Middle Ground Provided by CRTC

Why co-ventures might be a better bet than co-productions.

It's tough to be a Canadian producer: access to ample production funding is a constant struggle yet, at the same time, access to valuable Canadian content tax credits is strictly controlled by a list of guidelines that limit the involvement of non-Canadians - both creatively and financially.

Imagine you have developed a fantastic project with a non-Canadian colleague who has access to U.S. money. A Canadian distributor is excited about the project and is willing to provide a healthy minimum guarantee. Sounds great, except the Canadian distributor requires the production to qualify as Canadian content. This could be a problem since you have already agreed that your American colleague could co-produce the film.

As there is no co-production treaty between Canada and the U.S., an alternative is to qualify the film for "special recognition" as a CRTC "co-venture." CRTC co-ventures, under certain circumstances, allow Canadian producers to co-produce with non-Canadian partners yet still have productions qualify as "Canadian content" for broadcast purposes. Although a co-venture production may not qualify for Canadian content tax credits or other incentives from such funding entities as Telefilm Canada and the Canadian Television Fund, it qualifies for "special recognition" as a CRTC "co-venture." That will make a Canadian sale more likely (and usually more valuable) and still allow the involvement of non-Canadians.

In a CAVCO production, all producers must be Canadian. They must control,and be the central decision-maker, of the production from beginning to end, demonstrating full decision-making power. Co-ventures allow producers to avoid dealing with CAVCO's producer control rules and the restrictions on funding sources and back-end rights. Co-ventures are essentially international co-productions which are not included under any treaties administered by Telefilm and include ventures with co-producers of a foreign country without a film or television production treaty with Canada. For coventures, even cases in which producer functions are performed by non-Canadians, certification of the program as "Canadian" is possible.

Canadian producers of a co-venture must have equal decision-making responsibility with other co-venture partners on all creative elements and must be responsible for the administration of the Canadian elements of the budget. The Canadian producer must also retain an equal measure of approval rights over all elements of the production. Further, the Canadian producer must have financial participation in the production and must be entitled to at least 50% of the back end derived from the exploitation of the production. A co-venture must meet the same point and expenditure minimum requirements as other content productions (i.e. six "points" and 75% expenditure rules). A co-venture involving a co-producer from a Commonwealth or French-speaking country, or a country with which Canada has a film or television production treaty, only requires five "points." At least 50% of the costs for services are paid to Canadians, and at least 50% of post-production and laboratory costs are paid for services provided in Canada by Canadians. The director or the writer and at least one of the two lead performers must be Canadian in any case. All other criteria for certification of a Canadian program apply to such co-ventures.

Canadian producers often have to choose between producing without a U.S. partner in order to access to Canadian content incentives and acting as a production services provider for a U.S. producer, which may permit access to U.S. incentives but eliminates access to Canadian content incentives. CRTC co-ventures provide a middle ground that allows certification as Canadian while still allowing the involvement of a U.S. partner. Perhaps it is time to consider a tax credit for Canada-U.S. co-ventures, perhaps at a rate less than the content credit, but greater than the services credit.
- Doran Chandler