has an establishment in Québec, that is a party to a subcontract arising from the particular contract and that, at the time that portion of the remuneration is incurred, holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered as part of the production of the property, and

v.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that has an establishment in Québec, that is a party to a subcontract arising from the particular contract and that, at the time that portion of the remuneration is incurred, does not deal at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered at a stage of production of the property that is not the post-production stage;

(c.2)  a corporation that has entered into a contract (in this subparagraph referred to as an “initial contract”) with a first-tier subcontractor for the provision of services as part of the production of a property may not, in computing its labour expenditure for a taxation year in respect of the property under paragraph b or b.1 of that definition, include an amount in relation to the portion of the remuneration that the corporation pays under the initial contract to the first-tier subcontractor and to the portion of any remuneration the first-tier subcontractor pays to a second-tier subcontractor for services rendered as part of the production of the property if, in relation to the portion of the remuneration the corporation pays under the initial contract to the first-tier subcontractor, it includes an amount in computing its labour expenditure for any taxation year in respect of the property under paragraph b.2 of that definition;

(d)  (subparagraph repealed);

(d.1)  (subparagraph repealed);

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property is to be reduced, if applicable, by the aggregate of all amounts each of which is the lesser of the particular amount that corresponds to the salaries or wages described in paragraph a of that definition, or to the amount referred to in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that are included in that labour expenditure of the corporation for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular amount that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular amount that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular amount corresponds to the amount referred to in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the eligible employees of the person or partnership referred to in that subparagraph; and

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, an amount of assistance received by a corporation, another person or a partnership, as the case may be, is deemed to be repaid by the corporation, the other person or the partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, for the purpose of computing an amount that a corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the corporation, the other person or the partnership may reasonably expect to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a qualified labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph is to be read as if “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” was inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property; and

(b)  (subparagraph repealed);

(c)  may not be reimbursed if the property is not operated as first anticipated.

For the purpose of determining the qualified expenditure for services rendered outside the Montréal area, the qualified computer-aided special effects and animation expenditure and the qualified labour expenditure of a corporation in respect of a property for a taxation year, the following rules apply:

(a)  the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph is to be read, in respect of the property, as if “100/10 or 100/20” was replaced wherever it appears by “100/9.1875 or 100/19.3958”, if the qualified expenditure for services rendered outside the Montréal area, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 1 of subparagraph i or ii of subparagraph a.1 of the first paragraph of section 1029.8.35;

(b)  the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph is to be read, in respect of the property, as if “100/10” was replaced wherever it appears by “100/10.2083”, if the qualified computer-aided special effects and animation expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph i of subparagraph b of the first paragraph of section 1029.8.35;

(c)  the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “20/9 or 20/7” was replaced wherever it appears by “100/39.375 or 100/29.1667”, if the qualified labour expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 1 of subparagraph i or ii of subparagraph a of the first paragraph of section 1029.8.35; and

(d)  if the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “20/9 or 20/7” was replaced wherever it appears by “20/11 or 20/9”.

For the purpose of determining the qualified labour expenditure of a corporation for a taxation year that ends after 31 December 2008 in respect of a property, the amount of a labour expenditure incurred by the corporation in respect of the property before 1 January 2009 is to be multiplied by

(a)  39.375/45, if subparagraph i of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property; and

(b)  29.1667/35, if subparagraph ii of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126; 2007, c. 12, s. 147; 2009, c. 15, s. 233; 2010, c. 5, s. 142; 2010, c. 25, s. 125; 2011, c. 1, s. 61; 2011, c. 6, s. 186; 2011, c. 34, s. 73; 2013, c. 10, s. 104.

2011-12-09

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraph b.1 of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to v of paragraph b and i to iv of paragraph b.1 of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation under a contract for services rendered as part of the production of the property to a person or partnership (in this section referred to as a “first-tier subcontractor”) who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable either to services rendered by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who rendered services as part of the production of the property,

ii.  a particular corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation referred to in subparagraph iv, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who rendered services as part of the production of the property,

iii.  despite subparagraph ii, a particular corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who rendered services exclusively at the post-production stage of the property,

iv.  a corporation that has an establishment in Québec all the issued capital stock of which, except directors’ qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered by the individual as part of the production of the property, or

v.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services rendered, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who rendered services as part of the production of the property;

(b.1)  65% of the portion of the remuneration, other than salary or wages, that is incurred in the year by the first-tier subcontractor and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, 65% of the portion of the remuneration that was incurred by the first-tier subcontractor in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the first-tier subcontractor under a contract for services rendered as part of the production of the property to a person or partnership with whom the first-tier subcontractor is dealing at arm’s length at the time the contract is entered into (in this section referred to as a “second-tier subcontractor”) and who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

ii.  a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

iii.  despite subparagraph ii, a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to services rendered exclusively at the post-production stage of the property, or

iv.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property;

(b.2)  65% of the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, 65% of the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property, and that is paid by the corporation under a contract for services rendered as part of the production of the property to a first-tier subcontractor with which the corporation is dealing at arm’s length at the time the contract is entered into and who is

i.  an individual, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

ii.  a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property,

iii.  despite subparagraph ii, a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, is not dealing at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, to the extent that that portion of the remuneration is reasonably attributable to services rendered exclusively at the post-production stage of the property, or

iv.  a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable to services rendered as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of any of paragraphs a to b.2 if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“post-production” of a property means the stage of production of the property that includes all the activities that follow the shooting of the property, in particular transcoding and duplication of the property, digitization, compression and duplication of DVDs and CD-ROMs, video-on-demand encoding, subtitling of films, captioning for persons with a hearing impairment and video description for persons with a visual impairment;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 100/10 of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 100/10 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that relate to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 100/10 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles for the purposes of this division; or

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying 100/10 or 100/20, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10 or 100/20, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that relate to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10 or 100/20, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 20/9 or 20/7, as the case may be, of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 20/9 or 20/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership described in paragraph b or b.1 of the definition of “labour expenditure” and with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that, for a taxation year preceding the year in respect of the property, is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees, to the extent that the amount has not, under subparagraph iii of subparagraph e of the second paragraph, reduced the amount of the labour expenditure of the corporation for that preceding year in respect of the property; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 20/9 or 20/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation is a regional corporation for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of that definition in respect of an employee referred to in any of subparagraphs i, ii and v of that paragraph b or an individual referred to in subparagraph iv or v of that paragraph b only if that employee or individual is a party to the contract entered into between the employee’s or the individual’s employer, the corporation referred to in that subparagraph iv of which the employee or the individual is a shareholder or the partnership of which the employee or the individual is a member, as the case may be, and the corporation in respect of which that definition applies, under which the employee or the individual, as the case may be, undertakes to personally render services as part of the production of the property referred to in that definition;

(c.1)  the amount included by a particular corporation in computing its labour expenditure for a taxation year under paragraph b.1 or b.2 of that definition, in relation to the portion of the remuneration incurred in respect of a property under a particular contract referred to in that paragraph, must be reduced by the aggregate of

i.  the aggregate of all amounts each of which is the salaries or wages paid by a person or partnership who is a subcontractor party to the particular contract or a subcontract that arises from it, to the person’s or partnership’s employee who is not an eligible employee, unless the salaries or wages are paid

(1)  to an employee of the first-tier subcontractor, where the particular contract is referred to in paragraph b.1 of that definition,

(2)  by a corporation or partnership that does not have an establishment in Québec or does not carry on a business in Québec, for services rendered as part of the production of the property,

(3)  by a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered as part of the production of the property, or

(4)  by a corporation that has an establishment in Québec and that, at the time that portion of the remuneration is incurred, does not deal at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered at a stage of production of the property that is not the post-production stage,

ii.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that is a party to a subcontract arising from the particular contract and that does not have an establishment in Québec for services rendered as part of the production of the property,

iii.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a partnership that is a party to a subcontract arising from the particular contract and that does not carry on a business in Québec for services rendered as part of the production of the property,

iv.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that has an establishment in Québec, that is a party to a subcontract arising from the particular contract and that, at the time that portion of the remuneration is incurred, holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered as part of the production of the property, and

v.  the aggregate of all amounts each of which is equal to 65% of the portion of the remuneration paid to a corporation that has an establishment in Québec, that is a party to a subcontract arising from the particular contract and that, at the time that portion of the remuneration is incurred, does not deal at arm’s length with a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission for services rendered at a stage of production of the property that is not the post-production stage;

(c.2)  a corporation that has entered into a contract (in this subparagraph referred to as an “initial contract”) with a first-tier subcontractor for the provision of services as part of the production of a property may not, in computing its labour expenditure for a taxation year in respect of the property under paragraph b or b.1 of that definition, include an amount in relation to the portion of the remuneration that the corporation pays under the initial contract to the first-tier subcontractor and to the portion of any remuneration the first-tier subcontractor pays to a second-tier subcontractor for services rendered as part of the production of the property if, in relation to the portion of the remuneration the corporation pays under the initial contract to the first-tier subcontractor, it includes an amount in computing its labour expenditure for any taxation year in respect of the property under paragraph b.2 of that definition;

(d)  (subparagraph repealed);

(d.1)  (subparagraph repealed);

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property is to be reduced, if applicable, by the aggregate of all amounts each of which is the lesser of the particular amount that corresponds to the salaries or wages described in paragraph a of that definition, or to the amount referred to in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, that are included in that labour expenditure of the corporation for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular amount that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular amount that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular amount corresponds to the amount referred to in any of subparagraphs i to v of paragraph b and i to iv of paragraphs b.1 and b.2 of that definition, the amount of any government assistance and non-government assistance that a person or partnership with whom the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the eligible employees of the person or partnership referred to in that subparagraph; and

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, an amount of assistance received by a corporation, another person or a partnership, as the case may be, is deemed to be repaid by the corporation, the other person or the partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, for the purpose of computing an amount that a corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the corporation, the other person or the partnership may reasonably expect to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing the prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph is to be read as if “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” was inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property; and

(b)  (subparagraph repealed);

(c)  may not be reimbursed if the property is not operated as first anticipated.

For the purpose of determining the qualified expenditure for services rendered outside the Montréal area, the qualified computer-aided special effects and animation expenditure and the qualified labour expenditure of a corporation in respect of a property for a taxation year, the following rules apply:

(a)  the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph is to be read, in respect of the property, as if “100/10 or 100/20” was replaced wherever it appears by “100/9.1875 or 100/19.3958”, if the qualified expenditure for services rendered outside the Montréal area, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 1 of subparagraph i or ii of subparagraph a.1 of the first paragraph of section 1029.8.35;

(b)  the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph is to be read, in respect of the property, as if “100/10” was replaced wherever it appears by “100/10.2083”, if the qualified computer-aided special effects and animation expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph i of subparagraph b of the first paragraph of section 1029.8.35;

(c)  the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “20/9 or 20/7” was replaced wherever it appears by “100/39.375 or 100/29.1667”, if the qualified labour expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 1 of subparagraph i or ii of subparagraph a of the first paragraph of section 1029.8.35; and

(d)  if the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “20/9 or 20/7” was replaced wherever it appears by “20/11 or 20/9”.

For the purpose of determining the qualified labour expenditure of a corporation for a taxation year that ends after 31 December 2008 in respect of a property, the amount of a labour expenditure incurred by the corporation in respect of the property before 1 January 2009 is to be multiplied by

(a)  39.375/45, if subparagraph i of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property; and

(b)  29.1667/35, if subparagraph ii of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126; 2007, c. 12, s. 147; 2009, c. 15, s. 233; 2010, c. 5, s. 142; 2010, c. 25, s. 125; 2011, c. 1, s. 61; 2011, c. 6, s. 186; 2011, c. 34, s. 73.

2011-06-06

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to iv of paragraph b of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to iv of paragraph b of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation,

i.  to an individual, to the extent that that portion of the remuneration can reasonably be attributed either to services provided by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who provided services as part of the production of the property,

ii.  to a particular corporation having an establishment in Québec that, at the time that portion of the remuneration is incurred, is not a corporation referred to in subparagraph iii, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who provided services as part of the production of the property,

iii.  to a corporation having an establishment in Québec all the issued capital stock of which, except the director’s qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration can reasonably be attributed to services provided by the individual as part of the production of the property, or

iv.  to a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services provided, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who provided services as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of paragraph a or b if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 100/10 of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 100/10 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure” and that relate to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 100/10 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles for the purposes of this division; or

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying 100/10 or 100/20, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10 or 100/20, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure” and that relate to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10 or 100/20, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 20/9 or 20/7, as the case may be, of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 20/9 or 20/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that, for a taxation year preceding the year in respect of the property, is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, to the extent that the amount has not, under subparagraph iii of subparagraph e of the second paragraph, reduced the amount of the labour expenditure of the corporation for that preceding year in respect of the property; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 20/9 or 20/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation is a regional corporation for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of the said definition in respect of an employee referred to in subparagraph i, ii or iv of the said paragraph b or an individual referred to in subparagraph iii or iv of the said paragraph b only if that employee or individual is a party to the contract entered into between, on the one hand, his employer, the corporation referred to in that subparagraph iii of which he is a shareholder or the partnership of which he is a member, as the case may be, and, on the other hand, the corporation in respect of which the said definition applies, pursuant to which the employee or the individual, as the case may be, undertakes to personally provide services as part of the production of the property referred to in the said definition;

(d)  (subparagraph repealed);

(d.1)  paragraph b of the definition shall be read as if there were no reference, in subparagraphs ii and iii, to the words “having an establishment in Québec” and, in subparagraph iv, to the words “carrying on a business in Québec”, where the property is an animated film the main filming or taping of which began on or before 25 March 2001;

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property is to be reduced, where applicable, by the aggregate of all amounts each of which is the lesser of the particular amount that corresponds to the salaries or wages described in paragraph a of that definition or to the portion of the remuneration described in any of subparagraphs i to iv of paragraph b of that definition, that are included in that labour expenditure of the corporation for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular amount that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular amount that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular amount corresponds to the portion of the remuneration described in any of subparagraphs i to iv of paragraph b of that definition, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph;

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, an amount of assistance received by a corporation, another person or a partnership, as the case may be, is deemed to be repaid by the corporation, the other person or the partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, for the purpose of computing an amount that a corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the corporation, the other person or the partnership may reasonably expect to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing the prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph is to be read as if “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” was inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property; and

(b)  (subparagraph repealed);

(c)  may not be reimbursed if the property is not operated as first anticipated.

For the purpose of determining the qualified expenditure for services rendered outside the Montréal area, the qualified computer-aided special effects and animation expenditure and the qualified labour expenditure of a corporation in respect of a property for a taxation year, the following rules apply:

(a)  the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph is to be read, in respect of the property, as if “100/10 or 100/20” was replaced wherever it appears by “100/9.1875 or 100/19.3958”, if the qualified expenditure for services rendered outside the Montréal area, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 1 of subparagraph i or ii of subparagraph a.1 of the first paragraph of section 1029.8.35;

(b)  the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph is to be read, in respect of the property, as if “100/10” was replaced wherever it appears by “100/10.2083”, if the qualified computer-aided special effects and animation expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph i of subparagraph b of the first paragraph of section 1029.8.35;

(c)  the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “20/9 or 20/7” was replaced wherever it appears by “100/39.375 or 100/29.1667”, if the qualified labour expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 1 of subparagraph i or ii of subparagraph a of the first paragraph of section 1029.8.35; and

(d)  if the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “20/9 or 20/7” was replaced wherever it appears by “20/11 or 20/9”.

For the purpose of determining the qualified labour expenditure of a corporation for a taxation year that ends after 31 December 2008 in respect of a property, the amount of a labour expenditure incurred by the corporation in respect of the property before 1 January 2009 is to be multiplied by

(a)  39.375/45, if subparagraph i of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property; and

(b)  29.1667/35, if subparagraph ii of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126; 2007, c. 12, s. 147; 2009, c. 15, s. 233; 2010, c. 5, s. 142; 2010, c. 25, s. 125; 2011, c. 1, s. 61; 2011, c. 6, s. 186.

2011-02-17

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to iv of paragraph b of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to iv of paragraph b of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation,

i.  to an individual, to the extent that that portion of the remuneration can reasonably be attributed either to services provided by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who provided services as part of the production of the property,

ii.  to a particular corporation having an establishment in Québec, other than a corporation referred to in subparagraph iii, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who provided services as part of the production of the property,

iii.  to a corporation having an establishment in Québec all the issued capital stock of which, except the director’s qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration can reasonably be attributed to services provided by the individual as part of the production of the property, or

iv.  to a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services provided, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who provided services as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of paragraph a or b if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 100/10 of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 100/10 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure” and that relate to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 100/10 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles for the purposes of this division; or

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying 100/10 or 100/20, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10 or 100/20, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure” and that relate to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10 or 100/20, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 20/9 or 20/7, as the case may be, of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 20/9 or 20/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that, for a taxation year preceding the year in respect of the property, is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, to the extent that the amount has not, under subparagraph iii of subparagraph e of the second paragraph, reduced the amount of the labour expenditure of the corporation for that preceding year in respect of the property; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 20/9 or 20/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation is a regional corporation for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of the said definition in respect of an employee referred to in subparagraph i, ii or iv of the said paragraph b or an individual referred to in subparagraph iii or iv of the said paragraph b only if that employee or individual is a party to the contract entered into between, on the one hand, his employer, the corporation referred to in that subparagraph iii of which he is a shareholder or the partnership of which he is a member, as the case may be, and, on the other hand, the corporation in respect of which the said definition applies, pursuant to which the employee or the individual, as the case may be, undertakes to personally provide services as part of the production of the property referred to in the said definition;

(d)  (subparagraph repealed);

(d.1)  paragraph b of the definition shall be read as if there were no reference, in subparagraphs ii and iii, to the words “having an establishment in Québec” and, in subparagraph iv, to the words “carrying on a business in Québec”, where the property is an animated film the main filming or taping of which began on or before 25 March 2001;

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property is to be reduced, where applicable, by the aggregate of all amounts each of which is the lesser of the particular amount that corresponds to the salaries or wages described in paragraph a of that definition or to the portion of the remuneration described in any of subparagraphs i to iv of paragraph b of that definition, that are included in that labour expenditure of the corporation for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular amount that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular amount that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular amount corresponds to the portion of the remuneration described in any of subparagraphs i to iv of paragraph b of that definition, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph;

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, an amount of assistance received by a corporation, another person or a partnership, as the case may be, is deemed to be repaid by the corporation, the other person or the partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, for the purpose of computing an amount that a corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the corporation, the other person or the partnership may reasonably expect to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing the prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph is to be read as if “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” was inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property; and

(b)  (subparagraph repealed);

(c)  may not be reimbursed if the property is not operated as first anticipated.

For the purpose of determining the qualified expenditure for services rendered outside the Montréal area, the qualified computer-aided special effects and animation expenditure and the qualified labour expenditure of a corporation in respect of a property for a taxation year, the following rules apply:

(a)  the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph is to be read, in respect of the property, as if “100/10 or 100/20” was replaced wherever it appears by “100/9.1875 or 100/19.3958”, if the qualified expenditure for services rendered outside the Montréal area, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 1 of subparagraph i or ii of subparagraph a.1 of the first paragraph of section 1029.8.35;

(b)  the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph is to be read, in respect of the property, as if “100/10” was replaced wherever it appears by “100/10.2083”, if the qualified computer-aided special effects and animation expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph i of subparagraph b of the first paragraph of section 1029.8.35;

(c)  the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “20/9 or 20/7” was replaced wherever it appears by “100/39.375 or 100/29.1667”, if the qualified labour expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 1 of subparagraph i or ii of subparagraph a of the first paragraph of section 1029.8.35; and

(d)  if the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.3 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “20/9 or 20/7” was replaced wherever it appears by “20/11 or 20/9”.

For the purpose of determining the qualified labour expenditure of a corporation for a taxation year that ends after 31 December 2008 in respect of a property, the amount of a labour expenditure incurred by the corporation in respect of the property before 1 January 2009 is to be multiplied by

(a)  39.375/45, if subparagraph i of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property; and

(b)  29.1667/35, if subparagraph ii of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126; 2007, c. 12, s. 147; 2009, c. 15, s. 233; 2010, c. 5, s. 142; 2010, c. 25, s. 125; 2011, c. 1, s. 61.

2010-10-27

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to iv of paragraph b of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to iv of paragraph b of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation,

i.  to an individual, to the extent that that portion of the remuneration can reasonably be attributed either to services provided by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who provided services as part of the production of the property,

ii.  to a particular corporation having an establishment in Québec, other than a corporation referred to in subparagraph iii, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who provided services as part of the production of the property,

iii.  to a corporation having an establishment in Québec all the issued capital stock of which, except the director’s qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration can reasonably be attributed to services provided by the individual as part of the production of the property, or

iv.  to a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services provided, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who provided services as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of paragraph a or b if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 100/10 of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 100/10 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure” and that relate to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 100/10 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles for the purposes of this division; or

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying 100/10 or 100/20, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10 or 100/20, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure” and that relate to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10 or 100/20, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 20/9 or 20/7, as the case may be, of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 20/9 or 20/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that, for a taxation year preceding the year in respect of the property, is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, to the extent that the amount has not, under subparagraph iii of subparagraph e of the second paragraph, reduced the amount of the labour expenditure of the corporation for that preceding year in respect of the property; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 20/9 or 20/7, as the case may be, of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation is a regional corporation for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of the said definition in respect of an employee referred to in subparagraph i, ii or iv of the said paragraph b or an individual referred to in subparagraph iii or iv of the said paragraph b only if that employee or individual is a party to the contract entered into between, on the one hand, his employer, the corporation referred to in that subparagraph iii of which he is a shareholder or the partnership of which he is a member, as the case may be, and, on the other hand, the corporation in respect of which the said definition applies, pursuant to which the employee or the individual, as the case may be, undertakes to personally provide services as part of the production of the property referred to in the said definition;

(d)  (subparagraph repealed);

(d.1)  paragraph b of the definition shall be read as if there were no reference, in subparagraphs ii and iii, to the words “having an establishment in Québec” and, in subparagraph iv, to the words “carrying on a business in Québec”, where the property is an animated film the main filming or taping of which began on or before 25 March 2001;

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property is to be reduced, where applicable, by the aggregate of all amounts each of which is the lesser of the particular amount that corresponds to the salaries or wages described in paragraph a of that definition or to the portion of the remuneration described in any of subparagraphs i to iv of paragraph b of that definition, that are included in that labour expenditure of the corporation for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular amount that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular amount that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular amount corresponds to the portion of the remuneration described in any of subparagraphs i to iv of paragraph b of that definition, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph;

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, an amount of assistance received by a corporation, another person or a partnership, as the case may be, is deemed to be repaid by the corporation, the other person or the partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, for the purpose of computing an amount that a corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the corporation, the other person or the partnership may reasonably expect to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing the prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph is to be read as if “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” was inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property; and

(b)  (subparagraph repealed);

(c)  may not be reimbursed if the property is not operated as first anticipated.

For the purpose of determining the qualified expenditure for services rendered outside the Montréal area, the qualified computer-aided special effects and animation expenditure and the qualified labour expenditure of a corporation in respect of a property for a taxation year, the following rules apply:

(a)  the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph is to be read, in respect of the property, as if “100/10 or 100/20” was replaced wherever it appears by “100/9.1875 or 100/19.3958”, if the qualified expenditure for services rendered outside the Montréal area, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 1 of subparagraph i or ii of subparagraph a.1 of the first paragraph of section 1029.8.35;

(b)  the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph is to be read, in respect of the property, as if “100/10” was replaced wherever it appears by “100/10.2083”, if the qualified computer-aided special effects and animation expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph i of subparagraph b of the first paragraph of section 1029.8.35;

(c)  the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “20/9 or 20/7” was replaced wherever it appears by “100/39.375 or 100/29.1667”, if the qualified labour expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 1 of subparagraph i or ii of subparagraph a of the first paragraph of section 1029.8.35; and

(d)  if the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.1 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of the property, as if “20/9 or 20/7” was replaced wherever it appears by “20/11 or 20/9”.

For the purpose of determining the qualified labour expenditure of a corporation for a taxation year that ends after 31 December 2008 in respect of a property, the amount of a labour expenditure incurred by the corporation in respect of the property before 1 January 2009 is to be multiplied by

(a)  39.375/45, if subparagraph i of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property; and

(b)  29.1667/35, if subparagraph ii of subparagraph a of the first paragraph of section 1029.8.35 applies in respect of the property.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126; 2007, c. 12, s. 147; 2009, c. 15, s. 233; 2010, c. 5, s. 142; 2010, c. 25, s. 125.

2010-04-20

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to iv of paragraph b of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to iv of paragraph b of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation,

i.  to an individual, to the extent that that portion of the remuneration can reasonably be attributed either to services provided by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who provided services as part of the production of the property,

ii.  to a particular corporation having an establishment in Québec, other than a corporation referred to in subparagraph iii, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who provided services as part of the production of the property,

iii.  to a corporation having an establishment in Québec all the issued capital stock of which, except the director’s qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration can reasonably be attributed to services provided by the individual as part of the production of the property, or

iv.  to a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services provided, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who provided services as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of paragraph a or b if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 60/7 of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 60/7 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure” and that relate to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 60/7 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles for the purposes of this division; or

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure” and that relate to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 250% of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 250% of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that, for a taxation year preceding the year in respect of the property, is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, to the extent that the amount has not, under subparagraph iii of subparagraph e of the second paragraph, reduced the amount of the labour expenditure of the corporation for that preceding year in respect of the property; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 250% of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation is a regional corporation for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of the said definition in respect of an employee referred to in subparagraph i, ii or iv of the said paragraph b or an individual referred to in subparagraph iii or iv of the said paragraph b only if that employee or individual is a party to the contract entered into between, on the one hand, his employer, the corporation referred to in that subparagraph iii of which he is a shareholder or the partnership of which he is a member, as the case may be, and, on the other hand, the corporation in respect of which the said definition applies, pursuant to which the employee or the individual, as the case may be, undertakes to personally provide services as part of the production of the property referred to in the said definition;

(d)  (subparagraph repealed);

(d.1)  paragraph b of the definition shall be read as if there were no reference, in subparagraphs ii and iii, to the words “having an establishment in Québec” and, in subparagraph iv, to the words “carrying on a business in Québec”, where the property is an animated film the main filming or taping of which began on or before 25 March 2001;

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property is to be reduced, where applicable, by the aggregate of all amounts each of which is the lesser of the particular amount that corresponds to the salaries or wages described in paragraph a of that definition or to the portion of the remuneration described in any of subparagraphs i to iv of paragraph b of that definition, that are included in that labour expenditure of the corporation for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular amount that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular amount that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular amount corresponds to the portion of the remuneration described in any of subparagraphs i to iv of paragraph b of that definition, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph;

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, an amount of assistance received by a corporation, another person or a partnership, as the case may be, is deemed to be repaid by the corporation, the other person or the partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, for the purpose of computing an amount that a corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the corporation, the other person or the partnership may reasonably expect to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing the prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph is to be read as if “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” was inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property; and

(b)  (subparagraph repealed);

(c)  may not be reimbursed if the property is not operated as first anticipated.

In the case of property referred to in the first paragraph of section 1029.8.35.2,

(a)  the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph, in respect of the property, is to be read as if “100/10.5 or 100/22.17” was replaced wherever it appears by

i.  “100/9.1875 or 100/19.3958”, if the qualified expenditure for services rendered outside the Montréal area, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 1 of subparagraph i of subparagraph a.1 of the first paragraph of section 1029.8.35 or in subparagraph 1 of subparagraph ii of that subparagraph a.1, and

ii.  “100/10 or 100/20“, if the qualified expenditure for services rendered outside the Montréal area, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 2 of subparagraph i of subparagraph a.1 of the first paragraph of section 1029.8.35 or in subparagraph 2 of subparagraph ii of that subparagraph a.1;

(b)  the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph, in respect of the property, is to be read as if “60/7” was replaced wherever it appears by

i.  “100/10.2083”, if the qualified computer-aided special effects and animation expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 1 of subparagraph i of subparagraph b of the first paragraph of section 1029.8.35, and

ii.  “100/10”, if the qualified computer-aided special effects and animation expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph 2 of subparagraph i of subparagraph b of the first paragraph of section 1029.8.35; and

(c)  the definition of “qualified labour expenditure” in the first paragraph, in respect of the property, is to be read as if “250%” was replaced wherever it appears by

i.  “100/39.375”, if the property is referred to in subparagraph a of the first paragraph of section 1029.8.35.2 and the qualified labour expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph i of that subparagraph a,

ii.  “100/29.1667”, if the property is referred to in subparagraph b of the first paragraph of section 1029.8.35.2 and the qualified labour expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph i of that subparagraph b,

iii.  “20/9”, if the property is referred to in subparagraph a of the first paragraph of section 1029.8.35.2 and the qualified labour expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph ii of that subparagraph a, or “20/11”, if the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.1 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect, and

iv.  “20/7”, if the property is referred to in subparagraph b of the first paragraph of section 1029.8.35.2 and the qualified labour expenditure, in respect of which tax under Part III.1 is to be paid in respect of the property, is referred to in subparagraph ii of that subparagraph b, or “20/9”, if the property is the subject of a valid certificate issued by the Société de développement des entreprises culturelles for the purposes of subparagraph c of the first paragraph of section 1029.8.35 and none of the amounts of assistance referred to in subparagraphs ii to viii.1 of subparagraph c of the second paragraph of section 1029.6.0.0.1 is granted in its respect.

In the case of property referred to in the second paragraph of section 1029.8.35.2, the definition of “qualified labour expenditure” in the first paragraph is to be read, in respect of that property, as if “250%” was replaced wherever it appears by “20/9” where the property is property referred to in subparagraph a of the first paragraph of section 1029.8.35.2, or by “300%” in any other case.

For the purpose of determining the qualified labour expenditure of a corporation for a taxation year that ends after 31 December 2008 in respect of a property, the amount of a labour expenditure incurred by the corporation in respect of the property before 1 January 2009 is to be multiplied by

(a)  39.375/45, if subparagraph a of the first paragraph of section 1029.8.35.2 applies in respect of the property; and

(b)  29.1667/35, if subparagraph b of the first paragraph of section 1029.8.35.2 applies in respect of the property.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126; 2007, c. 12, s. 147; 2009, c. 15, s. 233; 2010, c. 5, s. 142.

2009-06-04

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to iv of paragraph b of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to iv of paragraph b of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation,

i.  to an individual, to the extent that that portion of the remuneration can reasonably be attributed either to services provided by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who provided services as part of the production of the property,

ii.  to a particular corporation having an establishment in Québec, other than a corporation referred to in subparagraph iii, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who provided services as part of the production of the property,

iii.  to a corporation having an establishment in Québec all the issued capital stock of which, except the director’s qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration can reasonably be attributed to services provided by the individual as part of the production of the property, or

iv.  to a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services provided, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who provided services as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of paragraph a or b if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 60/7 of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 60/7 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure” and that relate to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 60/7 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles for the purposes of this division; or

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure” and that relate to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 250% of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 250% of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that, for a taxation year preceding the year in respect of the property, is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, to the extent that the amount has not, under subparagraph iii of subparagraph e of the second paragraph, reduced the amount of the labour expenditure of the corporation for that preceding year in respect of the property; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 250% of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation is a regional corporation for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of the said definition in respect of an employee referred to in subparagraph i, ii or iv of the said paragraph b or an individual referred to in subparagraph iii or iv of the said paragraph b only if that employee or individual is a party to the contract entered into between, on the one hand, his employer, the corporation referred to in that subparagraph iii of which he is a shareholder or the partnership of which he is a member, as the case may be, and, on the other hand, the corporation in respect of which the said definition applies, pursuant to which the employee or the individual, as the case may be, undertakes to personally provide services as part of the production of the property referred to in the said definition;

(d)  (subparagraph repealed);

(d.1)  paragraph b of the definition shall be read as if there were no reference, in subparagraphs ii and iii, to the words “having an establishment in Québec” and, in subparagraph iv, to the words “carrying on a business in Québec”, where the property is an animated film the main filming or taping of which began on or before 25 March 2001;

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property is to be reduced, where applicable, by the aggregate of all amounts each of which is the lesser of the particular amount that corresponds to the salaries or wages described in paragraph a of that definition or to the portion of the remuneration described in any of subparagraphs i to iv of paragraph b of that definition, that are included in that labour expenditure of the corporation for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular amount that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular amount that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular amount corresponds to the portion of the remuneration described in any of subparagraphs i to iv of paragraph b of that definition, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph;

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, an amount of assistance received by a corporation, another person or a partnership, as the case may be, is deemed to be repaid by the corporation, the other person or the partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, for the purpose of computing an amount that a corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the corporation, the other person or the partnership may reasonably expect to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing the prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph shall be read with “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property; and

(b)  (subparagraph repealed);

(c)  may not be reimbursed if the property is not operated as first anticipated.

In the case of property referred to in the first paragraph of section 1029.8.35.2,

(a)  the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph, in respect of that property, shall be read with “100/10.5 or 100/22.17”, wherever it appears, replaced by “100/9.1875 or 100/19.3958”;

(b)  the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph, in respect of that property, shall be read with “60/7”, wherever it appears, replaced by “100/10.2083”; and

(c)  the definition of “qualified labour expenditure” in the first paragraph, in respect of the property, shall be read with “250%”, wherever it appears, replaced by “253.97%” if the property is property referred to in subparagraph a of the first paragraph of section 1029.8.35.2 or by “342.85%” in any other case.

In the case of property referred to in the second paragraph of section 1029.8.35.2, the definition of “qualified labour expenditure” in the first paragraph shall be read, in respect of that property, with “250%”, wherever it appears, replaced by “20/9” if the property is property referred to in subparagraph a of the first paragraph of section 1029.8.35.2, or by “300%” in any other case.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126; 2007, c. 12, s. 147; 2009, c. 15, s. 233.

2007-11-07

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to iv of paragraph b of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of all amounts each of which is the lesser of the particular portion of either the amount described in paragraph a of the definition of “labour expenditure” or an amount described in any of subparagraphs i to iv of paragraph b of that definition, that is included in that portion of the corporation’s labour expenditure for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular portion that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular portion that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular portion is the portion of an amount described in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph and that relate to the particular portion;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation,

i.  to an individual, to the extent that that portion of the remuneration can reasonably be attributed either to services provided by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who provided services as part of the production of the property,

ii.  to a particular corporation having an establishment in Québec, other than a corporation referred to in subparagraph iii, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who provided services as part of the production of the property,

iii.  to a corporation having an establishment in Québec all the issued capital stock of which, except the director’s qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration can reasonably be attributed to services provided by the individual as part of the production of the property, or

iv.  to a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services provided, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who provided services as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of paragraph a or b if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 60/7 of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 60/7 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure” and that relate to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 60/7 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles to the effect that more than 50% of its production costs for the three preceding taxation years in which it produced productions were incurred in relation to productions broadcast by unrelated third parties;

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure” and that relate to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of that property, to the extent that the amount has not, under subparagraph iii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  any repayment made in the year by the corporation, another person or a partnership, as the case may be, pursuant to a legal obligation, of any assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation, or of any other assistance that was received by the corporation, the other person or the partnership and that is referred to, in relation to the property, in subparagraph i of subparagraph c of the first paragraph of section 1129.2, up to 250% of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year because of that subparagraph i in relation to that assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 250% of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year,

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year, and

(3)  the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that, for a taxation year preceding the year in respect of the property, is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in any of subparagraphs i to iv of paragraph b of the definition of “labour expenditure”, to the extent that the amount has not, under subparagraph iii of subparagraph e of the second paragraph, reduced the amount of the labour expenditure of the corporation for that preceding year in respect of the property; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation or a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, and that the corporation, person or partnership, as the case may be, has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 250% of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation is a regional corporation for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of the said definition in respect of an employee referred to in subparagraph i, ii or iv of the said paragraph b or an individual referred to in subparagraph iii or iv of the said paragraph b only if that employee or individual is a party to the contract entered into between, on the one hand, his employer, the corporation referred to in that subparagraph iii of which he is a shareholder or the partnership of which he is a member, as the case may be, and, on the other hand, the corporation in respect of which the said definition applies, pursuant to which the employee or the individual, as the case may be, undertakes to personally provide services as part of the production of the property referred to in the said definition;

(d)  (subparagraph repealed);

(d.1)  paragraph b of the definition shall be read as if there were no reference, in subparagraphs ii and iii, to the words “having an establishment in Québec” and, in subparagraph iv, to the words “carrying on a business in Québec”, where the property is an animated film the main filming or taping of which began on or before 25 March 2001;

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property is to be reduced, where applicable, by the aggregate of all amounts each of which is the lesser of the particular amount that corresponds to the salaries or wages described in paragraph a of that definition or to the portion of the remuneration described in any of subparagraphs i to iv of paragraph b of that definition, that are included in that labour expenditure of the corporation for the year, and the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the particular amount that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year,

ii.  the amount of any benefit or advantage attributable to the particular amount that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, and

iii.  if the particular amount corresponds to the portion of the remuneration described in any of subparagraphs i to iv of paragraph b of that definition, the amount of any government assistance and non-government assistance that a person or partnership with whom or with which the corporation is not dealing at arm’s length has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, that is attributable to services rendered by an individual or to the wages of the person’s or partnership’s eligible employees that are referred to in that subparagraph;

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, an amount of assistance received by a corporation, another person or a partnership, as the case may be, is deemed to be repaid by the corporation, the other person or the partnership in a taxation year, pursuant to a legal obligation, if that amount

(a)  reduced, for the purpose of computing an amount that a corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the corporation, the other person or the partnership; and

(c)  ceased in the taxation year to be an amount that the corporation, the other person or the partnership may reasonably expect to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing the prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph shall be read with “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property; and

(b)  (subparagraph repealed);

(c)  may not be reimbursed if the property is not operated as first anticipated.

In the case of property referred to in the first paragraph of section 1029.8.35.2,

(a)  the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph, in respect of that property, shall be read with “100/10.5 or 100/22.17”, wherever it appears, replaced by “100/9.1875 or 100/19.3958”;

(b)  the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph, in respect of that property, shall be read with “60/7”, wherever it appears, replaced by “100/10.2083”; and

(c)  the definition of “qualified labour expenditure” in the first paragraph, in respect of the property, shall be read with “250%”, wherever it appears, replaced by “253.97%” if the property is property referred to in subparagraph a of the first paragraph of section 1029.8.35.2 or by “342.85%” in any other case.

In the case of property referred to in the second paragraph of section 1029.8.35.2, the definition of “qualified labour expenditure” in the first paragraph shall be read, in respect of that property, with “250%”, wherever it appears, replaced by “20/9” if the property is property referred to in subparagraph a of the first paragraph of section 1029.8.35.2, or by “300%” in any other case.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126; 2007, c. 12, s. 147.

2006-12-06

1029.8.34. In this division,

“computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the portion of each of the amounts described in paragraph a of the definition of “labour expenditure” and in any of subparagraphs i to iv of paragraph b of that definition, where applicable, included in the portion of the labour expenditure of the corporation for the year, that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, up to the portion of each of those amounts, as the case may be, and

ii.  the amount of any benefit or advantage attributable to the portion of each of the amounts described in paragraph a of the definition of “labour expenditure” and in any of subparagraphs i to iv of paragraph b of that definition, where applicable, included in the portion of the labour expenditure of the corporation for the year, that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, up to the portion of each of those amounts, as the case may be;

“eligible employee” of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

“expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the portion of each of the amounts described in paragraph a of the definition of “labour expenditure” and in any of subparagraphs i to iv of paragraph b of that definition, where applicable, included in the portion of the labour expenditure of the corporation for the year, that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, up to the portion of each of those amounts, as the case may be, and

ii.  the amount of any benefit or advantage attributable to the portion of each of the amounts described in paragraph a of the definition of “labour expenditure” and in any of subparagraphs i to iv of paragraph b of that definition, where applicable, included in the portion of the labour expenditure of the corporation for the year, that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, up to the portion of each of those amounts, as the case may be;

“labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation,

i.  to an individual, to the extent that that portion of the remuneration can reasonably be attributed either to services provided by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who provided services as part of the production of the property,

ii.  to a particular corporation having an establishment in Québec, other than a corporation referred to in subparagraph iii, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who provided services as part of the production of the property,

iii.  to a corporation having an establishment in Québec all the issued capital stock of which, except the director’s qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration can reasonably be attributed to services provided by the individual as part of the production of the property, or

iv.  to a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services provided, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who provided services as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of paragraph a or b if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

“qualified computer-aided special effects and animation expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made by the corporation in the year, pursuant to a legal obligation, of any assistance referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “qualified computer-aided special effects and animation expenditure” in respect of a taxation year for which the corporation is a qualified corporation or of any other assistance referred to in subparagraph i of subparagraph c of the first paragraph of section 1129.2 in relation to the property, not exceeding 60/7 of the tax under Part III.1 which the corporation is required to pay in a taxation year preceding the year by reason of the said subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 60/7 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “computer-aided special effects and animation expenditure”, reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year and that it has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 60/7 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified corporation”, in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles to the effect that at least 75% of its production costs for the preceding year were incurred in relation to productions broadcast by unrelated third parties;

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

“qualified expenditure for services rendered outside the Montréal area” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made by the corporation in the year, pursuant to a legal obligation, of any assistance referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in respect of a taxation year for which the corporation is a qualified corporation or of any other assistance referred to in subparagraph i of subparagraph c of the first paragraph of section 1129.2 in relation to the property not exceeding the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year by reason of that subparagraph i in relation to such assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of “expenditure for services rendered outside the Montréal area”, reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year and that it has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“qualified labour expenditure” of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  a repayment made by the corporation in the year, pursuant to a legal obligation, of any assistance referred to, in respect of the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation or of any other assistance referred to in subparagraph i of subparagraph c of the first paragraph of section 1129.2 in respect of the property not exceeding 250% of the tax under Part III.1 which the corporation is required to pay in a taxation year preceding the year by reason of the said subparagraph i in respect of such assistance, and

(2.1)  (subparagraph repealed),

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 250% of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year, and

(2)  the amount of any benefit or advantage that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year and that it has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 250% of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

“Québec film production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

“regional corporation”, in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“regional production” means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

“salary or wages” means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of “labour expenditure” set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of the said definition in respect of an employee referred to in subparagraph i, ii or iv of the said paragraph b or an individual referred to in subparagraph iii or iv of the said paragraph b only if that employee or individual is a party to the contract entered into between, on the one hand, his employer, the corporation referred to in that subparagraph iii of which he is a shareholder or the partnership of which he is a member, as the case may be, and, on the other hand, the corporation in respect of which the said definition applies, pursuant to which the employee or the individual, as the case may be, undertakes to personally provide services as part of the production of the property referred to in the said definition;

(d)  (subparagraph repealed);

(d.1)  paragraph b of the definition shall be read as if there were no reference, in subparagraphs ii and iii, to the words “having an establishment in Québec” and, in subparagraph iv, to the words “carrying on a business in Québec”, where the property is an animated film the main filming or taping of which began on or before 25 March 2001;

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property shall be reduced, where applicable, by the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to each of the amounts described in paragraph a of that definition and in any of subparagraphs i to iv of paragraph b of that definition, where applicable, included in that labour expenditure of the corporation for the year, that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, up to each of those amounts, as the case may be, and

ii.  the amount of any benefit or advantage attributable to each of the amounts described in paragraph a of that definition and in any of subparagraphs i to iv of paragraph b of that definition, where applicable, included in that labour expenditure of the corporation for the year, that a person or partnership has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, up to each of those amounts, as the case may be; and

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of “qualified expenditure for services rendered outside the Montréal area”, “qualified computer-aided special effects and animation expenditure” and “qualified labour expenditure” in the first paragraph, an amount of assistance is deemed to be repaid by a qualified corporation in a taxation year, pursuant to a legal obligation, where that amount

(a)  reduced, for the purpose of computing an amount that the qualified corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the qualified corporation, because of subparagraph ii of paragraph a of the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the qualified corporation, because of subparagraph ii of paragraph a of the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the qualified corporation, because of paragraph b of the definition of “expenditure for services rendered outside the Montréal area” in the first paragraph,

ii.  a labour expenditure of the qualified corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the qualified corporation, because of subparagraph ii of paragraph a of the definition of “qualified labour expenditure” in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the qualified corporation, because of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph;

(b)  was not received by the qualified corporation; and

(c)  ceased in the taxation year to be an amount that the qualified corporation can reasonably be expected to receive.

For the purposes of paragraph b of the definitions of “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property as depreciation up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of “labour expenditure”, “qualified computer-aided special effects and animation expenditure”, “qualified expenditure for services rendered outside the Montréal area” and “qualified labour expenditure” in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing the prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of “qualified expenditure for services rendered outside the Montréal area” and “expenditure for services rendered outside the Montréal area” in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of “computer-aided special effects and animation expenditure” in the first paragraph, subparagraph i of paragraph b of the definition of “labour expenditure” in that first paragraph shall be read with “if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services” inserted after “individual personally”.

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property;

(b)  is incurred totally in connection with the stages of production of the property referred to in paragraph a of the definition of “labour expenditure” in the first paragraph; and

(c)  may not be reimbursed if the property is not operated as first anticipated.

In the case of property referred to in the first paragraph of section 1029.8.35.2,

(a)  the definition of “qualified expenditure for services rendered outside the Montréal area” in the first paragraph, in respect of that property, shall be read with “100/10.5 or 100/22.17”, wherever it appears, replaced by “100/9.1875 or 100/19.3958”;

(b)  the definition of “qualified computer-aided special effects and animation expenditure” in the first paragraph, in respect of that property, shall be read with “60/7”, wherever it appears, replaced by “100/10.2083”; and

(c)  the definition of “qualified labour expenditure” in the first paragraph, in respect of the property, shall be read with “250%”, wherever it appears, replaced by “253.97%” if the property is property referred to in subparagraph a of the first paragraph of section 1029.8.35.2 or by “342.85%” in any other case.

In the case of property referred to in the second paragraph of section 1029.8.35.2, the definition of “qualified labour expenditure” in the first paragraph shall be read, in respect of that property, with “250%”, wherever it appears, replaced by “20/9” if the property is property referred to in subparagraph a of the first paragraph of section 1029.8.35.2, or by “300%” in any other case.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112; 2006, c. 36, s. 126.

2006-06-13

1029.8.34. In this division,

"computer-aided special effects and animation expenditure" of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the portion of each of the amounts described in paragraph a of the definition of “labour expenditure” and in any of subparagraphs i to iv of paragraph b of that definition, where applicable, included in the portion of the labour expenditure of the corporation for the year, that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, up to the portion of each of those amounts, as the case may be, and

ii.  the amount of any benefit or advantage attributable to the portion of each of the amounts described in paragraph a of the definition of “labour expenditure” and in any of subparagraphs i to iv of paragraph b of that definition, where applicable, included in the portion of the labour expenditure of the corporation for the year, that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, up to the portion of each of those amounts, as the case may be;

"eligible employee" of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

"expenditure for services rendered outside the Montréal area" of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to the portion of each of the amounts described in paragraph a of the definition of “labour expenditure” and in any of subparagraphs i to iv of paragraph b of that definition, where applicable, included in the portion of the labour expenditure of the corporation for the year, that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, up to the portion of each of those amounts, as the case may be, and

ii.  the amount of any benefit or advantage attributable to the portion of each of the amounts described in paragraph a of the definition of “labour expenditure” and in any of subparagraphs i to iv of paragraph b of that definition, where applicable, included in the portion of the labour expenditure of the corporation for the year, that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, up to the portion of each of those amounts, as the case may be;

"labour expenditure" of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation,

i.  to an individual, to the extent that that portion of the remuneration can reasonably be attributed either to services provided by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who provided services as part of the production of the property,

ii.  to a particular corporation having an establishment in Québec, other than a corporation referred to in subparagraph iii, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who provided services as part of the production of the property,

iii.  to a corporation having an establishment in Québec all the issued capital stock of which, except the director’s qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration can reasonably be attributed to services provided by the individual as part of the production of the property, or

iv.  to a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services provided, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who provided services as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of paragraph a or b if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

"qualified computer-aided special effects and animation expenditure" of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made by the corporation in the year, pursuant to a legal obligation, of any assistance referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of "qualified computer-aided special effects and animation expenditure" in respect of a taxation year for which the corporation is a qualified corporation or of any other assistance referred to in subparagraph i of subparagraph c of the first paragraph of section 1129.2 in relation to the property, not exceeding 60/7 of the tax under Part III.1 which the corporation is required to pay in a taxation year preceding the year by reason of the said subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 60/7 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of "computer-aided special effects and animation expenditure", reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(2)  the amount of any benefit or advantage that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of "computer-aided special effects and animation expenditure", reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year and that it has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 60/7 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

"qualified corporation", in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles to the effect that at least 75% of its production costs for the preceding year were incurred in relation to productions broadcast by unrelated third parties;

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

"qualified expenditure for services rendered outside the Montréal area" of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made by the corporation in the year, pursuant to a legal obligation, of any assistance referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of "expenditure for services rendered outside the Montréal area" in respect of a taxation year for which the corporation is a qualified corporation or of any other assistance referred to in subparagraph i of subparagraph c of the first paragraph of section 1129.2 in relation to the property not exceeding the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year by reason of that subparagraph i in relation to such assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of "expenditure for services rendered outside the Montréal area", reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(2)  the amount of any benefit or advantage that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of "expenditure for services rendered outside the Montréal area", reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year and that it has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

"qualified labour expenditure" of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  a repayment made by the corporation in the year, pursuant to a legal obligation, of any assistance referred to, in respect of the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation or of any other assistance referred to in subparagraph i of subparagraph c of the first paragraph of section 1129.2 in respect of the property not exceeding 250% of the tax under Part III.1 which the corporation is required to pay in a taxation year preceding the year by reason of the said subparagraph i in respect of such assistance,

(2.1)  (subparagraph repealed), and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 250% of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year, and

(2)  the amount of any benefit or advantage that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year and that it has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 250% of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

"Québec film production" means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

"regional corporation", in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

"regional production" means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

"salary or wages" means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of "labour expenditure" set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of the said definition in respect of an employee referred to in subparagraph i, ii or iv of the said paragraph b or an individual referred to in subparagraph iii or iv of the said paragraph b only if that employee or individual is a party to the contract entered into between, on the one hand, his employer, the corporation referred to in that subparagraph iii of which he is a shareholder or the partnership of which he is a member, as the case may be, and, on the other hand, the corporation in respect of which the said definition applies, pursuant to which the employee or the individual, as the case may be, undertakes to personally provide services as part of the production of the property referred to in the said definition;

(d)  (subparagraph repealed);

(d.1)  paragraph b of the definition shall be read as if there were no reference, in subparagraphs ii and iii, to the words "having an establishment in Québec" and, in subparagraph iv, to the words "carrying on a business in Québec", where the property is an animated film the main filming or taping of which began on or before 25 March 2001;

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property shall be reduced, where applicable, by the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to each of the amounts described in paragraph a of that definition and in any of subparagraphs i to iv of paragraph b of that definition, where applicable, included in that labour expenditure of the corporation for the year, that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, up to each of those amounts, as the case may be, and

ii.  the amount of any benefit or advantage attributable to each of the amounts described in paragraph a of that definition and in any of subparagraphs i to iv of paragraph b of that definition, where applicable, included in that labour expenditure of the corporation for the year, that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, up to each of those amounts, as the case may be; and

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of "qualified expenditure for services rendered outside the Montréal area", "qualified computer-aided special effects and animation expenditure" and "qualified labour expenditure" in the first paragraph, an amount of assistance is deemed to be repaid by a qualified corporation in a taxation year, pursuant to a legal obligation, where that amount

(a)  reduced, for the purpose of computing an amount that the qualified corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the qualified corporation, because of subparagraph ii of paragraph a of the definition of "qualified computer-aided special effects and animation expenditure" in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the qualified corporation, because of subparagraph ii of paragraph a of the definition of "qualified expenditure for services rendered outside the Montréal area" in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the qualified corporation, because of paragraph b of the definition of "expenditure for services rendered outside the Montréal area" in the first paragraph,

ii.  a labour expenditure of the qualified corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the qualified corporation, because of subparagraph ii of paragraph a of the definition of "qualified labour expenditure" in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the qualified corporation, because of paragraph b of the definition of "computer-aided special effects and animation expenditure" in the first paragraph;

(b)  was not received by the qualified corporation; and

(c)  ceased in the taxation year to be an amount that the qualified corporation can reasonably be expected to receive.

For the purposes of paragraph b of the definitions of "qualified computer-aided special effects and animation expenditure", "qualified expenditure for services rendered outside the Montréal area" and "qualified labour expenditure" in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property as depreciation up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of "labour expenditure", "qualified computer-aided special effects and animation expenditure", "qualified expenditure for services rendered outside the Montréal area" and "qualified labour expenditure" in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing the prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of "qualified expenditure for services rendered outside the Montréal area" and "expenditure for services rendered outside the Montréal area" in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of "computer-aided special effects and animation expenditure" in the first paragraph, subparagraph i of paragraph b of the definition of "labour expenditure" in that first paragraph shall be read with "if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services" inserted after "individual personally".

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property;

(b)  is incurred totally in connection with the stages of production of the property referred to in paragraph a of the definition of "labour expenditure" in the first paragraph; and

(c)  may not be reimbursed if the property is not operated as first anticipated.

In the case of property referred to in the first paragraph of section 1029.8.35.2,

(a)  the definition of "qualified expenditure for services rendered outside the Montréal area" in the first paragraph, in respect of that property, shall be read with "100/10.5 or 100/22.17", wherever it appears, replaced by "100/9.1875 or 100/19.3958";

(b)  the definition of "qualified computer-aided special effects and animation expenditure" in the first paragraph, in respect of that property, shall be read with "60/7", wherever it appears, replaced by "100/10.2083"; and

(c)  the definition of "qualified labour expenditure" in the first paragraph, in respect of the property, shall be read with "250%", wherever it appears, replaced by "253.97%" if the property is property referred to in subparagraph a of the first paragraph of section 1029.8.35.2 or by "342.85%" in any other case.

In the case of property referred to in the second paragraph of section 1029.8.35.2, the definition of "qualified labour expenditure" in the first paragraph shall be read, in respect of that property, with "250%", wherever it appears, replaced by "20/9" if the property is property referred to in subparagraph a of the first paragraph of section 1029.8.35.2, or by "300%" in any other case.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240; 2006, c. 13, s. 112.

2006-03-01

1029.8.34. In this division,

"computer-aided special effects and animation expenditure" of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to an amount paid for activities connected with computer-aided special effects and animation and carried on in Québec as part of the production of the property and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to that portion of the labour expenditure of the corporation, that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and

ii.  the amount of any benefit or advantage attributable to that portion of the labour expenditure of the corporation, that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year;

"eligible employee" of an individual, a corporation or a partnership means, in respect of a property that is a Québec film production, an individual resident in Québec at any time in the calendar year during which the individual renders services as part of the production of the property;

"expenditure for services rendered outside the Montréal area" of a corporation for a taxation year in respect of a property that is a Québec film production means

(a)  where the corporation is not a qualified corporation for the year, an amount equal to zero; and

(b)  in any other case, an amount equal to the amount by which the portion of a labour expenditure of the corporation for the year that is directly attributable to services rendered in the year in Québec, outside the Montréal area, in relation to a regional production and that is indicated, by budgetary item, on a document that the Société de développement des entreprises culturelles encloses with the advance ruling given or the certificate issued to the corporation in relation to the property, exceeds the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to that portion of the labour expenditure of the corporation, that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and

ii.  the amount of any benefit or advantage attributable to that portion of the labour expenditure of the corporation, that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year;

"labour expenditure" of a corporation for a taxation year in respect of a property that is a Québec film production means, subject to the second paragraph, the aggregate of the following amounts to the extent that they are reasonable under the circumstances and included in the production cost, cost or capital cost, as the case may be, of the property to the corporation:

(a)  the salaries or wages directly attributable to the property that are incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the salaries or wages that are incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, to the extent that they relate to services rendered in relation to the stages of production of the property, from the script stage to the post-production stage, or in relation to another stage of production of the property that is carried out after the post-production stage within a period that is reasonable to the Minister but that must not extend beyond the date provided for in the fifth paragraph, and that are paid by the corporation to its eligible employees;

(b)  the portion of the remuneration, other than salary or wages, that is incurred in the year by the corporation and, where the year is the taxation year in which the corporation files an application for an advance ruling or, in the absence of such an application, an application for a certificate in respect of the property with the Société de développement des entreprises culturelles, the portion of the remuneration that was incurred by the corporation in a year preceding the year in which the corporation filed the application for an advance ruling or a certificate, in relation to the stages of production referred to in paragraph a of the property and that is paid by the corporation,

i.  to an individual, to the extent that that portion of the remuneration can reasonably be attributed either to services provided by the individual personally as part of the production of the property or to the wages of the individual’s eligible employees who provided services as part of the production of the property,

ii.  to a particular corporation having an establishment in Québec, other than a corporation referred to in subparagraph iii, a corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission, or a corporation that is not dealing at arm’s length with a corporation holding such a licence, to the extent that that portion of the remuneration is reasonably attributable to the wages of the particular corporation’s eligible employees who provided services as part of the production of the property,

iii.  to a corporation having an establishment in Québec all the issued capital stock of which, except the director’s qualifying shares, belongs to an individual and whose activities consist mainly in providing the services of that individual, to the extent that that portion of the remuneration can reasonably be attributed to services provided by the individual as part of the production of the property, or

iv.  to a partnership carrying on a business in Québec, to the extent that that portion of the remuneration is reasonably attributable either to services provided, as part of the production of the property, by an individual who is a member of the partnership or to the wages of the partnership’s eligible employees who provided services as part of the production of the property; and

(c)  where the corporation is a subsidiary wholly-owned corporation of a particular corporation, the reimbursement made by the corporation of an expenditure that was incurred in a particular taxation year by the particular corporation in respect of the property and that would be included in the labour expenditure of the corporation in respect of the property for the particular year because of paragraph a or b if, where such is the case, the corporation had had such a particular taxation year and if the expenditure had been incurred by the corporation for the same purposes as it was by the particular corporation and had been paid at the same time and to the same person or partnership as it was paid by the particular corporation;

"qualified computer-aided special effects and animation expenditure" of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the computer-aided special effects and animation expenditure of the corporation for the year in respect of the property,

(2)  any repayment made by the corporation in the year, pursuant to a legal obligation, of any assistance referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of "qualified computer-aided special effects and animation expenditure" in respect of a taxation year for which the corporation is a qualified corporation or of any other assistance referred to in subparagraph i of subparagraph c of the first paragraph of section 1129.2 in relation to the property, not exceeding 60/7 of the tax under Part III.1 which the corporation is required to pay in a taxation year preceding the year by reason of the said subparagraph i in relation to that assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the computer-aided special effects and animation expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 60/7 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of "computer-aided special effects and animation expenditure", reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year, and

(2)  the amount of any benefit or advantage that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a computer-aided special effects and animation expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of "computer-aided special effects and animation expenditure", reduced the amount of that computer-aided special effects and animation expenditure of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year and that it has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified computer-aided special effects and animation expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 60/7 of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

"qualified corporation", in respect of a taxation year, means a corporation that, in the year, has an establishment in Québec and carries on there a Québec film or television production business that is a qualified business, but does not include

(a)  a corporation that, at any time in the year or during the 24 months preceding the year, is controlled, directly or indirectly in any manner whatever, by one or more persons not resident in Québec;

(a.1)  a corporation that, at any time in the year or during the 24 months preceding the year, would be controlled by a particular person, if each share of the capital stock of the corporation owned by a person not resident in Québec were owned by that particular person;

(a.2)  a corporation that is the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

(a.3)  a corporation that, at any time in the year or during the 24 months preceding the year, is not dealing at arm’s length with another corporation that holds a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission unless the corporation holds, for that year, a qualification certificate issued by the Société de développement des entreprises culturelles to the effect that at least 75% of its production costs for the preceding year were incurred in relation to productions broadcast by unrelated third parties;

(b)  (paragraph repealed);

(c)  a corporation that, in accordance with Book VIII, is exempt from tax for the year under this Part or that would be but for section 192;

(d)  (paragraph repealed);

(e)  (paragraph repealed);

"qualified expenditure for services rendered outside the Montréal area" of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of

(a)  the amount by which

i.  the aggregate of

(1)  the corporation’s expenditure for services rendered outside the Montréal area for the year in respect of the property,

(2)  any repayment made by the corporation in the year, pursuant to a legal obligation, of any assistance referred to, in relation to the property, in subparagraph ii or in paragraph b of the definition of "expenditure for services rendered outside the Montréal area" in respect of a taxation year for which the corporation is a qualified corporation or of any other assistance referred to in subparagraph i of subparagraph c of the first paragraph of section 1129.2 in relation to the property not exceeding the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the amount of the tax under Part III.1 that the corporation is required to pay in a taxation year preceding the year by reason of that subparagraph i in relation to such assistance, and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the corporation’s expenditure for services rendered outside the Montréal area or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified expenditure for services rendered outside the Montréal area of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 for a year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, pursuant to subparagraph i of paragraph b of the definition of "expenditure for services rendered outside the Montréal area", reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year, and

(2)  the amount of any benefit or advantage that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to an expenditure for services rendered outside the Montréal area of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, pursuant to subparagraph ii of paragraph b of the definition of "expenditure for services rendered outside the Montréal area", reduced the amount of that expenditure for services rendered outside the Montréal area of the corporation for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year and that it has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the corporation’s qualified expenditure for services rendered outside the Montréal area in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds the product obtained by multiplying 100/10.5 or 100/22.17, as the case may be, by the aggregate of all amounts each of which is a tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

"qualified labour expenditure" of a corporation for a taxation year in respect of a property that is a Québec film production means the lesser of the following amounts:

(a)  the amount by which

i.  the aggregate of

(1)  the labour expenditure of the corporation for the year in respect of the property,

(2)  a repayment made by the corporation in the year, pursuant to a legal obligation, of any assistance referred to, in respect of the property, in subparagraph ii or in subparagraph e of the second paragraph in respect of a taxation year for which the corporation is a qualified corporation or of any other assistance referred to in subparagraph i of subparagraph c of the first paragraph of section 1129.2 in respect of the property not exceeding 250% of the tax under Part III.1 which the corporation is required to pay in a taxation year preceding the year by reason of the said subparagraph i in respect of such assistance,

(2.1)  (subparagraph repealed), and

(3)  the amount by which the aggregate of all amounts each of which is, for a taxation year preceding the year and in respect of the property, the labour expenditure of the corporation or an amount determined under subparagraph 2, exceeds the amount by which the aggregate of all amounts each of which is a qualified labour expenditure of the corporation in respect of the property, for a taxation year that precedes the year, exceeds 250% of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 for a taxation year preceding the year by reason of subparagraph i of subparagraph c of the first paragraph of section 1129.2, in relation to assistance referred to in subparagraph ii, exceeds

ii.  the aggregate of

(1)  the amount of any government assistance and non-government assistance that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, to the extent that that amount has not, by virtue of subparagraph i of subparagraph e of the second paragraph, reduced the amount of that labour expenditure of the corporation for that preceding year, and

(2)  the amount of any benefit or advantage that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, that is attributable to a labour expenditure of the corporation for a taxation year preceding the year in respect of the property, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, to the extent that that amount has not, by virtue of subparagraph ii of subparagraph e of the second paragraph, reduced the amount of that labour expenditure for that preceding year; and

(b)  the amount by which

i.  50% of the amount by which the production costs directly attributable to the production of the property, other than an amount included in the production cost, cost or capital cost of the property to another corporation that is a qualified corporation, incurred by the corporation before the end of the year in respect of the property until the post-production stage or within a longer period that is reasonable to the Minister but that may not exceed the date provided for in the fifth paragraph, and paid by the corporation, exceeds the aggregate of

(1)  the amount of any government assistance and non-government assistance attributable to those costs that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for the year and that it has not repaid at that time pursuant to a legal obligation, and

(2)  the amount of any benefit or advantage attributable to those costs that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for the year, whether in the form of a reimbursement, compensation, guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property, or in any other form or manner, exceeds

ii.  the amount by which the aggregate of all amounts each of which is the qualified labour expenditure of the corporation in respect of the property, for a taxation year before the end of which an application for an advance ruling or, in the absence of such an application, an application for a certificate was filed in respect of that property with the Société de développement des entreprises culturelles and which precedes the year, exceeds 250% of the aggregate of all amounts each of which is tax that the corporation is required to pay under Part III.1 in respect of the property for a taxation year preceding the year;

"Québec film production" means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series in respect of which the Société de développement des entreprises culturelles gave a favourable advance ruling or issued a certificate for the purposes of this division;

"regional corporation", in relation to a taxation year, means a qualified corporation in respect of which the Société de développement des entreprises culturelle issues, for the year, a certificate certifying that the corporation qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

"regional production" means a Québec film production in respect of which the Société de développement des entreprises culturelles certifies, on the favourable advance ruling given or the certificate issued to a corporation in respect of the production, that the production qualifies for the purposes of subparagraph a.1 of the first paragraph of section 1029.8.35;

"salary or wages" means the income computed pursuant to Chapters I and II of Title II of Book III.

For the purposes of the definition of "labour expenditure" set forth in the first paragraph, the following rules apply:

(a)  for the purposes of paragraph a of the said definition, the salaries or wages directly attributable to a property are, where an employee directly undertakes, supervises or supports the production of the property, that portion of the salaries or wages, paid to or on behalf of that employee, that may reasonably be considered to be related to the production of the property;

(b)  remuneration, including a salary or wages, includes neither an expenditure included in the production cost of a property to a corporation and consisting of an amount otherwise included in the cost or capital cost of the property to another corporation that is a qualified corporation nor, for greater certainty, remuneration based on the profits or revenues derived from the operation of a property or an expenditure as remuneration that is, or may reasonably be considered to be, incurred by a corporation, as a mandatary, on behalf of another person;

(b.1)  remuneration, including a salary or wages, does not include remuneration paid for services rendered by a person who, in the opinion of the Société de développement des entreprises culturelles as indicated in the advance ruling given or the certificate issued in relation to property, assumes the role of the main character in the production of the property that is a docu-soap;

(c)  an amount may be included in the amount established under paragraph b of the said definition in respect of an employee referred to in subparagraph i, ii or iv of the said paragraph b or an individual referred to in subparagraph iii or iv of the said paragraph b only if that employee or individual is a party to the contract entered into between, on the one hand, his employer, the corporation referred to in that subparagraph iii of which he is a shareholder or the partnership of which he is a member, as the case may be, and, on the other hand, the corporation in respect of which the said definition applies, pursuant to which the employee or the individual, as the case may be, undertakes to personally provide services as part of the production of the property referred to in the said definition;

(d)  (subparagraph repealed);

(d.1)  paragraph b of the definition shall be read as if there were no reference, in subparagraphs ii and iii, to the words "having an establishment in Québec" and, in subparagraph iv, to the words "carrying on a business in Québec", where the property is an animated film the main filming or taping of which began on or before 25 March 2001;

(d.2)  (subparagraph repealed);

(e)  the amount of the labour expenditure of a corporation for a taxation year in respect of a property shall be reduced, where applicable, by the aggregate of

i.  the amount of any government assistance and non-government assistance attributable to that expenditure, that the corporation has received, is entitled to receive or may reasonably expect to receive on or before the corporation’s filing-due date for that year, and

ii.  the amount of any benefit or advantage attributable to that expenditure, whether in the form of a reimbursement, compensation or guarantee, in the form of proceeds of disposition of a property which exceed the fair market value of the property or in any other form or manner, that the corporation has obtained, is entitled to obtain or may reasonably expect to obtain on or before the corporation’s filing-due date for that year;

(f)  where, for a taxation year, a corporation is not a qualified corporation, its labour expenditure for the year in respect of a property is deemed nil.

For the purposes of subparagraph 2 of subparagraph i of paragraph a of the definitions of "qualified expenditure for services rendered outside the Montréal area", "qualified computer-aided special effects and animation expenditure" and "qualified labour expenditure" in the first paragraph, an amount of assistance is deemed to be repaid by a qualified corporation in a taxation year, pursuant to a legal obligation, where that amount

(a)  reduced, for the purpose of computing an amount that the qualified corporation is deemed to have paid to the Minister for a taxation year under section 1029.8.35,

i.  a qualified computer-aided special effects and animation expenditure of the qualified corporation, because of subparagraph ii of paragraph a of the definition of "qualified computer-aided special effects and animation expenditure" in the first paragraph,

i.1.  a qualified expenditure for services rendered outside the Montréal area of the qualified corporation, because of subparagraph ii of paragraph a of the definition of "qualified expenditure for services rendered outside the Montréal area" in the first paragraph,

i.2.  an expenditure for services rendered outside the Montréal area of the qualified corporation, because of paragraph b of the definition of "expenditure for services rendered outside the Montréal area" in the first paragraph,

ii.  a labour expenditure of the qualified corporation, because of subparagraph e of the second paragraph,

iii.  a qualified labour expenditure of the qualified corporation, because of subparagraph ii of paragraph a of the definition of "qualified labour expenditure" in the first paragraph, or

iv.  a computer-aided special effects and animation expenditure of the qualified corporation, because of paragraph b of the definition of "computer-aided special effects and animation expenditure" in the first paragraph;

(b)  was not received by the qualified corporation; and

(c)  ceased in the taxation year to be an amount that the qualified corporation can reasonably be expected to receive.

For the purposes of paragraph b of the definitions of "qualified computer-aided special effects and animation expenditure", "qualified expenditure for services rendered outside the Montréal area" and "qualified labour expenditure" in the first paragraph, the following rules apply:

(a)  production fees and general administration costs may be taken into account for the purpose of computing the production costs directly attributable to the production of property that is a Québec film production only to the extent that they are reasonable under the circumstances;

(b)  production costs directly attributable to the production of property that is a Québec film production include the portion of the cost of acquisition of a particular property, owned by the corporation and used by it as part of the production of the property, that is the portion of the depreciation of that particular property, for a taxation year, determined in accordance with the generally accepted accounting principles, relating to the use of that particular property by the corporation in the year, as part of the production of the property; and

(c)  the amount of an advantage attributable to production costs includes the portion of the proceeds of disposition for a corporation of a particular property used by it as part of the production of property that is a Québec film production that relates to the portion of the cost of acquisition of that particular property that is already included in the production costs of the property as depreciation up to the amount of the portion of the cost of acquisition of the particular property that is already included in the production costs of the property.

For the purposes of the definitions of "labour expenditure", "qualified computer-aided special effects and animation expenditure", "qualified expenditure for services rendered outside the Montréal area" and "qualified labour expenditure" in the first paragraph, the following rules apply:

(a)  the date to which those definitions refer is the date that is 18 months after the end of the corporation’s fiscal period that includes the date of recording of the first trial composite of the property or, in the case of a series, the date of recording of the last first trial composite of an episode or broadcast that is part of the series; and

(b)  no expenditure may be taken into consideration in computing a labour expenditure of a corporation for a taxation year in respect of a property that is a Québec film production, or production costs directly attributable to the production of such a property incurred before the end of a taxation year, unless the expenditure is paid at the time the corporation first files with the Minister the prescribed form containing the prescribed information provided for in the first paragraph of section 1029.8.35 for that taxation year.

For the purposes of the definitions of "qualified expenditure for services rendered outside the Montréal area" and "expenditure for services rendered outside the Montréal area" in the first paragraph, the Montréal area means the portion of the territory of Québec that is situated within 25 kilometres, by the shortest normally used road suitable for motor vehicles, from any point of the circumference of a circle having a radius of 25 kilometres the centre of which is the Papineau subway station.

For the purposes of paragraph b of the definition of "computer-aided special effects and animation expenditure" in the first paragraph, subparagraph i of paragraph b of the definition of "labour expenditure" in that first paragraph shall be read with "if the individual is resident in Québec at any time in the calendar year in which the individual rendered those services" inserted after "individual personally".

For the purposes of subparagraph b of the second paragraph, remuneration based on the profits and revenues derived from the operation of a property that is a Québec film production does not include remuneration included in the production cost, cost or capital cost, as the case may be, of the property to a corporation if that remuneration

(a)  is determined in particular on the basis of the area contemplated for the distribution or broadcasting of the property;

(b)  is incurred totally in connection with the stages of production of the property referred to in paragraph a of the definition of "labour expenditure" in the first paragraph; and

(c)  may not be reimbursed if the property is not operated as first anticipated.

In the case of property referred to in the first paragraph of section 1029.8.35.2,

(a)  the definition of "qualified expenditure for services rendered outside the Montréal area" in the first paragraph, in respect of that property, shall be read with "100/10.5 or 100/22.17", wherever it appears, replaced by "100/9.1875 or 100/19.3958";

(b)  the definition of "qualified computer-aided special effects and animation expenditure" in the first paragraph, in respect of that property, shall be read with "60/7", wherever it appears, replaced by "100/10.2083"; and

(c)  the definition of "qualified labour expenditure" in the first paragraph, in respect of the property, shall be read with "250%", wherever it appears, replaced by "253.97%" if the property is property referred to in subparagraph a of the first paragraph of section 1029.8.35.2 or by "342.85%" in any other case.

In the case of property referred to in the second paragraph of section 1029.8.35.2, the definition of "qualified labour expenditure" in the first paragraph shall be read, in respect of that property, with "250%", wherever it appears, replaced by "20/9" if the property is property referred to in subparagraph a of the first paragraph of section 1029.8.35.2, or by "300%" in any other case.

1992, c. 1, s. 177; 1993, c. 19, s. 122; 1993, c. 64, s. 167; 1994, c. 22, s. 321; 1995, c. 63, s. 174; 1996, c. 39, s. 273; 1997, c. 3, s. 61; 1997, c. 14, s. 219; 1997, c. 31, s. 143; 1997, c. 85, s. 254; 1999, c. 83, s. 189; 2000, c. 5, s. 255; 2000, c. 39, s. 143; 2001, c. 7, s. 144; 2001, c. 51, s. 105; 2002, c. 9, s. 56; 2003, c. 9, s. 198; 2004, c. 21, s. 300; 2005, c. 1, s. 230; 2005, c. 23, s. 153; 2005, c. 38, s. 240.