Canada eyes production tax credit reform

Canada is reviewing its production tax credit system with a “fresh pair of eyes” following the government’s shock U-turn over streamer spending and “ominous threats” from the US amid its ongoing trade war.

Marc Miller, minister of Canadian identity and culture, said the financing of shows for TV and streaming in Canada “escapes most people in government and also most importantly… taxpayers”, adding that reforms would be explored.

The minister, who has been in the role for six months, told the Banff World Media Festival that the complexity of the tax credit system “and how it gets leveraged by some players over others” can stifle productions and “even increase” costs.

“I got into this job with a fresh pair of eyes and frankly so did the prime minister [Mark Carney]. So when we bridge issues like what this ecosystem looks like, what Canadian content looks like - whether that’s for the purposes of tax credits or for something more important like getting great shows out to Canadians - I have approached it with the same pair of eyes, but also a willingness to be open about where we are currently and where we are going,” he said.

US streamer spending

Miller’s comments come less than two weeks after Canada’s government told the Canadian Radio-television and Telecommunications Commission (CRTC) to pull plans that would have increased contributions from US-based streamers such as Prime Video, Netflix and Apple TV towards local productions.

The CRTC had planned to create a fund of C$2bn (£1.07bn) by raising contributions to 15% of domestic revenues, up from the 5% mandated in the Online Streaming Act (aka Bill C11) that was first introduced in 2024. Streamers had already pushed back on the 5% charge, however, and contributions have been frozen amid ongoing court action from the Motion Picture Association (MPA), which represents US platforms.

The decision to scrap the proposed hike also came in the midst of trade negotiations between Canada and the US, with the latter labelling the regualtory move as an irritant to a far broader trade deal.

Miller addressed what he described as the “elephant in the room”, suggesting a more pragmatic approach was now being sought to support Canadian producers. His government has already said it will provide a C$600m annual injection into the audiovisual sector.

The minister continued: “Say what you want about where we are now, but when you’re getting sued from all corners and no one agrees with you and everything is a mess, it gives you an opportunity to stand in the eye of that hurricane and have a bit of a rethink.”

The C$600m will be invested into Canada’s audiovisual industry “as soon as possible”, Miller said, although how the amount will be distributed remains to be confirmed.

But, he added: “It offers an opportunity to think about if we are serving people as well as we should be. That’s where we are and as desirable as the principles in C11 are and I support them, the reality is that we are stalled.

”We have this sclerotic system that is keeping money from getting out and keeping the productions that we say we want to support from being properly supported.”

Miller said a “frank discussion with the biggest players” was needed around the benefits of producing in Canada “and that includes a very serious discussion about the benefits of tax credits that everyone seems to take for granted and then ask for more.

“That is frustrating as hell for someone who always feels like they’re being held up for ransom. I speak for Canadian taxpayers, who might not understand how this system gets supported, but certainly this money isn’t mine and [how it is spent] has to be justified.”

Miller concluded that while stability was vital, including around how tax credits are used, there is “an opportunity for a type of reform that makes sure people are getting the benefit of them and recognising that benefit”.