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P-5.1 - Act respecting the sectoral parameters of certain fiscal measures

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2022-06-08 Show full text at this date

SCHEDULE H

SOCIÉTÉ DE DÉVELOPPEMENT DES ENTREPRISES CULTURELLES

CHAPTER I

MEASURES COVERED BY THIS SCHEDULE

1.1. The Société de développement des entreprises culturelles administers the sectoral parameters of the following fiscal measures:

(1) the deduction in respect of a foreign worker holding a key position in a foreign production provided for in sections 737.22.0.9 to 737.22.0.11 of the Taxation Act (chapter I-3);

(2) the tax credit for Québec film productions provided for in sections 1029.8.34 to 1029.8.36 of the Taxation Act;

(3) the tax credit for film dubbing provided for in sections 1029.8.36.0.0.1 to 1029.8.36.0.0.3 of the Taxation Act;

(4) the film production services tax credit provided for in sections 1029.8.36.0.0.4 to 1029.8.36.0.0.6 of the Taxation Act;

(5) the tax credit for the production of sound recordings provided for in sections 1029.8.36.0.0.7 to 1029.8.36.0.0.9 of the Taxation Act;

(6) the tax credit for the production of performances provided for in sections 1029.8.36.0.0.10 to 1029.8.36.0.0.12 of the Taxation Act;

(7) the tax credit for book publishing provided for in sections 1029.8.36.0.0.13 to 1029.8.36.0.0.15 of the Taxation Act; and

(8) the tax credit for the production of multimedia events or environments presented outside Québec provided for in sections 1029.8.36.0.0.12.1 and 1029.8.36.0.0.12.2 of the Taxation Act.

CHAPTER II

SECTORAL PARAMETERS OF DEDUCTION IN RESPECT OF FOREIGN WORKER HOLDING KEY POSITION IN FOREIGN PRODUCTION

DIVISION I

INTERPRETATION AND GENERAL

2.1. In this chapter, unless the context indicates otherwise,

“film production services tax credit” has the meaning assigned by the first paragraph of section 5.1;

“production” means a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series;

“tax holiday for a foreign worker holding a key position in a foreign production” means the fiscal measure provided for in Title VII.3.3 of Book IV of Part I of the Taxation Act, under which an individual may deduct an amount in computing the individual’s taxable income for a taxation year.

2.2. An individual must obtain a certificate from the Société de développement des entreprises culturelles in respect of each eligible production for which the individual intends to claim the tax holiday for a foreign worker holding a key position in a foreign production.

2.3. The Société de développement des entreprises culturelles must, in order to determine whether a production is considered as an eligible production, apply the same rules as those provided for in sections 5.6 to 5.8 to determine whether a production is recognized as an eligible production for the purposes of the film production services tax credit.

DIVISION II

CERTIFICATE

2.4. A certificate issued to an individual under this chapter certifies that the individual works as a producer, an executive producer, an associate producer, a director, an assistant director, an artistic director, a director of photography, a musical director, a chief film editor, a set decorator, a financial controller, an accountant, a bookkeeper or a visual effects producer, supervisor or coordinator, in the course of the eligible production referred to in the certificate.

2.5. An individual may be recognized as a producer in respect of an eligible production if the individual is the person responsible for decision-making in respect of the eligible production throughout the project development and production processes.

CHAPTER III

SECTORAL PARAMETERS OF TAX CREDIT FOR QUÉBEC FILM PRODUCTIONS

DIVISION I

INTERPRETATION AND GENERAL

3.1. In this chapter, unless the context indicates otherwise,

“chroma key shooting” means any studio shooting in front of a plain coloured screen, generally blue or green, allowing, by means of electronic wizardry, the incorporation of objects, images or special effects in the final image;

“computer-aided special effects and animation” means special effects and animation sequences, as generally understood in the industry, created using digital technology, excluding effects that are strictly sound effects, subtitles and animation sequences essentially created by means of editing techniques;

“eligible online video service” means an online video service that carriesother pre-screened or pre-qualified content, is accessible in Québec, has Québecas part of its target audience and is considered to be an eligible online serviceby the Canadian Audio-Visual Certification Office;

“film” means a property that is a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series;

“labour expenditure” of a corporation for a taxation year in respect of a film means an expenditure that would be the corporation’s labour expenditure for the year in respect of the film for the purposes of the tax credit for Québec film productions if no reference were made to subparagraph e of the second paragraph of section 1029.8.34 of the Taxation Act;

“producer” in respect of a film means the individual responsible for decision-making in respect of the film throughout the project development and production processes;

“production costs” of a corporation in respect of a film means costs incurred by the corporation in respect of the film that are production costs referred to in the portion of subparagraph i of paragraph b of the definition of “qualified labour expenditure” in the first paragraph of section 1029.8.34 of the Taxation Act before subparagraph 1;

“tax credit for Québec film productions” means the fiscal measure provided for in Division II.6 of Chapter III.1 of Title III of Book IX of Part I of the Taxation Act, under which a corporation is deemed to have paid an amount to the Minister of Revenue on account of its tax payable under that Part for a taxation year;

“television broadcaster” means the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission.

Any reference made, in a provision of this chapter, to an amount incurred or paid, including a labour expenditure, costs, a remuneration, a talent fee or an advance, is to be replaced, if the provision applies in respect of a favourable advance ruling, by a reference to such an amount determined according to a budget.

In this chapter, a reference to a favourable advance ruling is a reference to the document certifying the favourable advance ruling given.

3.2. A corporation must obtain a favourable advance ruling or a qualification certificate from the Société de développement des entreprises culturelles in respect of each film for which it intends to claim the tax credit for Québec film productions.

In addition, a corporation must obtain one or more of the following certificates from the Société de développement des entreprises culturelles, as applicable:

(1) if the film is one for which the corporation intends to claim one or more of the following tax credit enhancements:

(a) the tax credit enhancement applicable to certain French-language productions, a certificate in respect of the film (in this chapter referred to as a “French-language production certificate”),

(b) the tax credit enhancement applicable to giant-screen films, a certificate in respect of the film (in this chapter referred to as a “giant-screen film certificate”), or

(c) the tax credit enhancement determined by reference to public financial assistance, a certificate in respect of the film (in this chapter referred to as a “certificate relating to the tax credit enhancement determined by reference to financial assistance”); and

(2) if it intends to avail itself of subparagraph a.1 of the first paragraph of section 1029.8.35 of the Taxation Act, a certificate in respect of the corporation as a regional corporation (in this chapter referred to as a “regional corporation certificate”).

If, at any time in the taxation year for which the corporation intends to benefit from the tax credit for Québec film productions or in the 24 months that precede that year, the corporation is not dealing at arm’s length with a corporation that is a television broadcaster or an eligible online video service provider, it must also obtain a certificate (in this chapter referred to as a “non-arm’s length certificate with regard to a television broadcaster” or a “non-arm’s length certificate with regard to an eligible online video service provider”, as the case may be) from the Société de développement des entreprises culturelles.

The certificate referred to in subparagraph 2 of the second paragraph must be obtained for each taxation year for which the corporation intends to avail itself in respect of a film of subparagraph a.1 of the first paragraph of section 1029.8.35 of the Taxation Act. Similarly, the non-arm’s length certificate with regard to a television broadcaster or the non-arm’s length certificate with regard to an eligible online video service provider, as the case may be, must be obtained for each taxation year referred to in the third paragraph for which the corporation intends to claim the tax credit for Québec film productions.

DIVISION II

FAVOURABLE ADVANCE RULING AND QUALIFICATION CERTIFICATE

3.3. A qualification certificate must be obtained for a film whose first trial composite is completed. If applicable, the qualification certificate confirms the favourable advance ruling given in respect of the film.

An application by a corporation for the issue of a qualification certificate in respect of a film must be filed,

(1) if the film was given a favourable advance ruling, within 18 months after the end of the corporation’s taxation year that includes the recording date of its first trial composite of the film; and

(2) in any other case, within three years after the end of that taxation year.

The Société de développement des entreprises culturelles may issue a qualification certificate to a corporation in respect of a film only if, at the time of the application for the qualification certificate, at least 95% of the amount that is the total production costs incurred by the corporation in respect of the film has been paid.

The Société de développement des entreprises culturelles must revoke a favourable advance ruling given to a corporation in respect of a film if the corporation fails to file an application for a qualification certificate in respect of the film within the time limit specified in the second paragraph or if such an application is denied. The effective date of the revocation is the date of coming into force of the favourable advance ruling.

3.4. A favourable advance ruling or a qualification certificate given or issued to a corporation under this chapter certifies that the film referred to in it is recognized as a Québec film production. In addition, the favourable advance ruling or the qualification certificate specifies, if applicable, that the film is a film in a foreign format.

If the corporation holds a valid regional corporation certificate, the Société de développement des entreprises culturelles must make sure, in the case of a co-produced film, that the following conditions have been met:

(1) the corporation is making the film either with another corporation in respect of which it is established, to the satisfaction of the Société de développement des entreprises culturelles, that it is a qualified corporation for the purposes of the tax credit for Québec film productions, or under a government agreement to which the Gouvernement du Québec, the Government of Canada or any of their departments, agencies or bodies is a party;

(2) the corporation is actively involved in its development; and

(3) the corporation’s share of the labour expenditure and production costs in respect of the film is a reasonable reflection of the corporation’s share of copyrights and revenues in the film, as well as its share of artistic, technical and financial responsibility with regard to the co-production of the film.

For the purposes of subparagraph b.1 of the second paragraph of section 1029.8.34 of the Taxation Act, the favourable advance ruling or the qualification certificate specifies, in the case of a docuseries, the name of the person who plays the role of the main character in the film.

If the film is a co-production, the favourable advance ruling or the qualification certificate specifies the corporation’s share, expressed as a percentage, of the labour expenditure and production costs in respect of the film for each taxation year for which they were incurred.

For the purposes of this section,

“labour expenditure” in respect of a film for a taxation year means the amount that would be obtained if, for each of the items included in the corporation’s labour expenditure in respect of the film for the taxation year, the amounts that the corporation incurred were replaced by all the amounts incurred in respect of the film and all those amounts were added together;

“production costs” in respect of a film for a taxation year means the aggregate of the costs incurred in respect of the film before the end of the year that are production costs referred to in the portion of subparagraph i of paragraph b of the definition of “qualified labour expenditure” in the first paragraph of section 1029.8.34 of the Taxation Act before subparagraph 1, or that would be such production costs had they been incurred by the corporation.

3.5. The Société de développement des entreprises culturelles attaches to the favourable advance ruling or the qualification certificate it gives or issues in respect of a film to a corporation referred to in subparagraph 2 of the second paragraph of section 3.2 a document specifying, by budgetary item, the amount that is the portion of the corporation’s labour expenditure in respect of the film, for any taxation year for which the favourable advance ruling or qualification certificate is given or issued, that relates to services rendered in Québec, outside the Montréal area, in relation to the film.

However, in the case of a co-produced film, the first paragraph applies only if the conditions of the second paragraph of section 3.4 are met.

In this section, the “Montréal area” means the portion of the territory of Québec located within 25 km, by the shortest passable road normally used, from any point of the circumference of a circle having a radius of 25 km the centre of which is the Papineau subway station.

3.6. The Société de développement des entreprises culturelles attaches to the favourable advance ruling or the qualification certificate it gives or issues in respect of a film for which a corporation intends to avail itself of subparagraph b of the first paragraph of section 1029.8.35 of the Taxation Act, a document specifying, by budgetary item, the amount that is the portion of the corporation’s labour expenditure in respect of the film, for any taxation year for which the favourable advance ruling or the qualification certificate is given or issued, that relates to eligible computer-aided special effects and animation activities, in relation to the film.

Activities that contribute directly to the creation of computer-aided special effects and animation and to chroma keying, such as motion capture, correction of animation curves, rendering, image retouching, graphics, filming, the use of computerized and automated animation benches, the use of computer-assisted automated cameras and chroma key shooting are considered to be eligible computer-aided special effects and animation activities.

3.7. A film other than an inter-provincial co-production may be recognized as a Québec film production if

(1) the film belongs to an eligible class of films;

(2) no part of the film belongs to a class of films described in section 3.9 or is a variety or magazine program other than those that are described in subparagraph 4 or 5 of the first paragraph of section 3.8; and

(3) the film meets the following requirements:

(a) the exploitation requirements of section 3.10,

(b) the production requirements of section 3.11,

(c) in the case of films with a running length of 75 minutes or longer, the creative personnel requirements of section 3.12, and

(d) the production costs requirements of section 3.13.

A film that is an inter-provincial co-production may be recognized as a Québec film production if

(1) the Québec part of the film belongs to an eligible class of films;

(2) the Québec part of the film meets

(a) the exploitation requirements of section 3.10, and

(b) the production requirements of section 3.11;

(3) at least 75% of the production costs incurred in respect of the Québec part of the film or, in the case of a serial film, in respect of the Québec part of all the episodes, other than the costs related to financing the film, is paid to individuals who were resident in Québec at the end of the calendar year (in this section referred to as the “particular year”) that precedes the year in which the application for a favourable advance ruling or a qualification certificate was filed in respect of the film, or to corporations or partnerships that had an establishment in Québec during the taxation year of the corporation in which the application was filed; and

(4) the corporation referred to in the first paragraph of section 3.2

(a) is co-producing the film with one or more co-producing corporations from one or more other provinces or territories of Canada,

(b) has a financial participation in the film equal to or greater than 20%,

(c) can show its effective independence with respect to the other corporations involved in the co-production of the film,

(d) has the necessary rights to import the film into Québec, in the same proportion as its financial participation in the film and its share of the rights to the receipts from the film, and

(e) has a creative and technical participation in the co-production of the film at least equal to its financial participation in the co-production of the film.

However, subparagraph 4 of the second paragraph does not apply to a film in respect of which the Société de développement des entreprises culturelles considers that work was sufficiently advanced on 13 March 2008.

In the case of a film made under a government co-production agreement entered into by another government in Canada or by any department or agency of such a government, the rules of subparagraphs 1 to 3 of the second paragraph also apply to the Canadian part of the film.

In addition, for the purpose of determining whether a film is an international co-production at a particular date, the policies and requirements of Telefilm Canada that apply on that date apply as if they were expressly specified in this division.

For the purposes of the second paragraph, “production costs” in respect of a film means the aggregate of the costs incurred in respect of the film by a corporation that are production costs referred to in the portion of subparagraph i of paragraph b of the definition of “qualified labour expenditure” in the first paragraph of section 1029.8.34 of the Taxation Act before subparagraph 1, or that would be such production costs had they been incurred by the corporation referred to in the first paragraph of section 3.2.

3.8. Subject to section 3.9, the following are eligible classes of films:

(1) fiction films, including films consisting entirely of sketches taken in full from a script and designed and arranged especially for television or online broadcasting;

(2) documentaries comprising at least 30 minutes of programming or 20 minutes of audiovisual content or, in the case of a series, at least 30 minutes of programming or 20 minutes of audiovisual content per episode, and documentaries intended for minors, which may comprise less;

(3) audiovisual magazine and variety programs, including variety programs featuring educational games, quizzes and contests for minors and designed and arranged especially for television or online broadcasting;

(4) audiovisual variety programs, including games, quizzes and contests, that are designed and arranged especially for television or online broadcasting and meet any of the following requirements:

(a) at least two thirds of their content consists of performances by performing artists, other than interviews, or of recordings of improvisation matches,

(b) they are talk show-type programs during which all or substantially all the subjects of discussion are artistic, literary, dramatic or musical events or works, or

(c) all or substantially all of their content consists of performances by performing artists, other than interviews, or of recordings of improvisation matches, and of discussions concerning artistic, literary, dramatic or musical events or works; and

(5) audiovisual magazine programs that are designed and arranged especially for television or online broadcasting and meet the following requirements:

(a) they consist of a series of at least seven episodes and are part of a program cycle,

(b) they are neither fiction, nor a reconstruction of actual events, nor reality television,

(d) each program covers a number of subjects, whether or not they belong to the same field of knowledge, and

(e) each program consists of independent segments of comparable length.

For the purposes of subparagraph b of subparagraph 5 of the first paragraph, a reality television production is an audiovisual production in which a situation is created and filmed to be edited into its final form. The situation features a place, a group of individuals and a theme.

3.9. The following are not eligible classes of films:

(1) films produced for industrial, commercial, institutional or business purposes;

(2) films produced for the purpose of teaching or learning a technique;

(3) films intended for an adult audience that contain explicit sex scenes;

(4) video clips;

(5) films featuring a sports event or a sports activity;

(6) news or public affairs programs, or news features;

(7) weather, road or stock market reports;

(8) gala, award or parade television programs that present a live or pre-recorded event, in real time, with or without modification during editing;

(9) games, quizzes and contests, in any form, except educational programs in the form of games, quizzes or contests intended for minors, and except the programs described in subparagraph 4 of the first paragraph of section 3.8;

(10) fundraising productions;

(11) reality television productions;

(12) “making of” productions; and

(13) films, other than documentaries, consisting exclusively or almost exclusively of stock footage.

For the purposes of subparagraph 11 of the first paragraph, a reality television production is an audiovisual production in which a situation is created and filmed to be edited into its final form. The situation features a place, a group of individuals and a theme.

3.10. The following exploitation requirements must be met by a film, as applicable:

(1) for a film whose primary market is the television market, there must be an undertaking from a television broadcaster to broadcast it in Québec;

(2) for a film whose primary market is the theatrical market,

(a) if the conditions under which a giant-screen film certificate may be obtained are met, there must be an undertaking that the film will be exploited in Canada in a public performance venue, and

(b) in any other case, there must be an undertaking by the holder of a distribution licence that the film will be exploited in Québec in a public performance venue primarily used for showing films of all classes;

(2.1) for a film whose primary market is the online broadcasting market,

(a) in the case of an eligible online video service by a provider that is a television broadcaster, there must be an undertaking by the broadcaster to make the film accessible in Québec through its eligible online video service, and

(b) in the case of an eligible online video service by another provider, there must be an undertaking by a holder of a general distributor’s licence to exploit the film in Québec and an undertaking by the provider to that holder to make the film accessible in Québec through the eligible online video service;

(3) if a film is not an original French-language film and the application for a favourable advance ruling or a qualification certificate is filed in its respect with an undertaking by a television broadcaster to broadcast it in French in Québec or by the holder of a distribution licence that the film will be exploited in French in theatres in Québec, the French dubbing of the film must be done in Québec, subject to the third paragraph;

(4) if a film is produced by a corporation that does not deal at arm’s length with a corporation that is a television broadcaster or an eligible online video service provider, it must be initially broadcast by a television broadcaster or an eligible online video service provider with which it deals at arm’s length;

(5) if a film is intended to be broadcast in Québec, close-captioning for the hearing-impaired is mandatory, unless the producer shows that it is impossible to satisfy this condition for technical reasons; and

(6) the producer must give an undertaking to have a film closed-captioned for the hearing-impaired before exploiting it on the video market in Québec.

For the purposes of subparagraph b of subparagraph 2 of the first paragraph, “class” means a class specified in section 81 of the Cinema Act (chapter C-18.1).

The requirement of subparagraph 3 of the first paragraph does not apply if a film is an international co-production involving a country of the Francophonie and, under the official co-production agreement, the foreign co-producer is responsible for delivering an original French version.

The application for a favourable advance ruling in respect of a film must be filed with the undertakings referred to in subparagraph 1, subparagraph b of subparagraphs 2 and 2.1 and subparagraph 6 of the first paragraph. Depending on the undertaking involved, when applying for a qualification certificate, the corporation must file a document confirming the television broadcasting of the film in Québec, its distribution in theatres in Québec, its online broadcasting accessible in Québec or its dubbing.

The application for a qualification certificate in respect of a film must be filed with the undertakings referred to in subparagraph a of subparagraphs 2 and 2.1 of the first paragraph.

3.11. The following production requirements must be met by a film:

(1) the position of producer must be held by an individual who was resident in Québec at the end of the calendar year (in this section referred to as the “particular year”) that precedes the year in which an application for a favourable advance ruling or a qualification certificate is filed in respect of the film; and

(2) the corporation filing the application must control the production of the film.

If there is a succession of producers during the development of the project or the production of the film because, for instance, of a change in ownership of the film, the requirement of subparagraph 1 of the first paragraph is considered to be met only if all of the producers were resident in Québec at the end of the particular year.

3.12. The creative personnel requirements are met by a film if the film obtains, in respect of its creative personnel, according to the rules of the third paragraph,

(1) a minimum of six points out of ten, calculated by awarding the number of points specified in the second paragraph for a particular function of that personnel only if the individual who wholly performs the function was resident in Québec at the end of the calendar year (in this section referred to as the “particular year”) that precedes the calendar year in which an application for a favourable advance ruling or a qualification certificate was filed in respect of the production; or

(2) a minimum of seven points out of ten, calculated by adding

(a) the total of the numbers each of which is the number of points specified in the second paragraph for a particular function of that personnel that is wholly performed by an individual who was resident in Québec at the end of the particular year, and

(b) the lesser of two and the total of the numbers each of which is the number of points specified in the second paragraph for a particular function of that personnel that is wholly performed by an individual who, at the end of the particular year, was not resident in Québec but was a Canadian citizen within the meaning of the Citizenship Act (R.S.C. 1985, c. C-29) or a permanent resident within the meaning of the Immigration and Refugee Protection Act (S.C. 2001, c. 27).

For the purposes of the first paragraph, the following number of points may be allotted to a film in respect of an individual:

(1) for the director, two points;

(2) for the screenwriter, two points;

(3) for the first lead actor, one point;

(4) for the second lead actor, one point;

(5) for the production designer, one point;

(6) for the director of photography, one point;

(7) for the music composer, one point; and

(8) for the chief film editor, one point.

The rules to which the first paragraph refers are the following:

(1) if the position of screenwriter is filled by more than one individual, the two points allotted for that function may, despite subparagraph 1 of the first paragraph and subparagraph a of subparagraph 2 of that paragraph, be taken into consideration only if all the individuals were resident in Québec at the end of the particular year or if one of them is

(a) an individual who was resident in Québec at the end of the particular year,

(b) the author of the script, provided that it is an original work or a film adaptation of a copyrighted work,

(d) the screenwriter who receives the highest fee;

(2) the identity of the first and second lead actors is determined not only on the basis of the remuneration paid, regardless of its form, but also on the basis of on-screen time;

(3) if there is no actor, the individual who performs the function of dancer, singer, variety artist, host, announcer, moderator or off-screen interviewer or voices the part of a character in an animated film, depending on the nature of the film, may be substituted;

(4) the individual who is the focus of a documentary film is not considered to be an actor;

(5) the point for the function of music composer is allotted only if the music created for the film is an original work;

(6) in the case of an animated film, the function of animation camera operator is substituted for that of director of photography and the function of design supervisor for that of production designer; and

(7) if there is no production designer, the art director may be substituted and in the absence of an art director, the head set designer may be substituted.

However, the creative personnel requirements are not met by a film if it does not obtain at least two of the points allotted for the functions of director and screenwriter and at least one of the points allotted for the functions of first and second lead actors.

A documentary that is unable to obtain the minimum number of points specified in the first paragraph because some functions listed in the second paragraph are not performed by anyone is deemed to have obtained the minimum number of points if all the individuals who perform such functions during the production were resident in Québec at the end of the particular year.

3.13. The following production cost requirements must be met by a film:

(1) in the case of a film with a running length of 75 minutes or longer,

(a) at least 75% of the amount that is the total post-production costs, including costs incurred for laboratory work, film cutting, sound editing and re-recording, and preparing and integrating film credits and music, is paid for services provided in Québec, and

(b) at least 75% of the amount that is the total production costs incurred by the corporation referred to in the first paragraph of section 3.2 in respect of the film, excluding the costs listed in subparagraph a, the remuneration of the producer and of the creative personnel listed in the second paragraph of section 3.12 and the costs related to financing the film, is paid to individuals who were resident in Québec at the end of the calendar year (in the second paragraph referred to as the “particular year”) that precedes the year in which the application for a favourable advance ruling or a qualification certificate was filed in respect of the film, or to corporations or partnerships that had an establishment in Québec during the taxation year of the corporation in which the application was filed; and

(2) in the case of a film with a running time of less than 75 minutes, at least 75% of the amount that is the total production costs incurred by the corporation referred to in the first paragraph of section 3.2 in respect of the film, other than the costs related to financing the film, is paid to individuals who were resident in Québec at the end of the calendar year (in the second paragraph referred to as the “particular year”) that precedes the year in which the application for a favourable advance ruling or a qualification certificate was filed in respect of the film, or to corporations or partnerships that had an establishment in Québec during the taxation year of the corporation in which the application was filed.

If the business of a corporation or partnership referred to in subparagraph b of subparagraph 1 of the first paragraph or in subparagraph 2 of the first paragraph consists essentially in offering the services of a shareholder, of a member of the partnership or of a person related to a shareholder of the corporation or to a member of the partnership, any amount paid to the corporation or partnership is considered to be an amount paid to a corporation or partnership that has an establishment in Québec only if the shareholder, the member or the related person who supplied the services in the course of the production of the film was resident in Québec at the end of the particular year.

If there is a succession of corporations during the development of the project or the production of the film because, for instance, of a change in ownership of the film, the requirements of the first paragraph are deemed to be met where it appears that they would be met if the total production costs incurred by each corporation were taken into consideration. However, each corporation must show, to the satisfaction of the Société de développement des entreprises culturelles, that it is a qualified corporation for the purposes of the tax credit for Québec film productions.

For the purpose of determining whether a film that meets the conditions for a giant-screen film certificate also meets the requirements of the first paragraph, costs related to production or post-production services not available in Québec are not to be taken into account.

3.14. Each episode of a serial film may be recognized as a Québec film production if the conditions of section 3.7 are met in its respect. In such a case, the Société de développement des entreprises culturelles specifies in the favourable advance ruling or the qualification certificate which episodes of the film are recognized.

3.14.1. For the purposes of the first paragraph of section 3.4, a film is a film in a foreign format if

(1) in the case of a film whose primary market is the television market or the online broadcasting market,

(a) a licence for adaptation in Québec was issued in respect of the film, which is derived from an audiovisual concept designed and arranged especially for television or online broadcasting, as the case may be, and is created outside Québec, and

(b) the licence specifies the format elements of the program or of the episodes that will form a series, such as the title, idea, structure and subjects, the description of the plot and of the characters, the target audience and the duration of each episode; or

(2) in the case of a film whose primary market is the theatrical market,

(a) the rights with respect to the film were granted for adaptation in Québec, and

(b) the film is a new version of a film previously brought to the screen that is not itself derived from a storyline adapted from another work, such as a literary or theatrical work, and the storyline of that new version reprises the plot and characters of the film previously brought to the screen.

DIVISION III

FRENCH-LANGUAGE PRODUCTION CERTIFICATE

3.15. A French-language production certificate issued to a corporation certifies that the film referred to in the certificate is eligible for the tax credit enhancement applicable to certain French-language productions.

3.16. A film is eligible for the tax credit enhancement applicable to certain French-language productions if

(1) it belongs to a class of eligible films; and

(2) the following requirements are met by the film:

(a) the screenwriting and exploitation requirements, and

(b) the creative personnel requirements.

3.17. The following are classes of eligible films:

(1) feature-length, medium-length and short fiction films, including co-produced feature-length films;

(2) one-off documentaries, including co-productions, intended mainly for exploitation in French-language markets; and

(3) productions intended for minors.

For the purposes of subparagraph 3 of the first paragraph, a production intended for minors means a French-language one-off or serial production intended for minors which

(1) is designed and produced according to their expectations rather than those of adults, features young protagonists and reflects reality from a young person’s point of view; and

(2) (subparagraph repealed);

(3) is not a family-oriented production.

3.18. The following screenwriting and exploitation requirements must be met by a film:

(1) in the case of a film intended for commercial theatrical exploitation, it is written and developed in French and its initial exploitation in Québec is in French; and

(2) in the case of a film intended for the television market or the online broadcasting market, it is written and developed in French, its financial structure includes 51% or more French-language television broadcasting or online broadcasting licences in dollar terms, and its initial broadcast in Québec is in French.

3.19. The following creative personnel requirements must be met by a film:

(1) it must obtain a minimum of five points out of seven in respect of its creative personnel, according to the allotment rules set out in the second paragraph and the following weighting:

(a) for the director, two points,

(b) for the screenwriter, two points,

(d) for the second lead actor, one point; and

(2) except for a co-production, at least 75% of the acting fees paid to individuals, other than individuals performing a function listed in subparagraph 1, are paid to individuals who were resident in Québec at the end of the calendar year (in this section referred to as the “particular year”) that precedes the calendar year in which an application for a favourable advance ruling or a qualification certificate is filed in respect of the film.

For the purposes of the first paragraph, the points are allotted in accordance with the following rules:

(1) the number of points specified in subparagraph 1 of the first paragraph for a particular function of the creative personnel is allotted only if the individual who wholly performs the function was resident in Québec at the end of the particular year; and

(2) the identity of the first and second lead actors is determined not only on the basis of remuneration, regardless of its form, but also on the basis of on-screen time.

However, a documentary that is unable to obtain the minimum number of points specified in subparagraph 1 of the first paragraph because some functions listed in that subparagraph are not performed by anyone is deemed to have obtained the minimum number of points if all the individuals who perform such functions during the production were resident in Québec at the end of the particular year.

In the case of a co-production, the requirements of this section, except the requirement of subparagraph 2 of the first paragraph, must be met in respect of the entire co-production and not only in respect of the Québec portion of the co-production.

DIVISION IV

GIANT-SCREEN FILM CERTIFICATE

3.20. A giant-screen film certificate issued to a corporation certifies that the film referred to in the certificate is eligible for the tax credit enhancement applicable to giant-screen films.

3.21. A giant-screen film as generally understood in the industry is considered to be a giant-screen film.

DIVISION V

CERTIFICATE RELATING TO THE TAX CREDIT ENHANCEMENT DETERMINED BY REFERENCE TO FINANCIAL ASSISTANCE

3.22. A certificate relating to the tax credit enhancement determined by reference to financial assistance issued to a corporation certifies that the film referred to in the certificate belongs to an eligible class of films for the tax credit enhancement determined by reference to public financial assistance.

3.23. The following are classes of films eligible for the tax credit enhancement determined by reference to public financial assistance:

(1) feature-length fiction films with a minimum running length of 75 minutes, other than those referred to in paragraph 2;

(2) series or miniseries, other than those referred to in paragraph 2.1, each episode of which is a fiction production with a minimum running length of 75 minutes;

(2.1) series or miniseries each episode of which is a fiction production that is an animation production where the minimum running length of the series or miniseries is 75 minutes; and

(3) one-off documentaries with a minimum running length of 30 minutes or with a minimum of 20 minutes of audiovisual content, and documentaries intended for minors, which may have a shorter running length.

DIVISION VI

REGIONAL CORPORATION CERTIFICATE

3.24. A regional corporation certificate issued to a corporation certifies that it is recognized as a regional corporation for the taxation year for which the application for the certificate was filed.

3.25. A corporation may be recognized as a regional corporation if

(1) it does not carry on its film or television production activities mainly within the Montréal area during the particular taxation year in which it files its application for a regional corporation certificate or during the 24-month period preceding that year;

(2) it deals at arm’s length with all corporations that carry on film or television production activities mainly within the Montréal area, at any time in the particular taxation year or the 24-month period preceding that year; and

(3) it is not directly or indirectly controlled in any manner whatever at any time in the particular taxation year or the 24-month period preceding that year, by one or more individuals domiciled in the Montréal area or by one or more corporations that carry on film or television production activities mainly within the Montréal area.

In this section, the “Montréal area” means the portion of the territory of Québec located within 25 km, by the shortest passable road normally used, from any point in a circle having a radius of 25 km the centre of which is the Papineau subway station.

DIVISION VII

NON-ARM’S LENGTH CERTIFICATE WITH REGARD TO A TELEVISION BROADCASTER OR AN ELIGIBLE ONLINE VIDEO SERVICE PROVIDER

3.26. An application for a non-arm’s length certificate with regard to a television broadcaster or a non-arm’s length certificate with regard to an eligible online video service provider for a particular taxation year must be filed by a corporation not later than six months after the end of its taxation year preceding the particular year.

To that end, the corporation must, on request, provide the Société de développement des entreprises culturelles with any document or information the latter considers necessary to enable it to determine the volume of independent productions produced by the corporation during the three taxation years preceding the particular year.

3.27. A non-arm’s length certificate with regard to a television broadcaster or a non-arm’s length certificate with regard to an eligible online video service provider issued to a corporation certifies that over 50% of its production costs for the last three taxation years, preceding the particular taxation year referred to in section 3.26, during which a film was produced, were incurred in relation to films broadcast by a television broadcaster or an eligible online video service provider with which the corporation deals at arm’s length

3.28. The Société de développement des entreprises culturelles may refuse to issue to a corporation, or may revoke, a non-arm’s length certificate with regard to a television broadcaster or a non-arm’s length certificate with regard to an eligible online video service provider if it becomes aware of a significant change in the volume of films produced by the corporation that are broadcast by the television broadcaster or the eligible online video service provider with which the corporation does not deal at arm’s length.

CHAPTER IV

SECTORAL PARAMETERS OF TAX CREDIT FOR FILM DUBBING

DIVISION I

INTERPRETATION AND GENERAL

4.1. In this chapter, unless the context indicates otherwise,

“film” means a property that is a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series;

“tax credit for film dubbing” means the fiscal measure provided for in Division II.6.0.0.1 of Chapter III.1 of Title III of Book IX of Part I of the Taxation Act, under which a corporation is deemed to have paid an amount to the Minister of Revenue on account of its tax payable under that Part for a taxation year.

4.2. A corporation must obtain a qualification certificate from the Société de développement des entreprises culturelles in respect of the dubbed version of each film for which it intends to claim the tax credit for film dubbing.

DIVISION II

QUALIFICATION CERTIFICATE

4.3. A qualification certificate issued to a corporation under this chapter certifies that the dubbed version of a film referred to in the qualification certificate is recognized as a qualified production of the corporation. It also specifies the date on which that version was completed.

An application for a qualification certificate in respect of the dubbed version of a film must be filed by a corporation with the Société de développement des entreprises culturelles within three years following the end of the corporation’s taxation year that includes the recording date of the dubbed master copy of the film.

4.4. A dubbed version of a film may be recognized as a qualified production of a corporation if

(1) the film belongs to an eligible class of films;

(2) no part of the film belongs to a class of films referred to in section 4.6 or is a variety or magazine program other than those described in subparagraph 4 or 5 of the first paragraph of section 4.5; and

(3) at least three quarters of the individuals who, for the purpose of producing the dubbed version, provided services relating to the actors’ performance and to stage management were resident in Québec at the end of the calendar year preceding the year in which the services were provided.

For the purposes of subparagraph 3 of the first paragraph, stage management means directing the actors during the recording of the dubbed version of the film.

If there is a succession of corporations during the dubbing of a film, the condition of subparagraph 3 of the first paragraph is deemed to be met provided it appears that the requirement would be met if all the individuals who provided services relating to the actors’ performance and to stage management to the corporations for the production of that dubbed version were taken into account. However, each of the corporations must show, to the satisfaction of the Société de développement des entreprises culturelles, that it is an eligible corporation for the purposes of the tax credit for film dubbing.

4.5. Subject to section 4.6, the following are eligible classes of films:

(1) fiction films, including films consisting entirely of sketches taken in full from a script and designed and arranged especially for television;

(2) documentaries comprising at least 30 minutes of programming or, in the case of a series, at least 30 minutes of programming per episode, and documentaries intended for minors, which may comprise less;

(3) television magazine and variety programs, including variety programs featuring educational games, quizzes and contests for minors;

(4) television variety programs, including games, quizzes and contests that meet any of the following requirements:

(a) at least two thirds of their content consists of performances by performing artists, other than interviews, or of recordings of improvisation matches,

(b) they are talk show-type programs during which all or substantially all the subjects of discussion are artistic, literary, dramatic or musical events or works, or

(5) television magazine programs that meet the following requirements:

(a) they consist of a series of at least seven episodes and are part of a program cycle,

(b) they are neither fiction, nor a reconstruction of actual events, nor reality television,

(d) each program covers a number of subjects, whether or not they belong to the same field of knowledge, and

(e) each program consists of independent segments of comparable length.

4.6. The following are not eligible classes of films:

(1) films produced for industrial, commercial, institutional or business purposes;

(2) films produced for the purpose of teaching or learning a technique;

(3) films intended for an adult audience that contain explicit sex scenes;

(4) video clips;

(5) films featuring a sports event or a sports activity;

(6) news or public affairs programs, or news features;

(7) weather, road or stock market reports;

(8) gala, award or parade television programs that present a live or pre-recorded event, in real time, with or without modification during editing;

(10) fundraising productions;

(11) reality television productions;

(12) “making of” productions; and

(13) films, other than documentaries, consisting exclusively or almost exclusively of stock footage.

For the purposes of subparagraph 11 of the first paragraph, a reality television production is an audiovisual production in which a situation is created and filmed to be edited in its final form. The situation features a place, a group of individuals and a theme.

4.7. In the case of a dubbed serial film, the dubbed version of each episode is recognized as a qualified production if the conditions of section 4.4 are met in its respect. In such a case, the Société de développement des entreprises culturelles specifies in the qualification certificate which episodes of the film are recognized.

CHAPTER V

SECTORAL PARAMETERS OF FILM PRODUCTION SERVICES TAX CREDIT

DIVISION I

INTERPRETATION AND GENERAL

5.1. In this chapter, unless the context indicates otherwise,

“computer-aided special effects and animation” means special effects and animation sequences, as generally understood in the industry, created using digital technology, excluding effects that are exclusively sound effects, subtitles and animation sequences essentially created by means of editing techniques;

“film” means a property that is a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series;

“film production services tax credit” means the fiscal measure provided for in Division II.6.0.0.2 of Chapter III.1 of Title III of Book IX of Part I of the Taxation Act, under which a corporation is deemed to have paid an amount to the Minister of Revenue on account of its tax payable under that Part for a taxation year;

“labour cost” of a corporation for a taxation year in respect of a film means the aggregate of all amounts each of which is an amount described in any of paragraphs a to c of the definition of “production costs” in the first paragraph of section 1029.8.36.0.0.4 of the Taxation Act that would be included in the corporation’s production costs for the year in respect of the film for the purposes of the film production services tax credit if no reference were made to subparagraph c of the third paragraph of that section;

“television broadcaster” means the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission.

Any reference made, in a provision of this chapter, to an amount incurred or paid, including costs, a remuneration, a talent fee or an advance, is to be replaced, when necessary, by a reference to such an amount determined according to a budget.

In this chapter, a reference to a favourable advance ruling is a reference to the document certifying the favourable advance ruling given.

5.2. An approval certificate and a favourable advance ruling must be obtained from the Société de développement des entreprises culturelles in respect of each film for which a corporation intends to claim the film production services tax credit.

Where the corporation owns the copyright in the film, it alone may file applications for those documents. Otherwise, the corporation files the application for a favourable advance ruling while the corporation that owns the copyright files the application for an approval certificate.

If, at any time in the taxation year for which the corporation intends to benefit from the film production services tax credit or in the 24 months that precede that year, the corporation does not deal at arm’s length with a corporation that is a television broadcaster, it must also obtain a certificate (in this chapter referred to as a “non-arm’s length certificate”) from the Société de développement des entreprises culturelles. The certificate must be obtained for each taxation year for which the corporation intends to claim the tax credit.

DIVISION II

APPROVAL CERTIFICATE

5.3. An approval certificate issued to a corporation under this chapter certifies that the film referred to in the certificate is recognized as a qualified production. It also specifies the filing date of the application for its issue.

The Société de développement des entreprises culturelles issues an approval certificate to a corporation only if the corporation owns the copyright in the film.

Unless it is a qualified corporation for the purposes of the film production services tax credit, the corporation must send a copy of the approval certificate it was issued in respect of the film to each of the corporations that has entered into a service contract with it for the production of the film and intends to claim the tax credit in respect of the film.

5.4. A film may be recognized as a qualified production if

(1) the film belongs to an eligible class of films described in section 5.5;

(2) no part of the film belongs to a class of films referred to in section 5.6; and

(3) the following production costs are $250,000 or more:

(a) where a film is part of a series or miniseries, the production costs of the series or miniseries, or

(b) in any other case, the production costs of the film.

5.5. Subject to section 5.6, the following are eligible classes of films:

(1) fiction films, including films consisting entirely of sketches taken in full from a script and designed and arranged especially for television;

(3) (paragraph repealed);

(4) (paragraph repealed);

(5) (paragraph repealed).

For the purposes of subparagraph 2 of the first paragraph, virtual reality means the technology that enables real-time interactive simulations through computer-generated images and a virtual environment which a person can explore and whose purpose is to replace the real world with a virtual world and virtual objects. Virtual reality may apply to all sensory pathways.

5.6. The following are not eligible classes of films:

(1) films produced for industrial, commercial, institutional or business purposes;

(2) films produced for the purpose of teaching or learning a technique;

(3) films intended for an adult audience that contain explicit sex scenes;

(4) video clips;

(5) films featuring a sports event or a sports activity;

(6) news or public affairs programs, or news features;

(7) weather, road or stock market reports;

(8) gala, award or parade television programs that present a live or pre-recorded event, in real time, with or without modification during editing;

(9) games, quizzes and contests, in any form, except educational programs in the form of games, quizzes or contests intended for minors;

(10) fundraising productions;

(11) reality television productions;

(12) “making of” productions; and

(13) films, other than documentaries, consisting exclusively or almost exclusively of stock footage.

5.7. In the case of a serial film, each episode may be recognized as a qualified production if the conditions of section 5.4 are met in its respect. In such a case, the Société de développement des entreprises culturelles specifies in the approval certificate which episodes of the film are recognized.

DIVISION III

FAVOURABLE ADVANCE RULING

5.8. A favourable advance ruling given to a corporation under this chapter certifies that the corporation is recognized, in respect of the film referred to in the ruling, for the purposes of the definition of “qualified corporation” in the first paragraph of section 1029.8.36.0.0.4 of the Taxation Act. It also specifies whether the main filming or taping in Québec in respect of the film is carried out after 12 June 2009.

To be valid, an application for a favourable advance ruling filed in respect of a film must be accompanied by a copy of the approval certificate issued in relation to the film.

A corporation may be recognized in respect of a film if

(1) the corporation owns the copyright in the film throughout the period in which production of the film is carried out in Québec; or

(2) the corporation has entered into a service contract for the production of the film with the corporation that owns the copyright in the film.

However, the condition of subparagraph 2 of the third paragraph applies only if it is established, to the satisfaction of the Société de développement des entreprises culturelles, that the corporation that owns the copyright in the film does not meet the conditions, other than the condition related to obtaining a favourable advance ruling in respect of the film, to be a qualified corporation for the purposes of the film production services tax credit.

5.9. The Société de développement des entreprises culturelles attaches to the favourable advance ruling it gives to a corporation in respect of a film a document specifying, by budgetary item, the amount that is the portion of the corporation’s labour cost in respect of the film, for any taxation year for which the favourable advance ruling is given, that relates to eligible activities connected with the production of computer-aided special effects and animation, in relation to the film.

(1) if the film is recognized as a qualified production for which the corporation intends to avail itself of subparagraph a.1 of the first paragraph of section 1029.8.36.0.0.5 of the Taxation Act, the portion of the corporation’s labour cost in respect of the film, for any taxation year for which the favourable advance ruling is given, that relates to eligible activities connected with the production of computer-aided special effects and animation, in relation to the film; or

(2) if the film is recognized as a qualified low-budget production for which the corporation intends to avail itself of subparagraph b of the first paragraph of section 1029.8.36.0.0.5 of that Act, the portion of the corporation’s labour expenditure in respect of the film, for any taxation year for which the favourable advance ruling is given, that relates to eligible activities connected with the production of computer-aided special effects and animation, in relation to the film.

DIVISION IV

NON-ARM’S LENGTH CERTIFICATE

5.10. An application for a non-arm’s length certificate, for a particular taxation year, must be filed by a corporation not later than six months after the end of its taxation year preceding the particular year.

For that purpose, the corporation must, on request, provide the Société de développement des entreprises culturelles with any document or information the Société considers necessary to enable it to determine the volume of the independent productions produced by the corporation during the three taxation years preceding the particular year.

5.11. A non-arm’s length certificate issued to a corporation certifies that over 50% of its production costs for the last three taxation years preceding the particular taxation year referred to in section 5.10, during which a film was produced, were incurred in relation to films broadcast by a television broadcaster with which the corporation deals at arm’s length.

5.12. The Société de développement des entreprises culturelles may refuse to issue to a corporation, or may revoke, a non-arm’s length certificate if it becomes aware of a significant change in the volume of films produced by the corporation that are broadcast by the television broadcaster with which the corporation does not deal at arm’s length.

CHAPTER VI

SECTORAL PARAMETERS OF TAX CREDIT FOR PRODUCTION OF SOUND RECORDINGS

DIVISION I

INTERPRETATION AND GENERAL

6.1. In this chapter, unless the context indicates otherwise,

“film” means a property that is a motion picture film, a video tape or a set of episodes or broadcasts that are part of a series;

“labour expenditure” of a corporation for a taxation year in respect of a recording means an expenditure that would be the corporation’s labour expenditure for the year in respect of the recording for the purposes of the tax credit for the production of sound recordings if no reference were made to subparagraph c of the second paragraph of section 1029.8.36.0.0.7 of the Taxation Act;

“production costs” of a corporation at a particular time in respect of a recording means the aggregate of the costs incurred by the corporation in respect of the recording at or before that time that are production costs described in the portion of subparagraph i of paragraph b of the definition of “qualified labour expenditure” in the first paragraph of section 1029.8.36.0.0.7 of the Taxation Act that precedes subparagraph 1;

“recording” means a sound recording, a digital audiovisual recording or a clip;

“tax credit for the production of sound recordings” means the fiscal measure provided for in Division II.6.0.0.3 of Chapter III.1 of Title III of Book IX of Part I of the Taxation Act, under which a corporation is deemed to have paid an amount to the Minister of Revenue on account of its tax payable under that Part for a taxation year;

“television broadcaster” means the holder of a broadcasting licence issued by the Canadian Radio-television and Telecommunications Commission;

“title” means an organized set of information.

A reference, in a provision of this chapter, to an amount incurred or paid, including a labour expenditure, costs, a remuneration, a talent fee or an advance, is to be replaced, if the provision applies in respect of a favourable advance ruling, by a reference to such an amount determined according to a budget.

In this chapter, a reference to a favourable advance ruling is a reference to the document certifying the favourable advance ruling given.

6.2. A corporation must obtain a favourable advance ruling or a qualification certificate from the Société de développement des entreprises culturelles in respect of each recording for which it intends to claim the tax credit for the production of sound recordings.

Despite any other provision of this chapter, a favourable advance ruling or a qualification certificate is given or issued to a corporation, in respect of a particular recording, only if

(1) the corporation is a record company recognized by the Société de développement des entreprises culturelles; or

(2) the corporation has entered into an agreement, with a view to exploiting the particular recording, with another corporation that is a record company recognized by the Société de développement des entreprises culturelles.

DIVISION II

FAVOURABLE ADVANCE RULING AND QUALIFICATION CERTIFICATE

6.3. A qualification certificate must be obtained for a recording whose master is completed. If applicable, the qualification certificate confirms the favourable advance ruling given in respect of the recording.

An application by a corporation for the issue of a qualification certificate in respect of a recording must be filed,

(1) if the recording was given a favourable advance ruling, within 18 months after the end of the corporation’s taxation year that includes the completion date of the master of the recording; and

(2) in any other case, within three years after the end of that taxation year.

The Société de développement des entreprises culturelles must revoke a favourable advance ruling given to a corporation in respect of a recording if the corporation fails to file an application for a qualification certificate in respect of the recording within the time limit specified in the second paragraph or if such an application is denied. The effective date of the revocation is the date of coming into force of the favourable advance ruling.

6.4. A favourable advance ruling or a qualification certificate given or issued to a corporation under this chapter certifies that the recording referred to in it is recognized as a qualified sound recording, a qualified digital audiovisual recording or a qualified clip of the corporation. The favourable advance ruling or qualification certificate also states that the corporation is a record company recognized by the Société de développement des entreprises culturelles or a corporation that has entered into an agreement with such a corporation with a view to exploiting the recording.

Furthermore, the favourable advance ruling or qualification certificate specifies the filing date of the application for its issue. In the event that the filing date precedes 1 September 2014 but follows 4 June 2014, the Société de développement des entreprises culturelles specifies in the favourable advance ruling or qualification certificate whether or not the work in respect of the recording was sufficiently advanced on that latter date.

If the recording is a co-production, the favourable advance ruling or the qualification certificate specifies the corporation’s share, expressed as a percentage, of the labour expenditure and production costs in respect of the recording for each taxation year for which they were incurred. The corporation’s share must reflect, in respect of the recording, the corporation’s production costs at the end of the year and the corporation’s labour expenditure for the year and take into account the scope of the responsibilities assumed by the corporation in the co-production.

For the purposes of this section,

“labour expenditure” in respect of a recording for a taxation year means the amount that would be obtained if, for each of the items included in the corporation’s labour expenditure in respect of the recording for the taxation year, the amounts that the corporation incurred were replaced by all the amounts incurred in respect of the recording and all those amounts were added together;

“production costs” in respect of a recording for a taxation year means the aggregate of the costs incurred in respect of the recording before the end of the year that are production costs described in the portion of subparagraph i of paragraph b of the definition of “qualified labour expenditure” in the first paragraph of section 1029.8.36.0.0.7 of the Taxation Act that precedes subparagraph 1, or that would be such production costs had they been incurred by the corporation.

6.5. In order for a sound recording to be recognized as a qualified sound recording of a corporation,

(1) unless it is a recording of a comedy show, at least 60% of the sound recording, determined with reference to its length in minutes, must consist in musical content;

(2) the sound recording must obtain, in respect of its creative personnel, a minimum of five points out of nine, calculated by awarding the number of points specified in the second paragraph for a particular function of that personnel only if the individual who wholly performs the function was resident in Québec at the end of the calendar year (in this section referred to as the “particular year”) that precedes the calendar year in which the recording work began or, if the function performed by the individual is that of lyricist, scriptwriter or composer, was resident in Québec for a continuous period of at least five years prior to the beginning of the work;

(3) at least 75% of the amount that is the corporation’s production costs in respect of the sound recording, other than the remuneration paid to an individual who performs a function referred to in any of subparagraphs 1 to 8 of the second paragraph, must have been paid to individuals who were resident in Québec at the end of the particular year or to corporations that had an establishment in Québec in that year;

(4) the sound recording must be produced by the corporation to be released in the retail market for commercial exploitation purposes; and

(5) the sound recording must not have been produced for the purpose of teaching or learning a technique or to further the specific objectives of a business or a corporation, other than the one set out in subparagraph 4, and is not an audiobook, a sound effects database or a component of a game.

For the purposes of the first paragraph, the following number of points may be allotted to a recording in respect of an individual:

(1) for the lyricist or the scriptwriter,

(a) two points in the case of a recording of a comedy show, or

(b) one point in any other case;

(2) for the composer,

(a) two points in the case of an instrumental recording, or

(b) one point in any other case;

(3) for the artistic director, one point;

(4) for the musical director, one point;

(5) for the director, one point;

(6) for the music arranger, one point;

(7) for the sound engineer, one point; and

(8) for the featured artist, two points.

For the purposes of this section,

(1) where a function referred to in any of subparagraphs 1 to 7 of the second paragraph is performed by two or more individuals, the number of points awarded for that function must be taken into account, despite subparagraph 2 of the first paragraph, if the requirement of that subparagraph 2 would be met in respect of at least half of the individuals were it read without reference to “wholly” ; and

(2) whether an individual is the featured artist is determined on the basis of the individual’s remuneration, the individual’s designation as the featured artist in promotional materials and the length of the individual’s performance.

For the purposes of subparagraph 4 of the first paragraph, a sound recording is considered to be released in the retail market if it is offered on the Internet for downloading.

If there is a succession of particular corporations during the production of a sound recording, the condition of subparagraph 3 of the first paragraph is deemed to be met provided it appears that the requirements would be met if all the individuals and corporations that provided services to the particular corporations in respect of the production of the sound recording were taken into account. However, each particular corporation must show to the satisfaction of the Société de développement des entreprises culturelles that it is a qualified corporation for the purposes of the tax credit for the production of sound recordings.

6.6. In order for a digital audiovisual recording to be recognized as a qualified digital audiovisual recording of a corporation,

(1) the digital audiovisual recording must run at least

(a) 20 minutes, if it is intended for children under 13 years of age, or

(b) 30 minutes, in any other case;

(2) the main feature of the digital audiovisual recording must consist exclusively or almost exclusively of numbers by an artist that are taken from the artist’s performances, from never previously released productions or from clips;

(3) the digital audiovisual recording must obtain, in respect of its creative personnel, a minimum of five points out of nine, calculated by awarding the number of points specified in the second paragraph for a particular function of that personnel only if the individual who wholly performs the function was resident in Québec at the end of the calendar year (in this section referred to as the “particular year”) that precedes the calendar year in which the recording work began or, if the function performed by the individual is that of lyricist, scriptwriter or composer, was resident in Québec for a continuous period of at least five years prior to the beginning of the work;

(4) at least 75% of the amount that is the corporation’s production costs in respect of the digital audiovisual recording, other than the remuneration paid to an individual who performs a function referred to in any of subparagraphs 1 to 8 of the second paragraph, must have been paid to individuals who were resident in Québec at the end of the particular year or to corporations that had an establishment in Québec in that year;

(5) the digital audiovisual recording must be produced by the corporation to be released in the retail market for commercial exploitation purposes; and

(6) the digital audiovisual recording must not be described in section 6.7.

For the purposes of the first paragraph, the following number of points may be allotted to a digital audiovisual recording in respect of an individual:

(1) for the lyricist or the scriptwriter,

(a) two points in the case of a recording of a comedy show, or

(b) one point in any other case;

(2) for the composer,

(a) two points in the case of an instrumental recording, or

(b) one point in any other case;

(3) for the artistic director, one point;

(4) for the musical director, one point;

(5) for the director, one point;

(6) for the music arranger, one point;

(7) for the sound engineer, one point; and

(8) for the featured artist, two points.

For the purposes of this section,

(1) in determining whether a main feature consists exclusively or almost exclusively of numbers by an artist that are taken from the artist’s performances, from never previously released productions or from clips, the artist’s participation as an actor, host or guest artist must not be taken into account;

(2) where a function referred to in any of subparagraphs 1 to 7 of the second paragraph is performed by two or more individuals, the number of points awarded for that function must be taken into account, despite subparagraph 3 of the first paragraph, if the requirement of that subparagraph 3 would be met in respect of at least half of the individuals were it read without reference to “wholly” ; and

(3) no points may be taken into account for the function of lyricist or scriptwriter in the case of an instrumental recording; and

(4) whether an individual is the featured artist is determined on the basis of the individual’s remuneration, the individual’s designation as the featured artist in promotional materials and the length of the individual’s performance.

If there is a succession of particular corporations during the production of a digital audiovisual recording, the condition of subparagraph 4 of the first paragraph is deemed to be met provided it appears that the requirement would be met if all the individuals and corporations that provided services to the particular corporations in respect of the production of the digital audiovisual recording were taken into account. However, each particular corporation must show to the satisfaction of the Société de développement des entreprises culturelles that it is a qualified corporation for the purposes of the tax credit for the production of sound recordings.

6.7. A digital audiovisual recording to which subparagraph 6 of the first paragraph of section 6.6 refers is such a recording of a particular corporation that

(1) is a title that has allowed any corporation to benefit from the tax credit for multimedia titles within the meaning of section 5.1 of Schedule A or from the tax credit for corporations specialized in the production of multimedia titles within the meaning of section 6.1 of that schedule;

(2) consists mainly in a film or a part of a film that has allowed a corporation referred to in the second paragraph to benefit from the tax credit for Québec film productions within the meaning of the first paragraph of section 3.1 or from the film production services tax credit within the meaning of the first paragraph of section 5.1;

(3) is produced for the purpose of teaching or learning a technique or to further the specific objectives of a business or a corporation, other than the one set out in subparagraph 5 of the first paragraph of section 6.6;

(4) is an audiobook, a sound effects database or a component of a game;

(5) consists wholly or partly in explicit sex scenes; or

(6) is likely to incite hatred toward an identifiable group.

A corporation to which subparagraph 2 of the first paragraph refers is any of

(1) the particular corporation;

(2) a corporation that is associated with the particular corporation at the time that the particular corporation files with the Société de développement des entreprises culturelles, in respect of the digital audiovisual recording, an application for a favourable advance ruling or, if such an application is not filed, an application for a qualification certificate; and

(3) a corporation that would have been associated with the particular corporation at the time referred to in subparagraph 2 if the corporation had not been dissolved and the persons or partnerships that directly or indirectly controlled the corporation, in any manner whatever, immediately before its dissolution, had still controlled it at that time.

For the purposes of this section, paragraph 5 of section 5 of this Act and the relevant provisions of the Taxation Act are to be read as if “in a taxation year” wherever it appears was replaced by “at any time”, with the necessary modifications.

6.8. In order for a clip to be recognized as a qualified clip of a corporation,

(1) the clip must have been produced to complement a recording that is recognized as a qualified sound recording or a qualified digital audiovisual recording, within 24 months after the recording date of the master of the recording or within 24 months after the recording date of the master of the first clip produced to complement the recording;

(2) the clip must have been produced by the corporation to promote the recording referred to in subparagraph 1;

(3) the clip must have been produced by the corporation for commercialization or for broadcasting by a television broadcaster or by the holder of a distribution licence under which the clip will be exploited in Québec in a public performance venue;

(4) at least 75% of the amount that is the corporation’s production costs in respect of the clip, other than the remuneration paid to the director, must have been paid to individuals who were resident in Québec at the end of the calendar year (in this section referred to as the “particular year”) that precedes the calendar year in which the recording work began or to corporations that had an establishment in Québec in the particular year;

(5) the director of the clip must have been resident in Québec at the end of the particular year; and

(6) the clip must not be a component of a game, must not contain explicit sex scenes and must not be likely to incite hatred toward an identifiable group.

For the purposes of subparagraph 3 of the first paragraph, a clip is considered to be commercialized if it is offered on the Internet for downloading.

If there is a succession of particular corporations during the production of a clip, the condition of subparagraph 4 of the first paragraph is deemed to be met provided it appears that the requirement would be met if all the individuals and corporations that provided services to the particular corporations in respect of the production of the clip were taken into account. However, each particular corporation must show to the satisfaction of the Société de développement des entreprises culturelles that it is a qualified corporation for the purposes of the tax credit for the production of sound recordings.

DIVISION III

RECOGNITION OF A RECORD COMPANY

6.9. A corporation may be recognized by the Société de développement des entreprises culturelles as a record company in respect of a recording if

(1) it has distributed in the retail market, at any time in the taxation year in which production of the recording began (in this section referred to as the “particular year”) or in the 365-day period preceding the beginning of that year, at least five sound recordings or digital audiovisual recordings on any of its labels;

(2) it has released, in the period including the particular year and the 730 days preceding the beginning of that year, at least three new sound recordings or digital audiovisual recordings on any of its labels; and

(3) it has entered, with one or more distributors, into a distribution agreement that is in force, for all its labels, throughout the particular year.

CHAPTER VII

SECTORAL PARAMETERS OF TAX CREDIT FOR PRODUCTION OF PERFORMANCES

DIVISION I

INTERPRETATION AND GENERAL

7.1. In this chapter, unless the context indicates otherwise,

“labour expenditure” of a corporation for a taxation year in respect of a performance means an expenditure that would be the corporation’s labour expenditure for the year in respect of the performance for the purposes of the tax credit for the production of performances if no reference were made to subparagraph d of the second paragraph of section 1029.8.36.0.0.10 of the Taxation Act;

“production costs” of a corporation at a particular time in respect of a performance means the aggregate of the costs incurred by the corporation in respect of the performance at or before that time that are production costs described in the portion of subparagraph i of paragraph b of the definition of “qualified labour expenditure” in the first paragraph of section 1029.8.36.0.0.10 of the Taxation Act that precedes subparagraph 1;

“tax credit for the production of performances” means the fiscal measure provided for in Division II.6.0.0.4 of Chapter III.1 of Title III of Book IX of Part I of the Taxation Act, under which a corporation is deemed to have paid an amount to the Minister of Revenue on account of its tax payable under that Part for a taxation year.

A reference made, in a provision of this chapter, to an amount incurred or paid, including a labour expenditure, costs, a remuneration, a talent fee or an advance, is to be replaced, if the provision applies in respect of a favourable advance ruling, by a reference to such an amount determined according to a budget.

In this chapter, a reference to a favourable advance ruling is a reference to the document certifying the favourable advance ruling given.

7.2. A corporation must obtain a favourable advance ruling or a qualification certificate from the Société de développement des entreprises culturelles in respect of each performance for which it intends to claim the tax credit for the production of performances. The favourable advance ruling or qualification certificate is valid only for

(1) the period from the preproduction stage to the end of the first year following the first showing before an audience;

(2) the period covering the second year following the first showing before an audience; or

(3) the period covering the third year following the first showing before an audience.

DIVISION II

FAVOURABLE ADVANCE RULING AND QUALIFICATION CERTIFICATE

7.3. A qualification certificate must be obtained for a performance for each of the periods specified in section 7.2. If applicable, the qualification certificate confirms the favourable advance ruling given in respect of the performance for that period.

An application by a corporation for the issue of a qualification certificate in respect of a performance for a period referred to in section 7.2 must be filed,

(1) if the performance has been given a favourable advance ruling for that period, within 18 months after the end of the corporation’s taxation year that includes the last day of the period; and

(2) in any other case, within three years after the end of that taxation year.

The Société de développement des entreprises culturelles must revoke a favourable advance ruling given to a corporation in respect of a performance if the corporation fails to file an application for a qualification certificate in respect of the performance within the time specified in the second paragraph or if such an application is denied. The effective date of the revocation is the date of coming into force of the favourable advance ruling.

7.4. A favourable advance ruling or a qualification certificate given or issued to a corporation under this chapter certifies that the performance referred to in it is recognized as a qualified performance of the corporation for the period referred to in section 7.2 that is specified in the ruling or qualification certificate. If the performance is an aquatic show, a circus show or an ice show any of the periods referred to in section 7.2 of which began before 14 March 2008 and had not ended on 13 March 2008, it may also be so recognized for a period referred to in section 7.2, even if the conditions of section 7.6 are met in its respect only from any day included in that period, unless that rule has already been applied to such an earlier period. In such a case, the date from which all those conditions are met in respect of the performance must be specified in the favourable advance ruling or the qualification certificate.

Furthermore, the favourable advance ruling or qualification certificate specifies, in the case where it is given or issued for the period described in paragraph 1 of section 7.2, the filing date of the application for its issue or, in any other case, the filing date of the application for the issue of the favourable advance ruling or qualification certificate given or issued for the period described in that paragraph 1. In the event that the filing date precedes 1 September 2014 but follows 4 June 2014, the Société de développement des entreprises culturelles specifies in the favourable advance ruling or qualification certificate whether or not the work in respect of the performance was sufficiently advanced on that latter date.

If applicable, the favourable advance ruling or the qualification certificate also specifies that the performance is

(1) a musical comedy in respect of which any of the periods referred to in section 7.2 had not ended on 20 March 2012; or

(2) a comedy show for which the application for an advance ruling or, in the absence of such an application, an application for a qualification certificate for the period referred to in paragraph 1 of section 7.2 is filed with the Société de développement des entreprises culturelles after 30 June 2015 or, in the event that the Société considers that the work on the show was not sufficiently advanced on 26 March 2015, after that date.

If the performance is a co-production, the favourable advance ruling or qualification certificate specifies the corporation’s share, expressed as a percentage, of the labour expenditure and production costs in respect of the performance for each taxation year for which they were incurred. The corporation’s share must reflect, in respect of the performance, the corporation’s production costs at the end of the year and the corporation’s labour expenditure for the year, and take into account the scope of the responsibilities assumed by the corporation in the co-production.

For the purposes of this section,

“labour expenditure” in respect of a performance for a taxation year means the amount that would be obtained if, for each of the items included in the corporation’s labour expenditure in respect of the performance for the taxation year, the amounts that the corporation has incurred were replaced by all the amounts incurred in respect of the performance and all those amounts were added together; and

“production costs” in respect of a performance for a taxation year means the aggregate of the costs incurred in respect of the performance before the end of the year that are production costs described in the portion of subparagraph i of paragraph b of the definition of “qualified labour expenditure” in the first paragraph of section 1029.8.36.0.0.10 of the Taxation Act that precedes subparagraph 1, or that would be such production costs had they been incurred by the corporation.

7.5. A favourable advance ruling or a qualification certificate may not be given or issued in respect of a performance for a period specified in paragraph 2 or 3 of section 7.2 if the requirements of section 7.6 have not been met in respect of the performance for the period referred to in paragraph 1 of section 7.2.

However, the first paragraph does not apply in respect of a performance that is an aquatic show, a circus show or an ice show in respect of which any of the periods referred to in section 7.2 began before 14 March 2008 and had not ended on 13 March 2008.

7.6. In order for a given performance to be recognized as a qualified performance of a corporation,

(1) it must be a music, live theatre, aquatic, comedy, mime, magic, circus or ice show;

(2) it must be produced by the corporation and the corporation must give at least five public showings of one or more performances each of which is

(a) a performance in respect of which the requirements of subparagraphs 1 and 4 to 6 are met, and

(b) a performance that the corporation produced or co-produced in the taxation year during which it began producing the given performance or in the 365 days that preceded the beginning of that year;

(3) its production and its exploitation must be under the control of the corporation, which must demonstrate, to the satisfaction of the Société de développement des entreprises culturelles, that it is a qualified corporation for the purposes of the tax credit for the production of performances;

(4) it must obtain, in respect of its creative personnel, a minimum of five points out of nine, calculated by awarding the number of points specified in the second paragraph for a particular function of that personnel only if the individual who wholly performs the function

(a) was resident in Québec at the end of the calendar year that precedes the calendar year in which the period specified in section 7.2 for which the application for a favourable advance ruling or a qualification certificate was filed in respect of the performance began, if the function performed by the individual is that of music arranger, artistic director, lighting designer, sound designer, musical director or featured artist, or

(b) was resident in Québec at the end of the calendar year that precedes the calendar year in which the performance production work began or, if the function performed by the individual is that of lyricist, scriptwriter or composer, was resident in Québec for a continuous period of at least five years prior to the beginning of the work;

(5) at least 75% of the amount that is the corporation’s production costs in respect of the performance, other than the remuneration paid to an individual who performs a function referred to in any of subparagraphs 1 to 8 of the second paragraph, must have been paid to individuals who were resident in Québec at the end of the particular calendar year that precedes the year in which the performance production work began or to corporations that had an establishment in Québec in that particular calendar year; and

(6) the performance must not be a show given at a private event, a benefit or a gala, a component of a game or part of an entertainment or catering service.

For the purposes of the first paragraph, the following number of points may be allotted to a performance in respect of an individual:

(1) for the lyricist or the scriptwriter,

(a) two points in the case of a comedy or live theatre show, or

(b) one point in any other case;

(2) for the composer,

(a) two points in the case of an instrumental recording, or

(b) one point in any other case;

(3) for the artistic director, one point;

(4) for the musical director, one point;

(5) for the lighting designer, one point;

(6) for the sound designer, one point;

(7) for the music arranger, one point; and

(8) for the featured artist, two points.

For the purposes of this section,

(1) where a function referred to in any of subparagraphs 1 to 7 of the second paragraph is performed by two or more individuals, the number of points awarded for that function must be taken into account, despite subparagraph 4 of the first paragraph, if the requirement of that subparagraph 4 would be met in respect of at least half of the individuals were the portion of that subparagraph before subparagraph a read without reference to “wholly” ;

(2) no points may be taken into account for the function of lyricist or scriptwriter in the case of an instrumental performance; and

(3) which individual is the featured artist is determined on the basis of the individual’s remuneration, the individual’s designation as the featured artist in promotional materials and the length of the individual’s performance.

For the purposes of subparagraph 3 of the first paragraph, a corporation is considered to have control of the production and exploitation of a performance if, alone or with other corporations, the corporation is responsible or shares responsibility for the artistic, technical and financial aspects of the performance, including its preproduction, production, marketing and promotion.

For the purposes of subparagraph 6 of the first paragraph, a show given at a private event is a performance that is not almost exclusively presented in public showings.

If there is a succession of particular corporations during the production of a performance, the condition of subparagraph 5 of the first paragraph is deemed to be met provided it appears that the requirement would be met if all the individuals and corporations that provided services to the particular corporations in respect of the production of the performance were taken into account. However, each of the corporations must show, to the satisfaction of the Société de développement des entreprises culturelles, that it is a qualified corporation for the purposes of the tax credit for the production of performances.

CHAPTER VIII

SECTORAL PARAMETERS OF TAX CREDIT FOR BOOK PUBLISHING

DIVISION I

INTERPRETATION AND GENERAL

8.1. In this chapter, unless the context indicates otherwise,

“digital version publishing costs” of a corporation in respect of a work or a group of works means the costs incurred by the corporation that are directly attributable to the publication of a digital version of the work or of a work that is part of the group of works for the purposes of the tax credit for book publishing;

“labour expenditure attributable to preparation costs and digital version publishing costs” of a corporation for a taxation year in respect of a work or a group of works means an expenditure that would be the corporation’s labour expenditure attributable to preparation costs and digital version publishing costs for the year in respect of the work or group of works for the purposes of the tax credit for book publishing if no reference were made to subparagraph c of the fifth paragraph of section 1029.8.36.0.0.13 of the Taxation Act;

“labour expenditure attributable to printing costs” of a corporation for a taxation year in respect of a work or a group of works means an expenditure that would be the corporation’s labour expenditure attributable to printing and reprinting costs for the year, in respect of the work or group of works, for the purposes of the tax credit for book publishing if no reference were made to

(1) paragraph a.1 of the definition of that expression in the first paragraph of section 1029.8.36.0.0.13 of the Taxation Act;

(2) the portion of the remuneration or of the consideration that the corporation has incurred for services rendered to it in Québec for reprinting work concerning that work or group of works; and

(3) subparagraph c of the third paragraph of section 1029.8.36.0.0.13 of that Act;

“publishing costs” of a corporation in respect of a work or a group of works means the costs incurred by the corporation that are printing costs or preparation costs directly attributable to the printing or the preparation of the work or group of works for the purposes of the tax credit for book publishing;

“Québec author” means, subject to the second paragraph, an individual who is an author or who is the editor of a work, or of a work that is part of a group of works written by a team of contributors, and who was resident in Québec at the end of the calendar year that precedes the calendar year in which the publishing work began, or was resident in Québec for at least five consecutive years prior to the beginning of the publishing work;

“tax credit for book publishing” means the fiscal measure provided for in Division II.6.0.0.5 of Chapter III.1 of Title III of Book IX of Part I of the Taxation Act, under which a corporation is deemed to have paid an amount to the Minister of Revenue on account of its tax payable under that Part for a taxation year.

If the work is a translation, only the translator is considered to be the author of the work.

Where a reference is made, in a provision of this chapter, to an amount incurred or paid, including a labour expenditure, costs, a remuneration, a talent fee or an advance, it is to be replaced, if the provision applies in respect of a favourable advance ruling, by a reference to such an amount determined according to a budget.

In this chapter, a reference to a favourable advance ruling is a reference to the document certifying the favourable advance ruling given.

8.2. A corporation must obtain a favourable advance ruling or a qualification certificate from the Société de développement des entreprises culturelles in respect of each work or group of works for which it intends to claim the tax credit for book publishing.

Despite any other provision of this chapter, a favourable advance ruling or a qualification certificate may be given or issued to a corporation in respect of a particular work or group of works only if the corporation is a publishing house recognized by the Société de développement des entreprises culturelles.

DIVISION II

FAVOURABLE ADVANCE RULING AND QUALIFICATION CERTIFICATE

8.3. A qualification certificate must be obtained for a work or a group of works after the first printing of the work or of all the works that are part of the group is completed. If applicable, the qualification certificate confirms the favourable advance ruling given in respect of the work or group of works.

An application by a corporation for the issue of a qualification certificate in respect of a work or a group of works must be filed,

(1) if the work or group of works has been given a favourable advance ruling, within 18 months after the end of the corporation’s taxation year that includes the date of completion of the first printing of the work or of the last work that is part of the group; and

(2) in any other case, within three years after the end of that taxation year.

The Société de développement des entreprises culturelles must revoke a favourable advance ruling given to a corporation in respect of a work or a group of works if the corporation fails to file an application for a qualification certificate in respect of the work or group of works within the time specified in the second paragraph or if such an application is denied. The effective date of the revocation is the date of coming into force of the favourable advance ruling.

8.4. A favourable advance ruling or a qualification certificate that is given or issued to a corporation under this chapter certifies that the work or group of works that is referred to in it is recognized as an eligible work or an eligible group of works of the corporation. It specifies the date of the beginning of publishing work relating to the work or group of works. If applicable, the title of every work that is part of the group is also given in the certificate. In addition, the favourable advance ruling or qualification certificate states that the corporation is a publishing house recognized by the Société de développement des entreprises culturelles.

If applicable, the favourable advance ruling or the qualification certificate also certifies that the digital version of the work or a work that is part of the group of works is recognized as an eligible digital version of that work.

Furthermore, the favourable advance ruling or qualification certificate specifies the filing date of the application for its issue. In the event that the filing date precedes 1 September 2014 but follows 4 June 2014, the Société de développement des entreprises culturelles specifies in the favourable advance ruling or qualification certificate whether or not the work in respect of the work or group of works was sufficiently advanced on that latter date.

If the work or group of works is co-published, the favourable advance ruling or qualification certificate specifies the corporation’s share, expressed as a percentage, of the labour expenditure and publishing costs in respect of the work or group of works for each taxation year for which they were incurred. The corporation’s share must take into account the scope of the responsibilities assumed by the corporation, especially as regards the financial aspect.

For the purposes of this section,

“labour expenditure” in respect of a work or a group of works for a taxation year means the amount that would be obtained if, for each of the items included in the corporation’s labour expenditure attributable to printing costs in respect of the work or group of works for the taxation year and for each of the items included in the corporation’s labour expenditure attributable to preparation costs and digital version publishing costs in respect of the work or group of works for the taxation year, the amounts that the corporation has incurred were replaced by all the amounts incurred in respect of the work or group of works and all those amounts were added together;

“publishing costs” in respect of a work or a group of works for a taxation year means the aggregate of the costs incurred in respect of the work or group of works before the end of the year that are printing costs or preparation costs directly attributable to the printing or the preparation of the work or group of works for the purposes of the tax credit for book publishing, that are digital version publishing costs directly attributable to the publication of a digital version of the work or of a work that is part of the group of works for the purposes of that tax credit or that would be such printing costs, such preparation costs or such digital version publishing costs had they been incurred by the corporation.

8.5. In order for a work to be recognized as an eligible work of a corporation,

(1) the work must be published for commercial exploitation purposes and have a first print run of at least 100 copies;

(2) the work must be by a Québec author or, if it is signed by two or more authors, at least half of them must be Québec authors;

(3) the work must be published in the form of a bound book;

(4) the work must contain at least

(a) 8 pages, if it is a children’s book,

(b) 16 pages, if it is a comic book,

(d) 48 pages, if it is any other type of book;

(5) the work must be published under the corporation’s trademark or, if it is intended to be exported, under a third party’s trademark;

(6) the corporation must assume alone or, if applicable, with the other corporations involved in co-publishing the work, all the financial and commercial risks related to publishing the work;

(7) at least 75% of the amount that is the aggregate of the corporation’s publishing costs in respect of the work, other than non-refundable advances paid to Québec authors, must have been paid to individuals who were resident in Québec at the end of the particular calendar year that precedes the calendar year in which the publishing work began or to corporations that had an establishment in Québec in that particular calendar year; and

(8) the work must not be described in section 8.7.

For the purposes of subparagraph 2 of the first paragraph, an individual whose sole role is to illustrate a work is not considered to be an author.

If there is a succession of particular corporations during the publication of a work, the condition of subparagraph 7 of the first paragraph is deemed to be met provided it appears that the requirement would be met if all the individuals and corporations that provided services to the particular corporations in respect of the preparation and printing of the work were taken into account. However, each particular corporation must show to the satisfaction of the Société de développement des entreprises culturelles that it is a qualified corporation for the purposes of the tax credit for book publishing.

8.6. In order for a group of works to be recognized as an eligible group of works of a corporation,

(1) all the works that are part of the group must be wholly published by the same corporation or, in the case of a co-publication, by the same corporations, all of which must be publishing houses recognized by the Société de développement des entreprises culturelles;

(2) the first printing of the last work that is part of the group must be completed within 36 months after the first printing of the first work;

(3) at least 75% of the amount that is the aggregate of the corporation’s publishing costs in respect of the group of works, other than non-refundable advances paid to Québec authors, must have been paid to individuals who were resident in Québec at the end of the particular calendar year that precedes the calendar year in which the publishing work began or to corporations that had an establishment in Québec in that particular calendar year;

(4) the requirements of the first paragraph of section 8.5, other than the requirement of subparagraph 7 of that paragraph, must be met in respect of each work that is part of the group; and

(5) no one work in the group must have entailed preparation and printing costs that are inordinate when compared with those incurred for the other works in the group.

If there is a succession of particular corporations during the publication of a group of works, the condition of subparagraph 3 of the first paragraph is deemed to be met provided it appears that the requirement would be met if all the individuals and corporations that provided services to the particular corporations in respect of the preparation and printing of the group of works were taken into account. However, each particular corporation must show to the satisfaction of the Société de développement des entreprises culturelles that it is a qualified corporation for the purposes of the tax credit for book publishing.

8.6.1. In order for the digital version of a work produced by a corporation to be recognized as an eligible digital version of the work,

(1) the work must be recognized as an eligible work or be part of a group of works that is recognized as an eligible group of works;

(2) the corporation must hold the publishing rights to the digital version of the work and provide proof of that fact to the Société de développement des entreprises culturelles;

(3) the application for recognition of the digital version of the work must be filed with the Société de développement des entreprises culturelles at the same time as the application for a favourable advance ruling or, in the absence of such an application, the application for a qualification certificate in respect of the work or the group of works of which the work is part; and

(4) at least 75% of the amount that is the aggregate of the corporation’s digital version publishing costs in respect of the work or the group of works of which the work is part must have been paid to individuals who were resident in Québec at the end of the particular calendar year preceding the calendar year in which the digital version publishing work began or to corporations that had an establishment in Québec in that particular calendar year.

If there is a succession of particular corporations during the publication of a work or a group of works, the requirement of subparagraph 4 of the first paragraph is deemed to be met provided it appears that it would be met if all the individuals and corporations that provided services to the particular corporations in respect of the publication of the digital version of the work or of any work that is part of the group of works were taken into account. However, each particular corporation must show to the satisfaction of the Société de développement des entreprises culturelles that it is a qualified corporation for the purposes of the tax credit for book publishing.

8.7. A work to which subparagraph 8 of the first paragraph of section 8.5 refers is

(1) a work that is a periodical publication, including a work that is updated on an ongoing basis;

(2) a work that contains advertising, other than advertising aimed at promoting the publishing products of the corporation referred to in the first paragraph of section 8.2;

(3) a work that is a directory, a calendar, a day planner, a catalogue, a drawing book, a colouring book, a workbook or any other work which, by its very nature, will become obsolete or may be used only once;

(4) a work whose pages are typewritten, photocopied, mimeographed or handwritten;

(5) a work that encourages violence or sexism, racism or any other form of discrimination; or

(6) a work published for promotional or business purposes.

DIVISION III

RECOGNITION OF A PUBLISHING HOUSE

8.8. A corporation may be recognized as a publishing house by the Société de développement des entreprises culturelles if

(1) it edits and publishes books;

(2) its main activity consists in publishing for commercial purposes, with a view to achieving profitability;

(3) it has entered into contracts with one or more authors or copyright holders to publish their works or the works in which they hold the copyright;

(4) it commercializes the works it publishes; and

(5) it has a collection of at least three works by Québec authors who have no interest in the affairs of the publishing house.

CHAPTER IX

SECTORAL PARAMETERS OF TAX CREDIT FOR PRODUCTION OF MULTIMEDIA EVENTS OR ENVIRONMENTS PRESENTED OUTSIDE QUÉBEC

DIVISION I

INTERPRETATION AND GENERAL

9.1. In this chapter, unless the context indicates otherwise,

“labour expenditure” of a corporation for a taxation year in respect of a multimedia event or environment means an expenditure that would be the corporation’s labour expenditure for the year in respect of the multimedia event or environment for the purposes of the tax credit for the production of multimedia events or environments presented outside Québec if no reference were made to subparagraph d of the second paragraph of section 1029.8.36.0.0.12.1 of the Taxation Act;

“production costs” of a corporation at a particular time in respect of a multimedia event or environment means the aggregate of the costs incurred by the corporation in respect of the multimedia event or environment on or before that time that are production costs referred to in the portion of subparagraph i of paragraph b of the definition of “qualified labour expenditure” in the first paragraph of section 1029.8.36.0.0.12.1 of the Taxation Act before subparagraph 1;

“tax credit for the production of multimedia events or environments presented outside Québec” means the fiscal measure provided for in Division II.6.0.0.4.1 of Chapter III.1 of Title III of Book IX of Part I of the Taxation Act, under which a corporation is deemed to have paid an amount to the Minister of Revenue on account of its tax payable under that Part for a taxation year.

Any reference made, in a provision of this chapter, to an amount incurred or paid, including a labour expenditure, costs, a remuneration, a talent fee or an advance, is to be replaced, if the provision applies in respect of a favorable advance ruling, by a reference to such an amount determined according to a budget.

In this chapter, a reference to a favourable advance ruling is a reference to the document certifying the favourable advance ruling given.

9.2. A corporation must obtain a favourable advance ruling or a qualification certificate from the Société de développement des entreprises culturelles in respect of each multimedia event or environment for which it intends to claim the tax credit for the production of multimedia events or environments presented outside Québec.

DIVISION II

FAVOURABLE ADVANCE RULING AND QUALIFICATION CERTIFICATE

9.3. A qualification certificate must be obtained for a multimedia event or environment following its first presentation before an audience outside Québec. If applicable, the qualification certificate confirms the favourable advance ruling given in respect of the multimedia event or environment.

An application by a corporation for the issue of a qualification certificate in respect of a multimedia event or environment must be filed,

(1) if the multimedia event or environment has been given a favourable advance ruling, within 18 months after the end of the corporation’s taxation year that includes the date of its first presentation before an audience outside Québec; and

(2) in any other case, within three years after the end of that taxation year.

The Société de développement des entreprises culturelles must revoke a favourable advance ruling given to a corporation in respect of a multimedia event or environment if the corporation fails to file an application for a qualification certificate in its respect within the time specified in the second paragraph or if such an application is denied. The effective date of the revocation is the date of coming into force of the favourable advance ruling.

9.4. A favourable advance ruling or a qualification certificate given or issued to a corporation under this chapter certifies that the multimedia event or environment referred to in it is recognized as a qualified production of the corporation. It also specifies the filing date of the application for its issue. In the event that the filing date precedes 1 September 2014 but follows 4 June 2014, the Société de développement des entreprises culturelles specifies in the favourable advance ruling or qualification certificate whether or not the work in respect of the multimedia event or environment was sufficiently advanced on that latter date.

If the multimedia event or environment is a co-production, the favourable advance ruling or qualification certificate specifies the corporation’s share, expressed as a percentage, of the labour expenditure and production costs in its respect for each taxation year for which they were incurred. The corporation’s share must reflect, in respect of the multimedia event or environment, the corporation’s production costs at the end of the year and the corporation’s labour expenditure for the year, and take into account the scope of the responsibilities assumed by the corporation in the co-production.

For the purposes of this section,

“labour expenditure” in respect of a multimedia event or environment, for a taxation year, means the amount that would be obtained if, for each of the items included in the corporation’s labour expenditure, in respect of the multimedia event or environment, for the taxation year, the amounts that the corporation has incurred were replaced by all the amounts incurred in its respect and all those amounts were added together;

“production costs” in respect of a multimedia event or environment, for a taxation year, means the aggregate of the costs incurred in respect of the multimedia event or environment, before the end of the year, that are production costs described in the portion of subparagraph i of paragraph b of the definition of “qualified labour expenditure” in the first paragraph of section 1029.8.36.0.0.12.1 of the Taxation Act that precedes subparagraph 1, or that would be such production costs had they been incurred by the corporation.

9.5. In order for a multimedia event or environment to be recognized as a qualified production of a corporation,

(1) the multimedia event or environment must offer an educational or cultural experience and be presented for entertainment purposes not advertising purposes;

(2) in the case of a multimedia event, it must be reasonable to expect that, over a period of three years beginning on its first presentation before an audience, it be presented principally in places of amusement situated outside Québec;

(3) in the case of a multimedia environment, it must be produced under a contract that concerns the design and production of such an environment to be presented outside Québec and that the corporation entered into with a person with whom the corporation deals at arm’s length;

(4) the multimedia event or environment must obtain, in respect of its creative personnel, a minimum of five points out of nine, calculated by awarding the number of points specified in the second paragraph for a particular function of that personnel only if the individual who wholly performs the function was resident in Québec at the end of the particular calendar year that precedes the calendar year in which production work relating to the multimedia event or environment began;

(5) the production of the multimedia event or environment must be under the control of the corporation, which must demonstrate, to the satisfaction of the Société de développement des entreprises culturelles, that it is a qualified corporation for the purposes of the tax credit for the production of multimedia events or environments presented outside Québec; and

(6) at least 75% of the amount that is the corporation’s production costs in respect of the multimedia event or environment, other than the remuneration paid to an individual who performs a function referred to in any of subparagraphs 1 to 9 of the second paragraph, must have been paid to individuals who were resident in Québec at the end of the particular calendar year that precedes the year in which production work relating to the multimedia event or environment began or to corporations that had an establishment in Québec in that particular calendar year.

For the purposes of the first paragraph, the following number of points may be allotted to a multimedia event or environment in respect of an individual:

(1) for the lighting designer, one point;

(2) for the designer, one point;

(3) for the environment designer, one point;

(4) for the graphic designer, one point;

(5) for the content and project manager for audiovisual and sound, one point;

(6) for the programmer, one point;

(7) for the writer, one point;

(8) for the scriptwriter, one point; and

(9) for the scenographer, one point.

For the purposes of this section, the following rules apply:

(1) where an individual performs more than one of the functions referred to in subparagraphs 1 to 9 of the second paragraph, the point awarded for each function the individual performs must, subject to subparagraph 4 of the first paragraph, be taken into account; and

(2) where a function referred to in any of subparagraphs 1 to 9 of the second paragraph is performed by two or more individuals, the point awarded for that function must be taken into account, despite subparagraph 4 of the first paragraph, if the condition of that subparagraph 4 would be met in respect of at least half of the individuals were that subparagraph read without reference to “wholly”.

For the purposes of subparagraph 5 of the first paragraph, a corporation is considered to have control of the production of a multimedia event if, alone or with other corporations, the corporation is responsible or shares responsibility for the artistic, technical and financial aspects of the multimedia event or environment, including its production, marketing and promotion. The same applies with respect to the control of the production of a multimedia environment, except that the responsibilities assumed or shared by the corporation do not include the marketing and promotion of the multimedia environment.

For the purposes of the first paragraph, a place of amusement means premises or a place, including a museum, where an event or an exhibition will be presented.

If there is a succession of particular corporations during the production of a multimedia event or environment, the condition of subparagraph 6 of the first paragraph is deemed to be met provided it appears that the condition would be met if all the individuals and corporations that provided services to the particular corporations in respect of the production were taken into account. However, each of the corporations must show, to the satisfaction of the Société de développement des entreprises culturelles, that it is a qualified corporation for the purposes of the tax credit for the production of multimedia events or environments presented outside Québec.

9.6. The Société de développement des entreprises culturelles is justified in revoking the favourable advance ruling given or the qualification certificate issued to a corporation in respect of a particular multimedia event, if it is evident, at the end of the period provided for in subparagraph 2 of the first paragraph of section 9.5, that the corporation has failed to meet the condition of that subparagraph. The effective date of the revocation is the date of coming into force of the revoked document. The revocation of a qualification certificate for that reason entails the revocation of any related favourable advance ruling.

2012, c. 1, Schedule H; 2013, c. 10, ss. 199 to 212; 2015, c. 21, ss. 574 to 589; 2015, c. 36, ss. 184 to 194; 2017, c. 1, ss. 422 to 430; 2017, c. 29, s. 232; 2019, c. 14, ss. 502 to 518; 2021, c. 14, ss. 210 and 211; 2021, c. 362021, c. 36, s. 180; 2022, c. 232022, c. 23, s. 1651.

2021-12-10 Show full text at this date