OCT 7 1987
Federal Business Development Bank 800, square Victoria Suite 900 Montreal, Quebec H4Z 1L4
Attention: Angela Sunde, Coordinator, Information
Dear Sirs: C. Tremblay (613) 957-2139
Re: Update to Federal Assistance Programs - F.B.D.B. Database
Further to your letter of July 8, 1987, we have reviewed the English version of the summary relating to the Capital Cost Allowance - Certified Feature Productions and Certified Short Productions, which you supplied. Our comments are provided below.
In general, your summary is correct, however, you may wish to add a comment after the second paragraph entitled "Criteria" indicating that the 100% allowance under Class 12 of Schedule 11 of the Income Tax Regulations is spread over two years because of the half-year rule which is applicable in the year of acquisition.
You may also wish to add at the end of the paragraph entitled "Certified Production", a reference to Income Tax Regulation 1100(21), entitled "Certified Films and Video Tapes", and to the definition of "Certified Production" in Income Tax Regulation 1104(2). Then, should a reader wish to do so, he may consult these references for more detailed information.
The White Paper on tax reform of June 18, 1987, may affect future capital cost allowance claims regarding acquisitions of certified Canadian film productions after December 31, 1987, if passed in its present form. If adopted as proposed, the capital cost allowance on films will be reduced to 15% in the year of acquisition and 30% on a declining balance method in subsequent years. Investors will however be able to deduct the cost of a film fully, without regard to the above rule, to the extent of their income from all films in a year.
We trust the above is of some assistance. Yours truly,
ORIGINAL SIGNED BY
for Director Small Business and General Division Specialty Rulings Directorate Legislative and Intergovernmental Affairs Branch