Two routes, one fork per production
Each production takes exactly one path through the credit system, and the paths reward different budgets. The domestic route computes on labour at higher rates but demands a Canadian-controlled qualified corporation, copyright ownership and CAVCO's Canadian-content certification. The service route computes on a broader base of qualifying Ontario spend at lower rates and asks far less about ownership, which is why it carries productions made for someone else. A labour-heavy budget shot mostly with Ontario crew leans one way; a spend-heavy budget with significant non-labour costs can lean the other. The fork is per production, not per company: a slate can hold your own series on the domestic route and a service job for a foreign studio on the other, each in its own corporation with its own claim. Tax Planning & Advisory here means running the whole budget through both routes before certification starts, because the fork cannot be re-taken after the fact.
| Question | Domestic route (OFTTC + CPTC) | Service route (OPSTC + PSTC) |
|---|---|---|
| Who owns the copyright? | Your qualified corporation | Usually the client producer |
| What does the credit measure? | Eligible labour | Broader qualifying Ontario spend |
| Content certification? | CAVCO Canadian-content points | None — accredited production instead |
| Typical fit | Your own shows | Work produced under contract |
Enhancements are planned, not tripped over
Inside the domestic route sit add-ons that only exist if the production is shaped for them in prep. The OFTTC carries an enhanced rate for first-time producers and a regional bonus where enough of the shoot happens outside the Greater Toronto Area, which turns a location decision into a tax decision worth making deliberately rather than discovering at claim time. On the post side, the Ontario Computer Animation and Special Effects credit pays 18% on eligible VFX and animation labour, a separate claim with its own labour tracking that has to be set up before the vendor contracts are signed, not after delivery. None of these change how you shoot; all of them change what the shoot is worth on the T2.
Pay the producer in a currency the claim counts
How the owner takes money out changes the size of the claim. Salary paid to the producer for production work can sit in the eligible labour base where it is reasonable and documented; dividends never can, because they are not labour. Salary also builds RRSP room and CPP entitlement, while a management fee charged by the parent company to the production corporation needs a written agreement and HST on the invoice to survive review. Where family members work on the slate, TOSI is the flag to check before income lands on their returns. The salary-versus-dividend answer that suits a plumber rarely suits a producer, because a producer's wage does double duty as a credit input.
Development costs, dead projects and the year-end
A development slate is a graveyard with a few survivors, and the tax planning point is to bury the dead on time. Costs carried for projects that are genuinely abandoned should be written off in the year the decision is made, with the abandonment documented, rather than sitting on the balance sheet flattering the asset side. The corporation's year-end is a lever too: the claim can only be filed with the T2 for the year, so a year-end placed shortly after expected delivery shortens the gap between wrap and refund, while an awkward one adds most of a year to it. And because the refundable credits reduce the cost pools they relate to, a big claim year raises taxable income; the service-fee margins and producer fees that remain are what the small business deduction shelters, at roughly 12.2% combined in Ontario on the first $500,000. A first genuinely profitable year also starts the corporate instalment clock, so the cash plan for the following production should assume the CRA now expects to be paid quarterly rather than once.
Decisions, priced in writing
Route choice, location bonuses, producer compensation and write-off timing are exactly the kind of decisions our decision-first approach exists for: each one modelled with numbers from your own budget, answered in writing before it becomes irreversible. The structure that carries these choices, the parent company and the per-production corporations underneath it, is its own decision, covered in our Incorporation work for producers.
