OFTTC

• In order to receive the OFTTC, a production must have no more than 25% non-Ontario costs. Non-Ontario costs are costs not paid to either Ontario residents or corporations with a permanent establishment in Ontario. Ontario costs are those that are paid to Ontario-based individuals or corporations for goods or services provided by the Ontario-based individuals or corporations in the course of carrying on their businesses at permanent establishments in Ontario.

  Non-Ontario costs are not necessarily determined the same way as non-Canadian costs are for the federal credit. For instance, per diems that are spent outside of Ontario are non-Ontario costs unless those amounts were included in the crew agreements for Ontario residents as taxable income. Hotel expenses outside of Ontario are non-Ontario costs, even if the person who stayed in the room is an Ontario resident.

  Even if a production company paid an Ontario travel agent to assist in the booking of the hotel room outside of Ontario, this would still be considered a non-Ontario cost as the travel agent is in the business of finding the room and making the connections, but they are not in the business of renting and providing the actual hotel room. The same principle would apply if the production company was using an Ontario travel agent to assist with booking flights or rental cars outside of Ontario. Again, to be considered an Ontario cost, the expenditure must be paid to an Ontario-based individual or corporation for goods or services that that Ontario-based individual or corporation provides in the course of carrying out their business at a fixed place of business in Ontario. Production companies may not insert an Ontario company as a middleman if that company is in a different line of business in order to convert the expenditure into an Ontario cost.

  Where travel arrangements for flights are booked online (ie via an airline’s website or on websites such as Expedia.ca) whether these expenditures would be considered as Ontario or non-Ontario costs would be a matter of fact. Questions that production companies should consider: Is the company in the business of providing that specific good or service (ie flight, hotel room, etc) or are they the party that makes the arrangements but payment must be made to a non-Ontario entity for the good or service when you/your crew arrive at your destination? If the company is in the business of providing that specific good or service, are they in fact carrying on their business at a permanent establishment (ie fixed place of business) in Ontario where they provide these goods and services? Does the airline you are purchasing flights from have an office in Ontario?

  If a production company is unsure, it should be conservative in its estimates and treat such costs as non-Ontario costs. In the event that the applicant for the OFTTC has treated these types of expenditures as Ontario costs, when Ontario Creates reviews the application, if it appears that considering these expenses as non-Ontario costs would put the production offside (ie the total non-Ontario costs would be more than 25% of the overall final cost), Ontario Creates will consult with CRA on the facts of the case to determine if the costs in each specific fact pattern are Ontario or non-Ontario costs.