FIBC Tax Credit Applicants: What “grinds” tax credits?

Under Film Incentive BC (“FIBC”), the tax credit amounts are calculated on the qualified BC labour expenditure (QBCLE) of the corporation, which is the lesser of the (a) labour cap or (b) BC labour incurred by the production company (excluding writer fees). Some expenses that are not directly attributable to the production or financing sources that are considered assistance will be deducted from the total cost of production while calculating the labour cap, hence “grinding” the tax credits.

The following is a non-exhaustive list of ineligible costs that grind BC tax credits:

Expenses not directly attributable:

• Website costs
• Promotional / marketing costs (other than unit publicity)
• 50% of craft service non-labour costs
• Tax credit application fees

Financing sources considered assistance:

• Certain types of crowdsourcing
• Grants
• Deferrals
• Non-recoupable advances
• Other provincial tax credits (not federal tax credits)
• Non-bona fide loans (please refer to CRA’s application policy on this issue and additional types of assistance)

Note that bona fide loans, equity financing and CAVCO (federal) tax credits do not grind the BC tax credits.

See s. 79(1) of the Income Tax Act (BC) “assistance”; “eligible production” (c).

Patricia Lee
Business Analyst, Motion Picture Tax Credits
plee(at)creativebc.com

This post is intended as a general overview. It is not exhaustive and should not be relied upon to determine eligibility or the final amount of an anticipated tax credit. In case of any discrepancies between this post and the Income Tax Act (BC) and Regulations (the “Act”), the provisions of the Act prevail.