Supporting the continued growth of the film industry

In recognition of the increased potential of the film industry in the province, government will allocate $2.29 million to the Newfoundland and Labrador Film Development Corporation (NLFDC) to fulfil its mandate to foster and promote the development and growth of the film and video industry in Newfoundland and Labrador, and to increase the national and international visibility of Newfoundland and Labrador as a location for film production. Of the total allocation, $2 million will be allocated for the Equity Investment Program, with the remaining $290,000 for core operational support. Budget 2005 also includes an enhanced Film and Video Industry Tax Credit, which will allow the province�s growing film and video industry to effectively compete with other provinces in Canada.

Additional Equity Investment
�The province�s film industry is demonstrating increased potential for growth,� said Tourism, Culture and Recreation Minister Paul Shelley. �Along with this growth comes the need for additional investment. Already this year, the NLFDC has commitments of over $1 million through its Equity Investment Program. This injection of an additional $1 million to the program, bringing it to $2 million, will provide additional opportunity to attract and develop new and exciting film projects in the province.�

Increased Core Funding for NLFDC
For 2004-05, the NLFDC has projected film production activity in the range of $18 million, with $20 million projected for 2005-06, resulting in increased demands on the NLFDC's existing programs. The NLFDC has expended approximately $9 million in total (Equity Investment Program and Tax Credit Program) in the last five years, leveraging an additional $47 million from funding sources outside the province.

Government�s allocation of $290,000 for core operational support represents an additional $110,000 increase over its previous allocation of $180,000.

Enhanced Tax Credit Program
The Film and Video Industry Tax Credit, a refundable provincial Corporate Income Tax credit, is extended to December 31, 2008. The credit is calculated at 40 per cent of eligible local labour costs. Currently, corporations controlled by persons outside the province, or with assets of greater than $25 million are not eligible for the credit. This restriction is being removed. In addition, the current maximum annual tax credit of $1 million per film project and $2 million per film corporation is being replaced with a single corporation credit of $3 million.

Under the current mentorship program, the purpose of which is to develop film crews, a film production company can receive a tax credit for the salary of a non-resident mentor, but this may not exceed the tax credit for the salary of the mentored employee. With the enhanced mentorship program, a greater tax credit will be available for the mentor�s salary.

Investment Spurs Economic Growth
The film industry in the province has continued to grow in recent years, particularly through the efforts of the Newfoundland and Labrador Film Development Corporation. Since its inception, the NLFDC has been successful in developing and attracting over 90 film projects, including feature films The Shipping News, Rare Birds and the television series Random Passage, generating approximately $53 million in local production activity. The film and television industry also provides intangible benefits to the province, including a sense of provincial pride and an increased level of awareness of Newfoundland and Labrador as a tourism destination.

�Government�s investment in the film industry is a strategic investment that will continue to result in increased film production activity in the province and economic benefit to regions of the province. A detailed economic assessment of the industry has indicated that the payoff in GDP to the province from its film incentive program is in the range of $3.65 for each $1 spent,� said Minister Shelley. �With recent television series including Life with Derek in Corner Brook and Hatching, Matching and Dispatching in Petty Harbour, the local industry is gaining ground in attracting television series productions. This is an important part of the sustained growth of this industry.�

Background
The Film and Video Industry Tax Credit, a non-refundable tax credit under the Income Tax Act, was implemented in 1999 as a measure to assist the growth of the province's emerging telefilm industry and to generate new economic activity, resulting in the creation of new jobs in the province. At the time the program was introduced, the film industry was at its infancy. The industry has since grown and has appropriate management and staffing expertise, and production and post-production infrastructure in place.

The Newfoundland and Labrador Film Development Corporation was established in 1997 and is mandated to promote the development of the indigenous film and video industry in the province, as well as to promote the province in national and international film and video markets as a location for film, television, and commercial productions.

Media contact: Tansy Mundon, Tourism, Culture and Recreation, (709) 729-0928, 685-1741

2005 03 21                     2:35 p.m.