The Tax Shelter Era
August 27, 2017 10:27 AM Subscribe
In 1974, in order to boost the Canadian film industry, the Capital Cost Allowance (CCA) was increased to 100%. This meant that as long as their productions met a number of standards that made it “Canadian”, investors could deduct 100% of their investment from their taxable income. Thus began the Tax Shelter Era (1975-1982) of Canadian film.
Although this eight year period did produce some mainstream classics such as The Silent Partner, most of what emerged were low budget genre movies, including quite a few horror films (Prom Night and My Bloody Valentine being among the most well known).
Perhaps the more important result of this period was not the films themselves but the filmmakers that were able to get their foot in the door and gain valuable experience in film production. The man who arguably benefited most from this was David Cronenberg, who turned out five films in this period: Shivers, Rabid, Fast Company, The Brood and Scanners.
And though it was an artistic boon for some, it was a financial swindle for others. Some investors wrote off huge amounts of money for movies they had no intention of ever releasing to audiences. It was discovered that over half of the 66 films produced in 1980 never even made it to theaters, and thus in 1982 the CCA was downgraded to 50% and the Tax Shelter era was over.
Although this eight year period did produce some mainstream classics such as The Silent Partner, most of what emerged were low budget genre movies, including quite a few horror films (Prom Night and My Bloody Valentine being among the most well known).
Perhaps the more important result of this period was not the films themselves but the filmmakers that were able to get their foot in the door and gain valuable experience in film production. The man who arguably benefited most from this was David Cronenberg, who turned out five films in this period: Shivers, Rabid, Fast Company, The Brood and Scanners.
And though it was an artistic boon for some, it was a financial swindle for others. Some investors wrote off huge amounts of money for movies they had no intention of ever releasing to audiences. It was discovered that over half of the 66 films produced in 1980 never even made it to theaters, and thus in 1982 the CCA was downgraded to 50% and the Tax Shelter era was over.
Interesting tale
posted by growabrain at 12:02 PM on August 27, 2017
posted by growabrain at 12:02 PM on August 27, 2017
It really did help launch the Canadian film industry, which is huge - not just in terms of fully Canadian films, but so many film services we can offer to international productions because we have the talent and infrastructure to handle pretty much anything. That tax credit still exists for a lesser extent, and there are also provincial tax credits available. The amount of business these credits have brought in far outweighs the lost revenue of the credits themselves, and has meant that lots of talented creative people can stay and work in Canada instead of having to move to London or LA to work at the same level, which is great! I'm pretty happy to be able to do my job and still be close to my friends and family!
posted by 5_13_23_42_69_666 at 12:20 PM on August 27, 2017 [4 favorites]
posted by 5_13_23_42_69_666 at 12:20 PM on August 27, 2017 [4 favorites]
Isn;t so much stuff still done in Vancouver because of all the tax handouts. like over half of the salary of a special effects person is paid by the government. Its welfare for already rich companies.
posted by Iax at 1:00 PM on August 27, 2017
posted by Iax at 1:00 PM on August 27, 2017
including quite a few horror films (Prom Night and My Bloody Valentine being among the most well known).
ARGH BLACK CHRISTMAS DAMN YOU
posted by ricochet biscuit at 1:15 PM on August 27, 2017 [4 favorites]
ARGH BLACK CHRISTMAS DAMN YOU
posted by ricochet biscuit at 1:15 PM on August 27, 2017 [4 favorites]
ARGH BLACK CHRISTMAS DAMN YOU
I had originally included that, but according to this link it was made pre-CCA. Otherwise, yes, your anger is quite justified, ricochet biscuit.
posted by AlonzoMosleyFBI at 1:31 PM on August 27, 2017 [2 favorites]
I had originally included that, but according to this link it was made pre-CCA. Otherwise, yes, your anger is quite justified, ricochet biscuit.
posted by AlonzoMosleyFBI at 1:31 PM on August 27, 2017 [2 favorites]
like over half of the salary of a special effects person is paid by the government. Its welfare for already rich companies.
what? no, not really. it's not giving out money, it's just taxing the money spent on local productions at a lower rate. I work at a large VFX company, and the tax breaks make it so that we can attract a lot more business, and then pay people at a decent rate. And it's not even a guarantee of success - a lot of canadian VFX companies have gone under because it is hard to stay in business, even with the tax breaks. When it does work though, it affords a decent living for a lot of very hardworking people, I hope you don't begrudge us that?
I don't have the actual figures on hand, but the amount of cash brought in versus the amount invested by the government is like, 10 to 1
posted by 5_13_23_42_69_666 at 1:46 PM on August 27, 2017 [7 favorites]
what? no, not really. it's not giving out money, it's just taxing the money spent on local productions at a lower rate. I work at a large VFX company, and the tax breaks make it so that we can attract a lot more business, and then pay people at a decent rate. And it's not even a guarantee of success - a lot of canadian VFX companies have gone under because it is hard to stay in business, even with the tax breaks. When it does work though, it affords a decent living for a lot of very hardworking people, I hope you don't begrudge us that?
I don't have the actual figures on hand, but the amount of cash brought in versus the amount invested by the government is like, 10 to 1
posted by 5_13_23_42_69_666 at 1:46 PM on August 27, 2017 [7 favorites]
A lot of whether or not this kind of thing works (in the sense of it being mutually beneficial for both the film industry and the locality that is trying to woo them) is in the details. New Orleans launched an incentive package a while back to encourage more film companies to work there, but the impression I've gotten is that it hasn't brought a lot of benefit to the city. Companies will film there, but they ship in all the folks who are doing the filming from elsewhere (meaning few job opportunities for New Orleanians) and the system isn't really geared toward fostering a local film industry, just getting existing players to use New Orleans more in their productions. Meanwhile the filmings themselves are often fairly disruptive.
It's been a little while now since I lived there, but I didn't get the sense that residents were particularly enjoying the increased activity. Possibly it is bringing money into the city coffers though, which is certainly badly needed down there.
posted by Anticipation Of A New Lover's Arrival, The at 1:59 PM on August 27, 2017
It's been a little while now since I lived there, but I didn't get the sense that residents were particularly enjoying the increased activity. Possibly it is bringing money into the city coffers though, which is certainly badly needed down there.
posted by Anticipation Of A New Lover's Arrival, The at 1:59 PM on August 27, 2017
From perhaps faulty memory, there was a time back in the nineties in the US where film industry tax breaks did help local economies more, but that created a sort of growing competition between cities to offer better breaks, which, combined with more and more cities jumping on the bandwagon, made the boost to the local economy largely disappear.
In other words, it worked somewhat for the cities/states that used it first, but the effect didn't last long once it became a more competitive field for the film industry to exploit.
posted by gusottertrout at 2:53 PM on August 27, 2017 [1 favorite]
In other words, it worked somewhat for the cities/states that used it first, but the effect didn't last long once it became a more competitive field for the film industry to exploit.
posted by gusottertrout at 2:53 PM on August 27, 2017 [1 favorite]
Hah.
This policy shift — and the funding of feature films with public money in general — came under further scrutiny after the critic Robert Fulford (writing under the name Marshall Delaney) wrote a scathing review of David Croneberg’s CFDC-funded horror film Shivers in the September 1975 edition of Saturday Night magazine. The review, titled “You Should Know How Bad This Film Is. After All, You Paid For It,” called the film “an atrocity, a disgrace to everyone connected with it — including the taxpayers… If using public money to produce films like this is the only way that English Canada can have a film industry, then perhaps English Canada should not have a film industry.”
I'd pay good money to watch a reaction video of Fulford watching a double bill of Naked Lunch and Crash.
posted by mandolin conspiracy at 3:56 PM on August 27, 2017 [6 favorites]
This policy shift — and the funding of feature films with public money in general — came under further scrutiny after the critic Robert Fulford (writing under the name Marshall Delaney) wrote a scathing review of David Croneberg’s CFDC-funded horror film Shivers in the September 1975 edition of Saturday Night magazine. The review, titled “You Should Know How Bad This Film Is. After All, You Paid For It,” called the film “an atrocity, a disgrace to everyone connected with it — including the taxpayers… If using public money to produce films like this is the only way that English Canada can have a film industry, then perhaps English Canada should not have a film industry.”
I'd pay good money to watch a reaction video of Fulford watching a double bill of Naked Lunch and Crash.
posted by mandolin conspiracy at 3:56 PM on August 27, 2017 [6 favorites]
Isn't this the sort of thing that used to happen in Germany that was the only thing that allowed Uwe Boll to exist?
posted by Samizdata at 4:25 PM on August 27, 2017 [2 favorites]
posted by Samizdata at 4:25 PM on August 27, 2017 [2 favorites]
I will say there was a definite downturn in Miami-area productions when the state tax credits and other incentives expired. I think there is still a reality show going on, but IIRC Bloodlines was the last relatively large project being done down here. All I've noticed recently is B-roll type stuff, and everyone seems to be saying they're either going to have to do something else or move to Georgia. It's been a bit of a thing because it's killed all the ancillary businesses that did craft service and rented cameras, equipment, and such. Give it a couple more years and the infrastructure just won't exist anymore since everyone will have moved on and won't be coming back.
posted by wierdo at 4:55 PM on August 27, 2017
posted by wierdo at 4:55 PM on August 27, 2017
This is a big part of the reason why Vancouver Never Plays Itself!
posted by Philby at 5:13 PM on August 27, 2017 [3 favorites]
posted by Philby at 5:13 PM on August 27, 2017 [3 favorites]
Government seed money seems to have created security for producers but it seems to have also set standardized budgets and isn't creating much growth down the production chain. One of the cable companies bought the largest animation studio back in the 90s and as soon as that happened, rates for the job that I did were clawed back to a standardized level. All the smaller studios coincidentally have been offering me those same rates over the last 20 years (still frozen at what they were in the mid 90s).
posted by bonobothegreat at 7:07 PM on August 27, 2017
posted by bonobothegreat at 7:07 PM on August 27, 2017
...at least from my limited perspective.
posted by bonobothegreat at 7:12 PM on August 27, 2017
posted by bonobothegreat at 7:12 PM on August 27, 2017
And now 35 years later I finally understand the premise behind Great White North on SCTV.
posted by enf at 7:37 PM on August 27, 2017 [1 favorite]
posted by enf at 7:37 PM on August 27, 2017 [1 favorite]
There was a collage film made a few years back using only footage from films from the 'tax shelter' era: Taking Shelter, cut together by director Jonathan Culp. Trailer is here.
posted by filmvisuality at 10:06 PM on August 27, 2017 [2 favorites]
posted by filmvisuality at 10:06 PM on August 27, 2017 [2 favorites]
Isn't this the sort of thing that used to happen in Germany that was the only thing that allowed Uwe Boll to exist?
Heh. Well, yeah, but it helps plenty of better filmmakers too. European filmmakers rely heavily on national incentives for planning their budgets. Often creating co-productions between countries, using locations and technicians and artists from more than one nation to get a bigger economic boost for their films. There is a determined effort in many countries to try and prevent Hollywood films from completely swamping their own national films, but at the same time, an eagerness to bring in big budget Hollywood films to help local economies and artists.
At that latter end, it helps explain why certain locations show up in so many films, as location managers from the area offer some interesting sites as options, which filmmakers then tend to repeat since they have a look of "the moment". Here's just one example, in Germany, the Messedamm underpass.
And here's a list of the most favorable incentives different countries offer filmmakers to produce movies in their countries, and the requirements they demand in exchange.
posted by gusottertrout at 12:28 AM on August 28, 2017 [2 favorites]
Heh. Well, yeah, but it helps plenty of better filmmakers too. European filmmakers rely heavily on national incentives for planning their budgets. Often creating co-productions between countries, using locations and technicians and artists from more than one nation to get a bigger economic boost for their films. There is a determined effort in many countries to try and prevent Hollywood films from completely swamping their own national films, but at the same time, an eagerness to bring in big budget Hollywood films to help local economies and artists.
At that latter end, it helps explain why certain locations show up in so many films, as location managers from the area offer some interesting sites as options, which filmmakers then tend to repeat since they have a look of "the moment". Here's just one example, in Germany, the Messedamm underpass.
And here's a list of the most favorable incentives different countries offer filmmakers to produce movies in their countries, and the requirements they demand in exchange.
posted by gusottertrout at 12:28 AM on August 28, 2017 [2 favorites]
For non-Canadians this may on the surface seem to be not unlike the loophole Uwe Boll exploited for his productions but there was a little more in play at the time.
A big part of what gets caught up in Canadian film (and cultural production in general here) and its funding are our ideas of Canadian identity. All our schizophrenic relationships are on display: commercial success vs. authentic representation, popularity vs. artistic integrity, American market dominance vs. Canadian home grown styles. The tax shelter era was ground zero for these debates (See Jennifer Vanderburgh's Ghostbusted! Popular perceptions of English Canadian Cinema which outlines this or particularly Benjamin Wright's Canada’s Great Shame: Tax Shelters, Nationalism, and Popular Taste in Canadian Cinema which has some telling excerpts of an interview with producer Don Carmody and some excellent things to say in regards to Cronenberg and his emergence during this period).
While I think on the surface the excuse for the CCA's cancellation I've often heard is echoed in that Robert Fulford review of Shivers mentioned above (the "your tax dollars are being used to make garbage!" argument and shaming being a strong motivator for Canadian voters) but I think a larger problem was simply that it wasn't financially sound overall. For instance, if the film was successful (as in the case with Meatballs and Porkys - combined gross of $150mil) producers would be subjected to higher capital gains fees (mentioned in the Wright article I linked to in the previous paragraph). This article from Cinema Canada from the period as well as this one from the CJC in 1991 talk numbers (if you're interested).
Regardless there is no denying that the lasting legacy of that time was a boom for our industry. In the early 70's you'd be lucky to string together a film crew from across Canada, when they cancelled CCA in 1982 we had something like a dozen and now we have industry comparable to other countries our size. In fact, every few years someone suggests we try it again to give ourselves a boost (I found this article from 2004 but I've seen comments as recently as last year advocating its reinstatement).
If you're interested in more information (film gods help you) Manjunath Pendakur's Canadian Dreams and American Control does a good job (he's got some strong opinions [which for the record I don't disagree with] but I think it is a solid statement on the era).
posted by Ashwagandha at 9:36 AM on August 29, 2017 [5 favorites]
A big part of what gets caught up in Canadian film (and cultural production in general here) and its funding are our ideas of Canadian identity. All our schizophrenic relationships are on display: commercial success vs. authentic representation, popularity vs. artistic integrity, American market dominance vs. Canadian home grown styles. The tax shelter era was ground zero for these debates (See Jennifer Vanderburgh's Ghostbusted! Popular perceptions of English Canadian Cinema which outlines this or particularly Benjamin Wright's Canada’s Great Shame: Tax Shelters, Nationalism, and Popular Taste in Canadian Cinema which has some telling excerpts of an interview with producer Don Carmody and some excellent things to say in regards to Cronenberg and his emergence during this period).
While I think on the surface the excuse for the CCA's cancellation I've often heard is echoed in that Robert Fulford review of Shivers mentioned above (the "your tax dollars are being used to make garbage!" argument and shaming being a strong motivator for Canadian voters) but I think a larger problem was simply that it wasn't financially sound overall. For instance, if the film was successful (as in the case with Meatballs and Porkys - combined gross of $150mil) producers would be subjected to higher capital gains fees (mentioned in the Wright article I linked to in the previous paragraph). This article from Cinema Canada from the period as well as this one from the CJC in 1991 talk numbers (if you're interested).
Regardless there is no denying that the lasting legacy of that time was a boom for our industry. In the early 70's you'd be lucky to string together a film crew from across Canada, when they cancelled CCA in 1982 we had something like a dozen and now we have industry comparable to other countries our size. In fact, every few years someone suggests we try it again to give ourselves a boost (I found this article from 2004 but I've seen comments as recently as last year advocating its reinstatement).
If you're interested in more information (film gods help you) Manjunath Pendakur's Canadian Dreams and American Control does a good job (he's got some strong opinions [which for the record I don't disagree with] but I think it is a solid statement on the era).
posted by Ashwagandha at 9:36 AM on August 29, 2017 [5 favorites]
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