This story may be positive for LGF.
canoe.com
Revenue Canada to give special attention
to Hollywood stars
By IAN JACK
The Financial Post
Revenue Canada will set up a special unit to speed through the
system the tax returns of Hollywood movie stars working in
Canada, the Financial Post has learned.
The special unit is one of the changes the department is making in
the face of protests from the multibillion-dollar Canadian film
industry, which was outraged when Revenue Canada said it would
start charging regular income tax rates to Americans coming north
to work on movies and TV shows.
The industry said the move could cost hundreds of jobs because
Hollywood stars such as Gwyneth Paltrow and John Travolta
would stay away rather than pay the top Canadian marginal rate of
47% of net income. Revenue Canada had been charging them just
15% of gross income as a withholding tax.
Revenue Canada has already backed away from raising the tax to
47%. Herb Dhaliwal, the revenue minister, said Jan. 22 that the
department would go back to charging just the withholding tax
while a joint group of industry players and Revenue officials
worked out a more permanent solution.
While the group isn't expected to finalize all the details of how to
treat the stars - and other entertainment workers ranging from
directors to key grips and gaffers - until June, Revenue Canada has
decided it will handle all movie people through a new group of
officials dedicated to just that.
Taxpayer watchdog Walter Robinson was critical.
"You want Revenue Canada to be serving Canadians in general,
not specific groups because they've complained loudly," said Mr.
Robinson, federal director of the Canadian Taxpayers Federation.
"It looks like the squeaky wheel is getting the grease. How about a
special unit for processing my tax return faster?"
But sources say the unit replicates one in place in Britain, and is
intended to give Hollywood a greater degree of comfort it won't
face hassles over tax payments.
The government will borrow another British idea and, in a further
concession to the industry, allow U.S. citizens working on movies
and TV shows to get pre-production approval of the tax they will
have to pay. Ruling on the tax owed before film workers set foot in
the country will be a major part of the work of the unit.
Mr. Robinson called this another perk unavailable to regular
Canadians.
The Canadian film and TV industry employs about 35,000 people
and generates $2.3-billion a year in economic activity, and much of
that comes from U.S. shows and movies shot in Canada using
American actors.
The film industry in British Columbia, home of Mr. Dhaliwal's
riding, has been particularly vocal in its complaints. One producer,
Fitch Cady, said several projects in B.C. had been held up pending
a decision on the tax.
Mr. Dhaliwal has said that ultimately the tax rate for U.S. actors will
have to rise. But it almost certainly will not hit the level a Canadian
would have to pay on the same income.
Canada has treaties with most U.S. states and with the U.S.
government to avoid double taxation, meaning any tax paid in
Canada by Americans can be deducted in their home state. But
there is no such treaty with California, where most big-name actors
live, which is why they care about Canadian tax rates.
Senior Canadian tax officials were in California late last week to tour
the major studios and meet with state bureaucrats in an attempt to
persuade them to pursue a treaty banning double taxation. But
there is no incentive for the California government to sign one,
since it could lead to more productions moving north. |
