A Terms of Trade Primer - Part 8 (Producer Fees/Overhead, Tax Credits, Audit Rights)

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This is the eight (and final) installment in our series about the new Terms of Trade applicable to the English-language Canadian private broadcasting industry (Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7). This installment focuses on Section 9 (Producer Fees and Overhead), Section 10 (Retention of Producer Tax Credits) and Section 11 (Audit Rights) of the Terms of Trade Agreement. Archived versions of all eight posts in this series are available at this link.

What do the Terms of Trade say about... producer fees and overhead?

Producer fees and overhead "will be industry standard, as accepted by Canada Revenue Agency". CRA policy (as set out in Application Policy FAS 2009-01) with respect to fees and overhead paid to "incumbent" producers (e.g., those with an ownership interest in the production company) is that fees in the amount "of 10% of the total actual costs in parts B and C of the standardized production budget" are "generally considered reasonable". As the CRA document goes on to point out, that threshold amount "is not intended as a 'cap' or 'maximum allowable'. When justified and supported by the facts of the particular case, amounts greater than the reference threshold may be considered reasonable." (For further information, see this Heenan Blaikie LLP publication on the topic from 2008.)

Please see full article below for more information and links.

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Published In: Art, Entertainment & Sports Updates, Communications & Media Updates, Finance & Banking Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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