Ontario Sound Recording Tax Credit

Just stumbled across this tax credit for ontario corporations in the record business:

Here's the link:


http://www.omdc.on.ca/Page3398.aspx



Here's the details:

Ontario Sound Recording Tax Credit

What Is It?
The Ontario Sound Recording Tax Credit (OSRTC) is a refundable tax credit based upon eligible production and marketing costs incurred by a qualifying corporation with respect to an eligible Canadian sound recording.

How Much Is the Tax Credit?
The OSRTC is calculated as 20% of qualifying expenditures incurred by an eligible sound recording company with respect to an eligible Canadian sound recording by an emerging Canadian artist or group.

Who Is Eligible?
An eligible sound recording company is a Canadian-controlled corporation having carried on a sound recording business in Ontario for at least 12 months as a corporation or, prior to incorporation, as a sole proprietor or partnership.* An eligible sound recording company must earn more than 50% of its taxable income in Ontario for the preceding taxation year and more than 50% of the company’s business must be related to sound recording activities. An eligible sound recording company must have implemented a distribution plan (a plan to market the recording) for at least one sound recording in the preceding taxation year. An eligible sound recording company must enter into contracts with its artists and must bear the financial risks associated with its business or be related to a company that bears the risks.

* If the corporation's taxation year ends prior to May 11, 2005 please contact the OMDC for the applicable requirements.

What Kind of Expenditures Are Eligible?
Qualifying expenditures include recording production costs, such as artists’ royalties, musicians’ session fees, graphics, digital scanning, programming and testing; production costs for music videos that are directed by a qualified Canadian or made at a production facility in Ontario; and direct marketing expenditures including consultants’ fees and certain costs to launch the recording. Touring, performing manufacturing and distribution costs are not eligible. 100% of qualifying expenditures incurred primarily in Ontario are eligible; 50% of expenditures incurred outside Ontario for marketing and music video production are eligible. Qualifying expenditures must be incurred in the 24-month period beginning when the first qualifying expenditure is incurred in respect of the recording. Government assistance received by the sound recording company in respect of the qualifying expenditures reduces the qualifying expenditures. Funding from FACTOR is not considered government assistance.

What Types of Sound Recordings Are Eligible?
A sound recording is an eligible sound recording if the music or the lyrics, if any, on the recording are performed by an emerging Canadian artist and if:

the music was primarily composed by qualified Canadians; or the lyrics were primarily written by qualified Canadians; or the recording production activities took place in Ontario (a qualified Canadian is a Canadian citizen or permanent resident ordinarily resident in Canada at the time of composition or writing),
the total playing time is at least 15 minutes;**
the eligible sound recording company produced the recording and has exclusive contractual control of the master tape for at least 5 years after completion;
the eligible sound recording company has a distribution plan (a plan to market the recording);**
the sound recording is not primarily spoken word or wildlife or nature sounds, nor for instructional use or advertising or promotional purposes; and
the sound recording is not capable of inciting hatred against an identifiable group; the sound recording does not contain undue exploitation of sex and crime, horror, cruelty or violence.
**If the master recording was completed prior to May 11, 2005 please contact the OMDC for the applicable requirements.

Who Is an Emerging Canadian Artist?
An individual is an emerging Canadian artist if, at the time they signed the recording contract, they are a Canadian citizen or permanent resident ordinarily resident in Canada and if they have not had a gold recording as an individual or as part of a group in the USA and either Canada, UK, France, Germany, Asia or Latin America. A group is an emerging Canadian group if at least 75% of its members are emerging Canadian artists.

How Is the Credit Administered?
The OSRTC is jointly administered by the Ontario Media Development Corporation (OMDC) - an agency of the Ministry of Culture. Application is made to the OMDC for a certificate of eligibility, which the production company files with the Canada Revenue Agency together with its tax return in order to claim the OSRTC. The amount of the credit, net of any Ontario taxes owing, will be paid to the qualifying corporation. If the qualifying corporation does not owe any taxes, the full amount will be paid out.

* PLEASE NOTE: CANADA REVENUE AGENCY (CRA) WILL ADMINISTER BOTH FEDERAL AND ONTARIO CORPORATE TAXES FOR TAXATION YEARS ENDING AFTER DECEMBER 31, 2008. PLEASE BE ADVISED THAT AS OF JANUARY 1ST 2009, THE CRA HAS BECOME THE FIRST POINT OF CONTACT FOR ALL CORPORATE TAX ENQUIRIES. (1 800 959-5525)