Canadian Film Digest Year Book (1976)

SECRETARY OF STATE'S ANNOUNCEMENT ON FILM On August 5, Secretary of State J. Hugh Faulkner announced two federal government initiatives designed to increase private sector support of the Canadian feature film industry: a new income tax regulation which will allow investors in an eligible film to deduct 100% of their investment in one year; and after extensive negotiations with the Secretary of State, the two largest theatre chains in Canada — Famous Players Ltd. and Odeon Theatres (Canada) Ltd. — have voluntarily agreed to a quota of four weeks per theatre per year and investment of at least $1.7 million to aid the exhibition and production of Canadian feature films. “lam certain that these measures will be of significant benefit to the film industry in Canada,” said Mr. Faulkner, ‘‘and will see the private sector making additional investments in Canadian films to supplement the $3 million or thereabouts now invested annually by the Canadian Film Development Corporation (C.F.D.C.).” The new definition of a Canadian feature film will appear under subsection 1104(2) (h) of the Income Tax Regulations and will be retroactive, for income tax purposes, to include films produced after November 18, 1974. On that date, the federal budget included provisions for increasing the capital cost allowance for investors in eligible Canadian films from 60% to 100%. To be eligible for increased capital cost allowance, an applicant must invest in a Canadian feature film that is: At least 75 minutes in running time; Produced under a formal Canadian coproduction agreement with a foreign country, or A film in which: The producer is Canadian: 2/3 or more of the personnell performing key creative functions are Canadian; A minimum of 75% of the renumeration paid to personnel other than those included above is paid to Canadians; 102 At least 75% of the technical services are performed in Canada; The Canadian copyright is benefically owned by Canadian for not less than four years following completion of the film. To determine what degree of Canadian participation in a feature film would be required under the new regulations, Mr. Faulkner said that his department has consulted with representatives of the film industry. For film investors to be eligible for the tax write-off, producers will be required to apply for certification of the film to a District Taxation Office. “| will be monitoring the effects of these criteria as incentives to the industry and investors. If the results are not encouraging or if the regulations do not serve their intended purpose, | will propose changes to them.” Mr. Faulkner also announced that he had reached an agreement with Famous Players Ltd. and Odeon Theatres (Canada) Ltd. which between them control most theatres in Canada, to guarantee screen time for Canadian feature films and capital investment for Canadian film production. Famous Players Ltd. and Odeon Theatres (Canada) Ltd. have agreed to a quota system by which Canadian feature films will be guaranteed not less than four weeks of screen time per theatre per year in Famous Players and Odeon outlets in Canada. “The C.F.D.C. will monitor the situation closely,” Mr. Faulkner added. “They will submit quarterly reports to me which will be made public so that we will know how effectively the quota is being met. | have had discussions with all of the provinces, some of which are considering legislation, and | am sure that they too will carefully follow the developments.’’ Quebec and Ontario have both introduced Bills which could lead to a legislated quota. “| am gratified that Famous Players and Odeon have seized the initiative and responded positively to this increased quota plan. This new agreement, much broader in every way than the earlier one, has the potential to be really effective. “| also approached the chains to increase their investment in Canadian films. They have consented to invest at least $1.7 million in Canadian films over a One year period. Famous Players will provide $1.2 million and Odeon $500,000.” In conclusion, Mr. Faulkner said: ‘| will be keeping a close watch on the progress of this quota and investmnet agreement. | am confident that, together with the new capital cost allowance criteria, these measures will provide a healthy stimulus to the film industry in Canada so that it may compete more effectively with its foreign counterpars.” ACTRA’S REACTION Since feature films first became a significant part of the entertainment industry, Canada has consistently failed to properly understand and regulate the dominace of this industry by foreign, mainly American, interests. The Americans have never wavered in their basic aim: to control the exhibition and distribution of feature films in Canada. In 1909, the American ConsulGeneral in Winnipeg, John Edward Jornes, wrote an open letter to the New York trade publication, Moving Picture World, exorting American film interests to take over the Canadian market: “In this new country where all forms of amusement are scarc, moving pictures are welcomed, and_ there is no reason why the manufacturers of the United States should not control the business.” In 1920, a Canadian critic, S. Morgan-Powell, pinpointed an essential condition for keeping control of the film industry in Canada — control the theatres: