On May 2, 2016, following a lengthy consultation process,
B.C.'s Finance Minister Michael de Jong released a statement announcing proposed
reductions to the respective rates of the B.C. Production Services
Tax Credit (PSTC) and the B.C. Digital Animation or Visual Effects
Tax Credit (DAVE). The proposed reductions are subject to the
approval of the B.C. legislature and implementation legislation and
The recent boom in the B.C. film and TV production industry,
which accounted for approximately CDN$2B in expenditures in fiscal
year 2014-15, has placed increasing pressure on the B.C. Government
to contain the costs of its film tax credit program. The aggregate
cost of B.C. film tax credits jumped from CDN$343 million in fiscal
2014-15 to an estimated CDN$491 million in fiscal 2015-16.
In February , in conjunction with the 2016 provincial budget the B.C. Government announced
that it was creating a government/film industry working group to
address the rising cost of the Province's film tax credits. The
proposed reductions are intended to address that concern.
Reductions to PSTC and DAVE
Presently, the PSTC is equal to 33% of qualified B.C. labour
expenditures and the DAVE is equal to 17.5% of qualified B.C.
digital animation and VFX expenditures. Assuming legislative
approval, effective October 1, 2016:
the PSTC will be reduced to 28%, a
reduction of 5%; and
the DAVE will be reduced to 16%, a
reduction of 1.5%.
According to Minister de Jong:
We are proud of the success we've seen in this industry,
but we also need to safeguard the interests of B.C. taxpayers, who
ultimately pay for subsidies, and ensure there is equity with other
industries that drive B.C.'s economy.... We've settled on
these numbers after working with the industry and believe they
represent, for the short and medium term at least, a reasonable
The current PSTC rate of 33% and the current DAVE rate of 17.5%
will continue to apply to any production that commences principal
photography before October 1, 2016. In the case of a television
series, all the episodes produced for the applicable season will be
"grandfathered" if principal photography of the
series' initial episode commences before October 1, 2016.
Minister de Jong's statement did not specify an equivalent
benchmark for animated productions (although there is industry
speculation that similar "grandfathering" rules will
likely be introduced based on the first day of key animation
occurring before October 1, 2016, rather than the first day of
principal photography for a live action production, but this is yet
to be confirmed).
No Reduction to Domestic B.C. FIBC Tax Credit and/or Regional
and Distant Location Incentives
In addition to the PSTC and DAVE, B.C. has a film tax credit
called the Film Incentive British Columbia Tax Credit
("FIBC"), at the rate of 35% of qualified B.C. labour
expenditures, available only to B.C.-controlled "Canadian
B.C. will not reduce the FIBC, nor will it reduce any of the
additional distant location and/or regional incentives tied to the
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