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Breaking Down the Nova Scotia Tax Credit Cut

19186_10155478421325397_8978361907328290914_nPulled this from Copernicus’ facebook feed, thought I’d share it here.

I see many comments from the general public who see the tax credit as a hand out, and “if your industry needs heavy subsidy how is it successful?”

Here’s how the NS tax credit worked:
nova scotia 50{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} of labour +10{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} rural bonus(not HRM)+5{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} frequent filming for a max of 65{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} of labour!
it was the highest in the country! wow, thanks immensely, NS film and creative.(gone but not forgotten)
but here’s how other provinces’ tax credits stacked up, specifically for animation:

BC 35{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} of labour+ 17.5 digital animation credit+10{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} rural bonus(not vancouver) = 62.5{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd}

manitoba 45{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} of labour +5{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} rural bonus +10{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} frequent filming (not winnepeg) = 55{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd}

newfoundland 40{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} of the NFLD labour = 40{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd}

Ontario 35{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} of labor+20{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} digital animation credit +10{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} rural bonus(not toronto) = 65{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd}

quebec 25{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} of the total +16{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} digital animation credit +10{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} rural(not montreal) = 51{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd}

alberta- 25{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} of the total money spent in alberta(not based on labour)
NB 25{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} of new brunswick total spent(not based on labour)

so, all these credits were non-refundable which meant you could use them to finance the production, in other words, borrow from the bank.
(you don’t get the credit till the production is completed and lots of pencil pushers poke and prod for months)

now what the liberal government proposed in it’s budget:
25 {f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} of the **available credit is non refundable, and 75{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} is refundable as taxes owing.
so that 25{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} is available for financing- oh wait its 25{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} of the 50{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd},
so that’s 12.5{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} of labour.
what about that other 75{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd}? it is refundable and will be recouped as taxes owing.
BUT- All film and television production is set up as a single purpose company, and as such doesn’t have taxes owing.

so we are down to a 12.5{f2e86ea6af82e2bb048871abf045622abf0ed27fb513932dc1ee8c05a54cbefd} labour subsidy. now tell me why any producer would chose to send animation work to Nova Scotia ?

This credit is financing the show- not increasing our bottom line, it is essentially a savings to our clients.
Why have regional subsidy at all? why not get rid of them entirely?
well it’s a stand off, “a race to the bottom” is the common criticism.
But, it makes us a bit more competitive with asia on price- lets say double instead of triple.
You have to pay to play in the film game, and by making this credit non competitive, we are out of the running.
We haven’t put all our eggs in the service basket, we are developing our own shows and games. but service pays the bills, its steady- and it grows our reputation.
we are a world class animation studio of 90+ employees proudly based in Nova Scotia.
Please allow us to continue to thrive here.


  1. murray bain murray bain April 16, 2015

    Hi Mike ,can you fix two typos that I couldn’t on facebook? you can’t edit once you promote a post I’ve learned.
    ontario’s is 65% not 55%
    and 25% is of the available is “non”refundable and 75% is refundable as taxes.

  2. murray bain murray bain April 16, 2015

    reverse that last one i mean.. see I did it again. not much sleep lately- begrudgingly learning economics in the wee hours.

  3. mike mike April 16, 2015

    We could learn a lot from the VFX industry. They’ve already been through this. We’ll become wanderers, going from place to place chasing tax credits at the whims of governments. Don’t buy property, animators, you’ll be on to the next town soon enough.
    See what happened in Louisiana, NYC, and Califonia.

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