How to Calculate Eligible Labour Costs for Canadian Film, TV, and Digital Media Tax Credits

Labour costs make up most of the value for Canadian screen-based tax credits. For many productions, over 70% of the total tax credit comes from eligible labour. Mistakes—like listing the wrong worker or expense—can lead to a reassessment or a smaller refund. This guide shows you how to calculate eligible labour costs for Canadian film, TV, and digital media tax credits, using real program rules and examples.

What Is “Eligible Labour” for Film and Media Tax Credits?

Eligible labour means money paid to people who worked directly on your production and are Canadian residents. The details can differ between programs, but the main idea stays the same.

Here’s how the main federal programs define eligible labour:

Canadian Film or Video Production Tax Credit (CPTC)

The Canadian Film or Video Production Tax Credit gives a refundable federal tax credit of 25% on qualified Canadian labour expenses.

Eligible labour costs include:

Salaries and wages paid to Canadian residents
Payments to people under employment or personal services contracts
Employer-paid CPP and EI contributions linked to eligible wages
Work performed directly on the approved production

Limits to remember:

Labour must be reasonable for the work done
Payments must be made in the tax year or within 60 days after year-end
Corporate service fees do not count unless the money goes straight to individuals

Film or Video Production Services Tax Credit (PSTC)

The Film or Video Production Services Tax Credit offers a 16% refundable tax credit on eligible Canadian labour expenses.

Eligible labour costs:

Salaries and wages paid to Canadian residents
Work performed in Canada
Employees and qualifying independent contractors

What’s not eligible:

Payments to non-residents
Producer fees and profit sharing
Labour linked to development or distribution

This program is popular for foreign service productions. It can be combined with some provincial credits.

How Provincial Tax Credits Treat Labour Costs

Provinces use similar ideas but with different rates and rules.

British Columbia Film and Television Tax Credits

BC has several labour-based credits, such as:

BC Film and Television Tax Credit
Digital Animation, Visual Effects, and Post-Production (DAVE) Credit

The DAVE credit gives 16% to 17.5% of qualifying BC labour costs for digital animation and visual effects.

Eligible labour must:

Be paid to BC-based workers or contractors
Relate to approved post-production activities
Be backed up by payroll records and contracts

Quebec Production Services Tax Credit

Quebec’s production services credit gives 25% to 41% on eligible labour and goods, depending on the activity and location.

Labour must:

Be spent in Quebec
Be for production, animation, or VFX services
Be paid to eligible people or companies under SODEC rules

Step-by-Step: How to Calculate Eligible Labour Costs

Follow these steps to make sure you claim the right amount.

Step 1: List Eligible Workers

Include:

Canadian-resident employees
Canadian-resident independent contractors (if allowed)

Do not include:

Non-residents
Corporations and loan-out companies (unless the rules say you can and you structure it properly)

Step 2: Check Eligible Activities

Only include labour tied to:

Production
Post-production
Animation and VFX (if your program allows)

Labour for development, marketing, or distribution usually does not count.

Step 3: Add Up Eligible Payroll Amounts

Include:

Gross wages or fees
Employer CPP and EI contributions
Vacation pay linked to eligible work

Do not include:

Bonuses not tied to production work
Profit sharing
Per diems and travel costs

Step 4: Use the Correct Program Percentage

Apply the right rate:

25% for CPTC (federal)
16% for PSTC (federal)
16%–41% for provincial programs, depending on where you are

You can use GrantHub’s eligibility matcher to compare programs by province and production type. This helps when combining credits.

Common Mistakes to Avoid

Including non-resident labour
Even one ineligible worker can cause a review and slow down your refund.
Claiming corporate service fees as labour
Most tax credits only allow payments to individuals, not companies.
Missing payment timing rules
Labour usually must be paid within 60 days after year-end to count.
Poor documentation
Missing contracts, timesheets, or payroll records are a common reason costs get denied.

Frequently Asked Questions

Q: Can independent contractors count as eligible labour?
Yes, if they are Canadian residents and meet the program’s rules. Corporate contractors are usually left out unless the program allows the money to flow through to individuals.

Q: Are producer fees eligible labour costs?
Usually not. Producer fees and profit sharing are specifically excluded under federal programs.

Q: Can I claim the same labour costs under federal and provincial credits?
Yes. You can usually claim both, as long as you follow each program’s rules and do not double count the same credit.

Q: Do book publishing tax credits use the same labour rules?
Not exactly. Book Publishing Tax Credits often have stricter rules on which roles and activities count compared to film and TV programs.

Q: How long does it take to receive a tax credit refund?
Federal and provincial tax credits are paid after review. This can take a few months, depending on your file and if there is an audit.

Next Steps

Calculating eligible labour costs the right way can mean thousands more in your tax credit refund. GrantHub tracks active film, TV, digital media, and publishing tax credits across Canada, so you can see which programs fit your production.

For more help, check out:

What Business Expenses Are Eligible Across Canadian Grants and Loans
Journalism Tax Credits vs Grants in Canada: What Media Businesses Should Know

When it comes to labour costs, careful work pays off.

How to Calculate Eligible Labour Costs for Canadian Film, TV, and Digital Media Tax Credits