The Canadian government ismoving to increase the labour-based tax credit available to local film andtelevision producers, a long awaited balancing move following the February 2003increase to the tax credit available to off-shore producers.

The changes are expected toaffect Canadian content production and thereby increase Canada's attractivenessas an international co-production partner. The announcement was made Fridayfollowing a leak to the media.

Under the new regime, theCanadian Film and Video Producers Tax Credit (CFVPTC) will provide a tax creditequal for Canadian labour costs up to a maximum of 60% of the budget spent inCanada, up from 48%. The government will also classify any equity it holdsin a production as assistance rather as part of the budget, thereby enhancingthe potential benefit of the tax credit.

In a statement, CanadianFilm and Television Production Association acting president and CEO Guy Maysonsaid, "While foreign location shooting is important, we can't have thedomestic industry at a disadvantage. I think the government has helped fixthat."

According to the CFTPA, thenew credit will "provide assistance up to 12% of the cost of production, net ofassistance."