How to Claim Canadian Film or Video Production Tax Credit

Canadian filmmakers can claim a generous 25% refundable tax credit on qualified labor expenses, which stands among the best film incentives worldwide. This financial benefit covers up to 60% of total production costs and helps eligible productions substantially reduce their expenses.

Filmmakers can save even more money through provincial programs that work alongside federal incentives. British Columbia offers refundable tax credits of 36% to 46.2% when productions spend at least $1M. Ontario supports Canadian productions with up to 35% credit on eligible labor costs. On top of that, Alberta supports productions that spend over $500K with incentives ranging from 22% to 34.5%. These provincial benefits stack with the 25% federal qualified labor tax credit, which lets productions use both options at once.

This piece walks you through everything you need to know about Canadian film tax credits. You’ll learn the differences between the Canadian Film or Video Production Tax Credit (CPTC) and the Production Services Tax Credit (PSTC). The guide also shares strategies to help you get the most from Canada’s film incentive programs.

What is the Canadian Film or Video Production Tax Credit?

Canada has two different tax incentives that help its film and television industry thrive. These programs help productions secure funding and create new jobs while fostering creative growth nationwide.

Types of tax credits: CPTC vs PSTC

The Canadian government runs two main tax credit programs that serve different purposes:

The Canadian Film or Video Production Tax Credit (CPTC) gives you a fully refundable tax credit worth 25% of qualified labor costs ^[1]. This program helps Canadian programming grow and supports local independent producers ^[2].

The Film or Video Production Services Tax Credit (PSTC) comes with a 16% refundable tax credit on qualified Canadian labor costs ^[3]. This program wants to bring both Canadian and foreign productions to Canada ^[2].

The main difference between these programs is simple: CPTC backs Canadian content creation, while PSTC makes Canada an attractive filming location, regardless of the content’s origin.

Who can apply for each type?

Each program has its own set of requirements:

To qualify for CPTC, you need to run a prescribed taxable Canadian corporation that primarily engages in Canadian film or video production ^[4]. Your production needs Canadian citizens or permanent residents in the core team positions ^[2].

For PSTC, both Canadian and foreign-owned companies can apply ^[2]. You must run your film or video production through a permanent establishment in Canada and own the copyright for the production ^[3].

You can’t claim benefits from both programs for the same production ^[2].

How these credits support filming in Canada

These tax credits make Canada a powerhouse in the global film scene:

The numbers speak for themselves – CPTC can cover up to 15% of your total production costs after assistance ^[2]. Plus, you can stack these federal benefits with provincial credits, which is a big deal as it means that your total benefits could go way up ^[3].

So, these programs have made Canada a hot spot for filming while bringing in investment to the local film industry ^[3]. They help build a skilled workforce of crews, soundstages, and post-production talent. Canada’s variety of filming locations adds to the appeal ^[2].

The Canadian Audio-Visual Certification Office (CAVCO) and the Canada Revenue Agency (CRA) work together to run both programs ^[2]. This ensures proper management of these valuable industry benefits.

Federal Tax Credit Programs Explained

Tax incentives are the foundations of Canada’s film industry support system. The Canada Revenue Agency and Canadian Audio-Visual Certification Office work together to manage two different programs that provide crucial financial benefits.

1. Canadian Film or Video Production Tax Credit (CPTC)

Qualifying productions can receive a fully refundable tax credit equal to 25% of eligible labor costs ^[5]. The credit maxes out at 60% of total production costs, meaning you can’t exceed 15% of those costs ^[6].

A production company needs to qualify as a prescribed taxable Canadian corporation. The company should run its film or video production business in Canada with a permanent establishment ^[7]. It also needs certification as a Canadian film or video production. This usually means scoring at least 6 out of 10 points based on Canadians in key creative roles ^[6].

Companies must submit their applications within 24 months of the tax year ending after the start of principal photography ^[5].

2. Canadian Film or Video Production Services Tax Credit (PSTC)

This program gives you a 16% refundable tax credit on qualified Canadian labor costs ^[4]. This credit is a big deal as it means that you can claim any amount – there’s no upper limit ^[6].

Canadian and foreign-owned companies can qualify if they run their film or video production through a permanent establishment in Canada ^[4]. The company must own the copyright throughout Canadian production or have a direct contract with the copyright owner ^[4].

Key differences between CPTC and PSTC

The main difference is simple – CPTC focuses on Canadian content creation, while PSTC makes Canada an attractive filming location, whatever the content’s origin ^[8].

CPTC needs Canadian ownership and control with specific content requirements ^[6]. PSTC works differently. It doesn’t care about Canadian content but demands minimum costs. Productions must cost over $1 million total, and TV episodes need $100,000-$200,000 depending on length ^[6].

You can’t claim both credits at once ^[6].

Recent updates to federal programs in 2025

CAVCO changed its advertising guidelines for both programs in 2025 ^[9]. The new definition dropped the old 15% running time rule. Now it looks at productions that “combine information or entertainment with the sale or promotion of goods or services into a virtually indistinguishable whole” ^[9].

The office also set new service standards in 2025. They now want to process applications within 180 calendar days and aim to hit this target 85% of the time ^{[1] [4]}.

Provincial Incentives and Bonus Programs

Canadian provinces offer attractive tax credits on top of federal incentives, making Canada a prime destination for filming.

British Columbia: VFX and regional bonuses

British Columbia runs two major programs. Film Incentive BC (FIBC) supports Canadian productions with up to 35% credit on eligible labor costs ^[10]. The Production Services Tax Credit (PSTC) has jumped from 28% to 36% starting January 2025 ^[11]. Productions can get an extra 16% through the Digital Animation or Visual Effects (DAVE) Tax Credit ^[12]. Filming outside Vancouver brings additional benefits of 6-12.5% based on the location ^[10].

Ontario: First-time producer and regional boosts

The Ontario Film and Television Tax Credit (OFTTC) provides a 35% refund on eligible labor costs ^[2]. New producers get a 40% rate on their first $240,000 in qualifying labor ^[2]. A 10% bonus awaits productions that film completely outside the Greater Toronto Area ^[2]. Starting in 2023, all productions need to show an Ontario credit acknowledgment on screen ^[2].

Quebec: All-spend and animation incentives

Quebec stands out by offering its Production Services Tax Credit (QPSTC) at 25% on total production costs ^[13]. Computer-aided animation and visual effects work gets an extra 16% on labor costs ^[14].

Alberta, Manitoba, Nova Scotia: Unique offerings

Alberta’s tax credits range from 22% to 30% based on local ownership ^[15]. Manitoba leads Canada with labor-based credits up to 65% ^[16]. Nova Scotia provides up to 31% with extra bonuses for rural productions ^[17].

Stacking federal and provincial credits

These provincial credits blend naturally with federal incentives. This is a big deal, as it means total benefits can exceed 60% of production costs ^[18]. Innovative producers can maximize their financial benefits by combining these programs without conflicts.

How to Apply and Maximize Your Claim

Production companies need to plan each phase carefully to navigate the Canadian film tax credit system successfully.

Pre-production: Eligibility and planning

Production companies should check their eligibility requirements before they start shooting. The CAVCO Online system requires CPTC certification applications at least 6 months before the filing deadline ^[3]. Any production that begins after February 22, 2022, needs pre-certification forms within 120 days of the first labor expenses ^[19].

During production: Tracking labor and expenses

Record-keeping is crucial during filming. Companies must keep detailed records of Canadian resident labor costs and proper residency proof ^[3]. Subsection 21 (1) of the federal Income Tax Act allows capitalization of interest expense ^[3].

Post-production: Submitting final reports

Productions should submit their completion certificates within 24 months after the first tax year-end following principal photography ^[20]. Cost reports need to be audited for productions that exceed $500,000 ^[1].

Common mistakes to avoid

Missing deadlines, failing to claim regional bonuses, and poor residency documentation can get pricey ^[21]. Multi-year productions need completion certificates within 30 months from the year-end when principal photography started ^[3].

Working with tax credit consultants

Tax experts can assess eligibility, create estimates, and perform production cost audits ^[22]. They handle federal and provincial applications together and maximize benefits through well-timed submissions ^[22].

Conclusion

Canadian film and video production tax credits offer filmmakers significant financial advantages that reshape the economics of projects. The federal system is split into two parts: the Canadian Film or Video Production Tax Credit (CPTC) and the Production Services Tax Credit (PSTC). These provide refundable credits of 25% and 16% on qualified labor costs. Productions can recoup much of their costs while retaining creative control.

The benefits get even better with provincial programs. Each region – British Columbia, Ontario, Quebec, Alberta, Manitoba, and Nova Scotia – has its own set of incentives. These local programs, combined with federal credits, can cover up to 60% of total production costs. This makes Canada one of the world’s best places to film financially.

Getting these claims right needs careful planning and execution. Producers should check if they qualify before they start filming. They need to track qualified expenses during production and submit detailed documentation later. New applicants often miss vital deadlines or fail to obtain proper residency documents. This cuts into their potential benefits.

Tax credit experts are an excellent resource for help with this process. Their knowledge helps production companies direct application complexities, spot missed opportunities, and dodge common mistakes. Filmmakers who work with these specialists usually get better returns with less paperwork.

The Canadian film tax credit system keeps changing. Recent updates affect advertising definitions and processing times. Productions need to stay current with these changes to get the most from available incentives. These tax credits are more than just money – they show Canada’s steadfast dedication to growing its film industry. They also help bring international productions to the country’s varied locations and skilled workforce.

FAQs

Q1. What is the Canadian Film or Video Production Tax Credit (CPTC)? The CPTC is a refundable tax credit offered by the Canadian government that provides eligible productions with a 25% credit on qualified labor expenditures. It’s designed to support Canadian content creation and the domestic independent production sector.

Q2. How does the Production Services Tax Credit (PSTC) differ from the CPTC? The PSTC offers a 16% refundable tax credit on qualified Canadian labor expenditures and is open to both Canadian and foreign-owned corporations. Unlike the CPTC, it aims to attract productions to film in Canada regardless of content origin and has no cap on the amount that can be claimed.

Q3. Can productions claim both federal and provincial tax credits? Yes, productions can “stack” federal and provincial credits. This combination can potentially offset up to 60% of total production costs, making Canada a beautiful filming destination.

Q4. What are some common mistakes to avoid when claiming film tax credits in Canada? Common errors include missing application deadlines, overlooking regional bonuses, and failing to collect adequate residency documentation for Canadian workers. It’s also crucial to submit completion certificates within the required timeframe for multi-year productions.

Q5. How can tax credit consultants help maximize film tax credit claims? Tax credit consultants can evaluate eligibility, prepare estimates, conduct production cost audits, and assist with both federal and provincial applications. Their expertise helps production companies navigate complexities, identify overlooked opportunities, and avoid common pitfalls, typically resulting in maximized returns and reduced administrative burden.