Canada: Six Questions: Sex, Tax and Bill C-10

In February 2008, members of the Canadian film and TV industry publicly denounced amendments to the Income Tax Act contained in Bill C-10, labeling them "censorship." Director David Cronenberg was quoted in, an online magazine, as calling the provisions an assault on freedom of expression, and the source of potential catastrophe to financing a film "because the whole thing would fall apart like a house of cards." Minister of Canadian Heritage Josée Verner rebuffed the censorship claims, asserting that Bill C-10 has nothing to do with censorship and its goal "is to ensure public trust in how tax dollars are spent."

Why the fuss? This six-question primer covers key and background points in the current controversy over Bill C-10.

WHAT? Bill C-10, An Act to amend the Income Tax Act, including amendments in relation to foreign investment entities and non-resident trusts, and to provide for the bijural expression of the provisions of that Act, amends the definition of "Canadian film or video production certificate" in subsection 125.4(1) of the Income Tax Act. A production must receive a Canadian film or video production certificate in order to qualify for certain federal tax credits administered by the Canadian Audio-Visual Certification Office (CAVCO).

Under the changes, a "Canadian film or video production certificate" will mean a certificate issued in respect of a production by the Minister of Canadian Heritage, certifying that the production is a Canadian film or video production in respect of which that minister is satisfied that certain criteria have been met concerning revenue share, and that "public financial support of the production would not be contrary to public policy [emphasis added]." This 'public policy' provision is the source of the controversy.

The heritage minister has stated that Bill C-10's public policy provision will address "only the most extreme and gratuitous material." News reports speculate that criteria for denying tax credits could include grounds such as gratuitous violence, excessive sex, significant sexual content that lacks an educational purpose, or denigration of an identifiable group.

In fact, the language of Bill C-10 provides no explanation of the criteria according to which a film could be considered, in the heritage minister's discretion, "contrary to public policy." Bill C-10 also provides that the heritage minister shall issue guidelines under which a film or video production would satisfy the criteria. The bill expressly states that the guidelines will not be statutory instruments under the Statutory Instruments Act (and therefore not governed by the process of review and public comment afforded to regulations). At the time of writing of this article, the heritage minister had not released any guidelines nor given precise indications of their content, despite urging from members of the film and TV industry.

On April 2, 2008, the Department of Finance reportedly argued, before the Standing Senate Committee on Banking, Trade and Commerce, that the criteria for offensive film and TV productions should not be included in the legislation or its regulations — the court could void regulations due to vagueness but were likely to be more lenient with criteria contained in guidelines.

Minister of Canadian Heritage Josée Verner also appeared before the Senate banking committee, stating that Canadian Heritage would not apply the public policy provision until 12 months after Bill C-10 received royal assent. In addition, she invited input from the film and TV industry on the development of the guidelines. Members of the industry have subsequently voiced concerns about being involved in the development of censorship guidelines, since they are opposed to their very concept.

WHEN? The bill was passed by the House of Commons with all-party support on October 29, 2007. It received its second reading in the Senate on December 4, 2007. At the time of writing this article, the Senate banking committee was conducting hearings on Bill C-10, and concerned parties were appearing before the committee.

WHERE? The bill must undergo its third and final reading in the Senate. The Senate banking committee delayed a third and final reading of Bill C-10 in late February 2008, when public criticism of the bill erupted, putting the matter on hold until April 2008.

WHO? Objectors within the industry include a wide range of groups and individuals, including directors, actors and politicians who have publicly voiced opposition to the bill. Groups expressing concern or lobbying to challenge the bill include ACTRA (Alliance of Canadian Cinema, Television and Radio Artists), the Writers Guild of Canada, the Directors Guild of Canada, and the Canadian Film and Television Production Association.

WHY? A similar "public policy" provision was proposed in draft regulations to the Income Tax Act in 2003 by then Liberal Heritage Minister Sheila Copps. Ms. Copps was quoted in various press reports as explaining that the intention of her proposed provisions was to establish "reverse onus" for producers of extremely objectionable material, and to give the heritage minister discretion to prevent a film from receiving a tax credit in extreme cases.

The 2003 proposal arose in response to the film Karla about the lives of Paul Bernardo and Karla Homolka, and the hypothetical scenario where a film such as Karla might be eligible for tax credits had it been produced in Canada. However, the Income Tax Regulations enacted in 2005 did not contain the provision granting ministerial discretion to deny tax credits to films considered contrary to public policy.

The motivation for the Conservative government's inclusion of the public policy provision in Bill C-10 is unclear. Traditionally, the tax credits have been highly labour-driven, designed to encourage producers to hire Canadians using relatively objective criteria that award points to a production based on Canadians hired for key positions. Current regulations already exclude content such as pornography, news, reality television, game shows, talk shows, corporate video and advertising.

HOW? The affected federal tax credits are not the only source of funding available to film and TV producers. Other direct and indirect sources are available from federal, provincial and private sources, including Telefilm Canada (also administered under Canadian Heritage), banks, provincial tax credit programs and other private financiers. Practically, however, CAVCO tax credits and Canadian Program certification are often critical components to secure funding for Canadian productions. Consider that:

  • Domestic film and TV productions typically apply and may obtain subsidies at the script stage, but refundable tax credits are subsequently applied for and received after completion of principal photography.

  • Domestic productions often rely on funding from more than one source. Other sources of funding may base their funds or advances to the producer on the expectation or condition that the federal tax credit and certification as a Canadian Program by CAVCO will be received.

  • A producer (or financiers) therefore will not know if a production is unacceptable until after it has been shot, monies have been spent and the reviewing committee has reviewed the film and rendered a decision, should it choose to do so.

  • Producers who are denied tax credits could face a great risk of exposure to repay financiers whose grants or advances (e.g., Telefilm Canada, bank and distribution advances, etc.) were based on anticipated tax credits. This could potentially result in business or personal bankruptcy for the producer.

  • The public policy provision may not affect foreign productions shooting in Canada that receive CAVCO-administered federal tax credits but are not considered "Canadian" productions. Canadian Heritage representatives have argued that such tax credits are intended to encourage investment based on spending in Canada and not on content.

Supporters of the public policy provision claim it is only fair that public monies not be used to support the production of offensive content, and that nothing stops producers of such content from making their projects using other funding.

Opponents of the amendments raise numerous concerns, including:

  • the importance of the tax credit and Canadian program certification to financing arrangements;

  • the lack of clarity about who will decide what norms are "contrary to public policy";

  • the lack of guidelines or criteria;

  • the discretionary nature of how review and decisions will be exercised;

  • the volatile and practical effect of the timing and subjectivity of decisions;

  • the resulting inability of producers to secure adequate financing for their productions; and, of course,

  • the aftertaste of censorship.

Banks may be discouraged from providing the necessary loans to edgier, riskier productions if the projects may not be eligible for the tax credits on such subjective terms.

If the guidelines are put in place, some opponents argue self-censorship will result — writers and producers will write to the guidelines in order to ensure tax credits are received so the production can be made. Either way, they argue, the end result may be a freeze on the artistic expression of edgy, unique Canadian voices in film and TV.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions