CCA Bul­letin 09/08

March 11, 2008

Just the Facts

Over the past sev­eral days, the con­tro­versy over the fed­eral government’s bill C-10 con­tin­ued to make head­lines and edi­to­r­ial pages all over the country.

The leg­is­la­tion in ques­tion is enti­tled, “An Act to amend the Income Tax Act includ­ing amend­ments in rela­tion for­eign invest­ment enti­ties and on-resident trusts, and to pro­vide for the bijural expres­sion of the pro­vi­sions of the Act.”    (the Act).

This Act is cur­rently in front of the Bank­ing, Trade and Com­merce Com­mit­tee of the Sen­ate, prior to final approval and royal sanc­tion. Wad­ing through the highly tech­ni­cal pro­vi­sions of the leg­is­la­tion adorned with such an entic­ing title, it is easy to see how Par­lia­men­tar­i­ans from all Par­ties missed the impli­ca­tions found on page 346 of the 568 page doc­u­ment, in the sec­tion on the film and video cer­ti­fi­ca­tion pro­vi­sions of the Income Tax Act. That atten­tion was finally drawn to this sec­tion at such a late part of the process is in itself an inter­est­ing question.

The offen­sive sec­tion of the Act – 120.(3) reads as follows:

“Cana­dian film or video cer­tifi­cate” means a cer­tifi­cate issued in respect of a pro­duc­tion by the Min­is­ter of Cana­dian Her­itage cer­ti­fy­ing that the file or video pro­duc­tion in respect of which the Min­is­ter is sat­is­fied that (…) (b) pub­lic finan­cial sup­port of the pro­duc­tion would not be con­trary to pub­lic pol­icy.” (our emphasis).

Under­stand­ably, the lat­ter phrase has trig­gered the firestorm and sent Par­lia­men­tar­i­ans scram­bling, as it seems to point to an “after the fact” form of cen­sor­ship and raises inter­est­ing ques­tions about the arms’ length rela­tions of grant­ing agen­cies man­dated to sup­port Cana­dian film and TV pro­duc­tion. A large num­ber of orga­ni­za­tions, includ­ing the CCA, have con­tacted the Min­is­ter to express their con­cerns with the poten­tial cen­so­ri­ous impli­ca­tions of reg­u­la­tions asso­ci­ated with 120.(3) b). Many have also pointed at the uncer­tainty this would cre­ate in putting together the financ­ing of audio­vi­sual pro­duc­tion, a task com­plex enough as it is.

The Min­is­ter of Cana­dian Her­itage (link to Hansard) has said in the House of Com­mons on Wednes­day March 5, 2008 that once the Bill is passed by the Sen­ate, she will hold con­sul­ta­tions with the sec­tor about reg­u­la­tions flow­ing from the leg­is­la­tion and in par­tic­u­lar 120. (3) b).

This should be reas­sur­ing to hear the real ques­tion is whether we really need this sort of leg­is­la­tion to cope with the sit­u­a­tion our gov­ern­ment and our leg­is­la­tors seem to be pre­oc­cu­pied with.

The Crim­i­nal Code already con­tains pro­vi­sions that deal with pornog­ra­phy, child pornog­ra­phy, the pro­mo­tion of hate, slan­der, libel, advo­cat­ing crime and sundry other ele­ments which have proved ade­quate in the past to deal with these offences.

The Supreme Court of Canada has issued rul­ings clar­i­fy­ing some of these activ­i­ties such as pornog­ra­phy (But­ler deci­sion) , child pornog­ra­phy (John Robin Sharp deci­sion), hate crimes (Zun­del deci­sion),  etc. These deci­sions are steeped in rig­or­ous research and prove how dif­fi­cult it is to rush to judg­ment based on mere idio­syn­cratic and per­sonal opin­ions. There is cause for con­cern if such judg­ments were left to a panel of non jurists.

Finally, there are other instru­ments avail­able to the gov­ern­ment to deal with the per­ceived tax inequity result­ing from a crim­i­nal con­vic­tion of the film-maker while the pro­duc­tion itself ben­e­fits from a tax cer­ti­fi­ca­tion. Aren’t the pro­vi­sions of the Crim­i­nal Code con­cern­ing the pro­ceeds of crimes  suf­fi­cient to sat­isfy the government’s objectives?

IIf the Gov­ern­ment is only con­cerned with mate­r­ial with con­tent that is obscene, child pornog­ra­phy or hate lit­er­a­ture (includ­ing pro­mot­ing geno­cide), why not refer to that in the Income Tax Act? In this way, the deci­sion to with­old tax exemp­tion cer­tifi­cates could be tied to a find­ing by a judge under the Crim­i­nal Code—all of these pro­vi­sions have been upheld by the Supreme Court. This could also lead to reclaim­ing the pub­lic invest­ment made in the pro­duc­tion of the crim­i­nal activity.

Tell me more

The full text of sec­tion { 120.(3) of the Act reads as follows:

“(3)The def­i­n­i­tion “Cana­dian film or video pro­duc­tion cer­tifi­cate” in sub­sec­tion 124.4(1) of the Act is replaced by the fol­low­ing:  “Cana­dian film or video cer­tifi­cate” means a cer­tifi­cate issued in respect of a pro­duc­tion by the Min­is­ter of Cana­dian Her­itage cer­ti­fy­ing that the file or video pro­duc­tion in respect of which the Min­is­ter is sat­is­fied that

(a)   except where the pro­duc­tion is a treaty co-production ( as defined by reg­u­la­tion) an accept­able share of rev­enues from the exploita­tion of the pro­duc­tion in non-Canadian mar­kets is, under the terms of any agree­ment , retained by

(i) a qual­i­fied cor­po­ra­tion that owns or has owned an inter­est, or for civil law a right in the production,

(ii) a pre­scribed tax­able Cana­dian cor­po­ra­tion related to the qual­i­fied cor­po­ra­tion, or

(iii) any com­bi­na­tion of cor­po­ra­tions described in sub­para­graph (10 or (ii); and

(b)   pub­lic finan­cial sup­port of the pro­duc­tion would not be con­trary to pub­lic pol­icy.” (our empha­sis)

A few more facts about the con­tro­ver­sial amend­ment:

1.      The intent to amend the Income Tax Act was first announced by the Hon. John Man­ley and Sheila Copps in 2003 as part of the Lib­eral gov­ern­ment updat­ing of the ITA treat­ment of the film and video cer­ti­fi­ca­tion provisions.

2.      The cur­rent ver­sion of the Bill received unan­i­mous sup­port of all par­ties when it was voted on three times in the House of Com­mons. Par­lia­men­tar­i­ans of all stripes admit they missed the rel­e­vance of 120.(3) b when they stud­ied the legislation.

3.      The leg­is­la­tion is still in font of the Bank­ing Sen­ate Com­mit­tee and Sen­a­tors will hold addi­tional hear­ings on C-10 as a result of the clam­our that it has caused. The CCA has asked to appear before this Com­mit­tee to present its views on this legislation.

4.      There has been con­sid­er­able edi­to­r­ial com­men­tary on the leg­is­la­tion, most of which opposes the inter­pre­ta­tion of 120(3) B as an invi­ta­tion for polit­i­cal or sub­jec­tive deci­sions regard­ing the artis­tic mer­its of a par­tic­u­lar production.

ERRATUM:

The CCA made a mis­take when the bul­letin was first sent out, nam­ing the John Robin Sharpe deci­sion as the Robin Mitchell Sharpe deci­sion. The CCA wishes to apolo­gies for any incon­ve­nience this may have caused.