EDITOR’S NOTE: This document is subject to editorial revision before its reproduction in final form in the Federal Courts Reports.
INCOME tAX
Computation of tax
Canadian Film or Video Production Tax Credit
Judicial review of respondent's refusal to issue certificates entitling holders to Canadian Film or Video Production Tax Credit (tax credit) for three productions on ground productions constituting "advertising", a genre excluded from tax credit by Income Tax Regulations, C.R.C., c. 945 (Regulations) — Applicants related corporations, incorporated solely for purpose of television productions in question — Credit granted for Canadian workers hired to work on Canadian television productions — Access to tax credit limited by definition of “film or video production” found under Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 125.4(1) providing certain types of productions, listed in Regulations, s. 1106(1), not eligible — Respondent determining eligibility for tax credit on basis of information provided by producer, recommendation made by Canadian Audio-Visual Certification Office (CAVCO) — In 2014, 2016, CAVCO notifying applicants television series Croisières de rêves, Soleil tout inclus constituting excluded advertising, earlier certificates issued in error — Applicants notified all future productions based on same concept excluded — In 2017, respondent publishing new advertising definition in guidelines — Productions “where more than 15 percent of the running time consists of: extolling the virtues of one or more products, services, events, organizations or businesses” considered advertising — In Advance Notice of Denial, CAVCO indicating content of episodes submitted with applications to CAVCO in nature of infomercial centering on promotion of various hotels, tourist destinations — CAVCO inviting applicants to provide any new information likely to influence CAVCO’s assessment of file, which applicants did — In 2018, respondent forwarding Notice of Denial to applicants regarding three applications under review — Respondent of view productions in nature of infomercial centering on promotion of various cruises, sun destinations, tourist activities — Whether respondent erred in interpretation of Regulations, s. 1106(1), whether respondent breached duty of procedural fairness in processing applications — Respondent’s decision unreasonable, not falling within range of outcomes defensible in respect of facts, especially with regard to Act, Regulations — Canada (Attorney General) v. Zone3-XXXVI Inc., 2016 FCA 242 (Zone 3 FCA), Serdy Vidéo II Inc. v. Canada (Heritage), 2018 FC 413 particularly relevant in present case — Respondent’s role under Regulations, s. 1106(1) not to characterize production, but to ensure production not in excluded category — In using 15 percent threshold, respondent doing exact thing not within Court’s jurisdiction to do according to Federal Court of Appeal in Zone 3 FCA — CAVCO’s desire to expand scope of “advertising” exclusion set out in Regulations in era of traditional television advertising losing out to, inter alia, advertising placements, understandable — However, decision up to Parliament, not Minister — Application allowed.
9616934 Canada Inc. v. Canada (Heritage) (T-148-19, T-149-19, T-150-19, 2023 FC 432, Gagné A.C.J., reasons for judgment dated April 3, 2023, 25 pp.)