Film and Media Tax Credits Program v 2.0 - Privacy impact assessment summary

Domestic Compliance Programs Branch (DCPB)
Scientific Research and Experimental Development Directorate 
Canada Revenue Agency

Overview & PIA Initiation

Government institution

Canada Revenue Agency

Government official responsible for the PIA

Ted Gallivan

Assistant Commissioner

Domestic Compliance Programs Branch & International, Large Business and Investigations Branch

Head of the government institution or Delegate for section 10 of the Privacy Act

Marie-Claude Juneau

Director

Access to Information and Privacy Directorate

Name of program or activity of the government institution

Film and Media Tax Credit Program

Description of the class of record and personal information bank

Standard or institution specific class of record:

Film and Media Tax Credit Program - CRA DCPB 150

Standard or institution specific personal information bank:

Film and Media Tax Credit Program - CRA PPU 442 

Legal authority for program or activity

Section 125.4 of the Income Tax Act (ITA) sets out the framework for the Canadian Film or Video Production Tax Credit.

Section 125.5 of the ITA sets out the framework for the Film or Video Production Services Tax Credit.

Subsection 150(1) of the ITA requires a return of income that is in prescribed form and that contains prescribed information to be filed with the Minister without notice or demand for the return for each taxation year of a taxpayer.

Section 162 of the ITA is a penalty provision in cases where taxpayers do not file or provide certain information.

Section 237 of the ITA authorizes the collection of the SIN and is used for identification purposes.

Section 1106 of the Income Tax Regulations (Regulations) sets out the parameters for the certification of a film or video production.

Section 9300 of the Regulations defines the term “accredited production” for the purposes of section 125.5 of the Act.

Subsection 63(1) of the Canada Revenue Agency Act (CRA Act) allows the CRA to enter into or amend an agreement with a provincial, territorial or aboriginal government to administer a tax or other fiscal measure if the agreement is in accordance with guidelines relating to agreements of that kind established jointly by the Minister (of National Revenue) and the Minister of Finance.

This allows the CRA to administer the following provincial tax credits: 

Ontario Film and Television Tax Credit

• Section 91 of the Ontario Taxation Act, 2007
• Sections 23 and 26 to 30 of Ontario Taxation Act Regulation, O.Reg 37/09

Ontario Production Services Tax Credit

• Section 92 of the Ontario Taxation Act, 2007
• Sections 31 to 33 of Ontario Taxation Act Regulation, O.Reg 37/09

Ontario Interactive Digital Media Tax Credit

• Sections 93 to 93.2 of the Ontario Taxation Act, 2007
• Sections 34 to 35.2 of Ontario Taxation Act Regulation, O.Reg 37/09

Ontario Sound Recording Tax Credit

• Section 94 of the Ontario Taxation Act, 2007
• Section 36 of Ontario Taxation Act Regulation, O.Reg 37/09

Ontario Computer Animation and Special Effects Tax Credit

• Section 90 of the Ontario Taxation Act, 2007
• Sections 23 to 25 of Ontario Taxation Act Regulation, O.Reg 37/09

British Columbia Film and Television Tax Credit

• Sections 79 to 96 of the BC Income Tax Act
• BC Regulation 4/99

British Columbia Production Services Tax Credit

• Sections 79 and 82.1 to 82.3 of the BC Income Tax Act
• BC Regulation 4/99

British Columbia Book Publishing Tax Credit

• Sections 111 to 115 of the BC Income Tax Act
• BC Regulation 128/2003

British Columbia Interactive Digital Media Tax Credit

• Sections 132 to 140 of the BC Income Tax Act
• BC Regulation 187/2010

Manitoba Film and Video Production Tax Credit

• Sections 7.5 to 7.9 of the Manitoba Income Tax Act

Summary of the project / initiative / change

The Film and Media Tax Credits are federal and provincial tax incentives designed to encourage the film and media production industry in Canada. More specifically, they are designed to encourage the hiring of Canadians in the film and media production industry as most of the tax credits are labour-based.

The Canada Revenue Agency (CRA) administers two federal tax credits as well as five Ontario tax credits, four British Columbia tax credits and one Manitoba tax credit. Five of the provincial tax credits are administered via the Tax Collection Agreements with these provinces as they are similar to the federal credits. However, three of these credits are partially administered on a cost recovery basis via Service Level Agreements as they include elements that are significantly different from the federal credits..  The other five tax credits are fully administered on a cost recovery basis via Service Level Agreements.

Under the program, qualified corporations submit their film and media tax credit claims with their T2 Corporation Income Tax Return for each year in which they are claiming a credit. The CRA ensures that the claims are in line with Canada’s tax laws and the CRA’s policies and procedures and delivers the tax incentives for which the corporations qualify in a timely, consistent and predictable manner.

The CRA is committed to administering the program with fiscal integrity and ensuring that the legislation is applied correctly, consistently and fairly so that claimants receive all that they qualify for under the program.

In 2018-2019, the program provided more than $2.3 billion in tax incentives regarding almost 9,300 claims. Similar results are expected  for 2019-2020.

Each of the tax credits administered by the CRA are refundable tax credits meaning that the claimants receive a refund in the amount of the tax credit, unless taxes are owing in which case the credits are applied to the taxes owed first and the balance, if any, is refunded. The film and television tax credits may also be applied to the capital cost of the project, where the film or television program is capitalized.

The CRA website has more information on each of the tax credits at canada.ca/taxes-film. 

• As of April 1, 2019, the CRA will no longer be administering the Ontario Book Publishing Tax Credit and as such the applicable legislative references have been updated to reflect this.
• The number of Ontario tax credits have changed from six to five, and total amount of tax credit dollars paid and the number of claims received.  The Ontario Media Development Corporation (OMDC) changed its name to "Ontario Creates".
• The implementation of the Integras system for the Film & Media Tax Credits Program has been delayed to March 2020.
• Consolidation of CRA Tax Centres (TSOs) have been updated and the names of the TSOs in which there are Film Services Units.
• Assistant commissioner (AC) and Director General (DG) have changed since the last PIA.

To ensure compliance with the Privacy Act and associated CRA and Treasury Board of Canada Secretariat privacy policies, this privacy impact assessment examined the privacy risks associated with the Film and Media Tax Credits Program. All privacy risks that were identified have been mitigated, reduced, or eliminated.

Risk identification and categorization

A) Type of program or activity

Compliance / Regulatory investigations and enforcement

Level of risk to privacy: 3

Details:

The information is used to verify citizenship or residency of individuals whose salaries are being claimed by corporations as labour expenses in the calculation of the various film and media tax credits to determine the eligibility of such expenses. It is also used to verify that the salaries paid to the individuals qualify as labour expenditures for the purposes of calculating the tax credits. The claimant’s tax credits may be reduced if the salaries of these individuals are deemed not to qualify. It should be noted that the program focuses on corporate economic entities as opposed to individual taxpayers.  

B) Type of personal information involved and context

Social Insurance Number, medical, financial or other sensitive personal information and/or the context surrounding the personal information is sensitive. Personal information of minors or incompetent individuals or involving a representative acting on behalf of the individual. 

Level of risk to privacy: 3

Details:

The personal information collected in the course of an audit of a film or media tax credit claim falls within the definition of taxpayer information or confidential information, and is therefore subject to the provisions of section 241 of the Income Tax Act. The following forms collect the name and contact information of an individual the auditor may contact in the course of the audit: T1131, T1177, T2 SCH 429, T1197, T1196, T2 SCH 388, T2 SCH 558, T2 SCH 560, T2 SCH 556, and T2 SCH 554. No other personal information is collected on these forms.

During the course of the audit, additional information on certain individuals such as name, address, SIN, financial information, etc. is collected from the claimant corporation. The auditor does not collect the information directly from the individual. If additional information is required about a particular individual, the claimant contacts the individual and then provides the information to the auditor. Occasionally, the individual will send the information directly to the auditor instead of providing it to the claimant corporation. 

C) Program or activity partners and private sector involvement

Private sector organizations or international organizations or foreign governments 

Level of risk to privacy: 4

Details:

Film and media tax credits program information may be shared with the Canadian Audio-Visual Certification Office (CAVCO) of the Department of Canadian Heritage in line with the provisions of section 241 of the Income Tax Act.

Information may also be shared with provincial government institutions in line with section 241 of the Income Tax Act and the memoranda of understanding (MOUs) that the CRA has with certain provinces for the administration of the film and media tax credits. These institutions include the Ministry of Finance of Ontario, Ontario Creates (formerly the Ontario Media Development Corporation (OMDC)), the Ministry of Finance of Manitoba, Manitoba Film and Music, the Ministry of Finance of British Columbia (BC FINANCE), and Creative BC. The CRA currently has MOUs with Ontario Creates (formerly OMDC) and Manitoba Film and Music. Discussions have begun for the development of an MOU with CAVCO.

In addition, the CRA may also use the service of Iron Mountain (formerly known as Recall) to transport and store paper copies containing personal information. 

D) Duration of the program or activity:

Long-term program

Level of risk to privacy: 3

Details:

The Film and Media Tax Credits Program has been in place since 1996 and will remain a long-term program. 

E) Program population

The program affects certain individuals for external administrative purposes.

Level of risk to privacy: 3

Details:

The Film and Media Tax Credits program affects corporations who have applied for a film or media tax credit. Although personal information is collected in relation to the film or media tax credit claims, no decisions are made with regard to the individuals to whom the information relates.

The requirements for collecting personal information under the Film and Media Tax Credit program apply to all claimants but vary depending on the scope of the audit for each claim. 

F) Technology & privacy

Does the new or modified program or activity involve the implementation of a new electronic system, software or application program including collaborative software (or groupware) that is implemented to support the program or activity in terms of the creation, collection or handling of personal information? 

Risk to privacy: No

Does the new or modified program or activity require any modifications to IT legacy systems and/or services?

Risk to privacy: No

The new or modified program or activity involves the implementation of one or more of the following technologies:

Enhanced identification methods - this includes biometric technology (i.e. facial recognition, gait analysis, iris scan, fingerprint analysis, voice print, radio frequency identification (RFID), etc...) as well as easy pass technology, new identification cards including magnetic stripe cards, "smart cards" (i.e. identification cards that are embedded with either an antenna or a contact pad that is connected to a microprocessor and a memory chip or only a memory chip with non-programmable logic). 

Risk to privacy: No

Details: n/a

Use of Surveillance - this includes surveillance technologies such as audio/video recording devices, thermal imaging, recognition devices , RFID, surreptitious surveillance / interception, computer aided monitoring including audit trails, satellite surveillance etc.

Risk to privacy: No

Details: n/a

Use of automated personal information analysis, personal information matching and knowledge discovery techniques - for the purposes of the Directive on PIA, government institutions are to identify those activities that involve the use of automated technology to analyze, create, compare, identify or extract personal information elements. Such activities would include personal information matching, record linkage, personal information mining, personal information comparison, knowledge discovery, information filtering or analysis. Such activities involve some form of artificial intelligence and/or machine learning to uncover knowledge (intelligence), trends/patterns or to predict behavior. 

Risk to privacy: No

Details: N/A

G) Personal information transmission

The personal information is transferred to a portable device or is printed.  

Level of risk to privacy: 3

Details: The information on a Corporation Income Tax Return (T2) is entered into the Business Return programs’ Corporate Tax Assessing System (CORTAX). Any T2 Return that contains one or more of the above forms is automatically referred to one of the three Film Services Units, depending on the location of the claimant’s books and records.

The information in CORTAX is linked to the Audit Information Management system (AIMS) when a file is opened in AIMS.

Auditors in the field use laptop computers with full disk encryption.  They access the network using Cisco AnyConnect v4.2.

Cisco AnyConnect v4.2allows users to gain access to the CRA network anytime, anywhere that internet services are available. This application is managed by Shared Services Canada. All users are required to sign on with the Public Key Infrastructure (PKI) and there are clear policies and procedures to be followed.

Auditors will copy information received from the claimant via encrypted USB key or password protected CD to their encrypted laptop computers in the course of their audits. Some documents may be printed. Paper documents received may be scanned and stored on the auditor’s laptop and/or a shared drive.

H) Risk impact to the individual or employee

Details: If an individual’s personal information is compromised, it could cause them financial harm.