The government of Ontario has made life a littleeasier for film and television producers as it handed down its 2004 budget.Although its production tax credit (OFTTC) remains unchanged at 20% of eligiblelabour costs, those costs will not be reduced by the amount of equityinvestment from Canadian government film agencies. This intra-governmentalclaw-back has long been an irritant to local producers.

Further, the OFTTC will now match changes made lastNovember to the equivalent federal tax credit, the Canadian Film or VideoProduction Tax Credit. Those changes allow a third party to hold an interest ina production so long as the production or one of the investors is not connectedto a tax shelter scheme and include a provision that extends a production'seligibility period. Now labour performed up to two years before commencement ofprincipal photography is eligible for the credit.

Describingthe changes as "a step in the right direction", Canadian Film and TelevisionProduction Association chairman Laszlo Barna said he would continue to pressfor an increase in the tax credit itself. Last year, US-financed production inthe province dropped 36% due to a combination of the SARS scare, the risingvalue of the Canadian dollar and competition from other provinces.

In 2003, Ontario saw 133 domestic productions with anaggregate budget of over $360m (C$500m). About 20,000 persons are employed inOntario's film and television production, distribution and exhibition sectors.