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Canadian Animation studios

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Canadian Animation studios

Hi again.

[QUOTE]Originally Posted by Animated Ape
The reason a lot of american studios farm their work out to studios in Canada, is because they get government subsudies, I'm not sure if that is the right term. So when they bid on a project, they can under bid something like 25% of what it would really cost to produce, because the Canadian govnernment will reemburse them the 25%.

This is untrue.

Its a popular urban myth that gets passed around, and its just plain wrong.

What the Canadian government offers is a TAX CREDIT--that is assigned AFTER the fact--after all production costs have been payed and is "reimbiursed" via the tax return.
What it means is that the production simply pays less tax than it would without the the credit.
There's no actual money changing hands all, it is is a slice taken off the back end of the costs. All the production costs remain the same, the only value that changes is what's owed to the government come tax-time.

Its gives Canadian productions NO advantage over any other production, what DOES work in our favour ( that allows under-bidding) is our devalued dollar.
If our dollar is only worth 75 cents to the USA One Dollar, then a $75,000 US bid is worth $100,000 Cdn. This means that the money that comes up here just goes further, but is off-set by higher taxes etc. The exchange rate is often the only thing making a Canadian service job from the USA viable for anyone to work on it.
This cheaper dollar is the incentive for sending productions up our way, and that is soley the discretion of US production houses.
If anything, when the math is done, the wages come out to the same OR LOWER than in the USA.

So, to repeat there are NO subsidies given to Canadian productions from the Canadian government. It would be nice to see this fact passed around more often than the myth.

--Ken[/QUOTE]

Thanks for clearing that up Ken and Wade. Yeah, I wasn't sure what it was called, and the amount. Tax credits are still a much better deal than what US studios get. So I'm going to use some numbers as an example, to see if I get this right. If a Canadian studio gets a 10% "tax credit" on a $100,000 (Canadian dollar) project, that is $10,000 that they wouldn't have to pay to the govnernment? If that's the case, I wouldn't mind that if I owned my own studio. I also always wondered, how Canadian animators could make a living. I know, Canada has very high taxes, at least compared to the US, and Vancouver isn't a very cheap place to live. I'm using Vancouver as an example since I've visited there, and there are several studios there.

Thanks for clearing that up Ken and Wade. Yeah, I wasn't sure what it was called, and the amount. Tax credits are still a much better deal than what US studios get. So I'm going to use some numbers as an example, to see if I get this right. If a Canadian studio gets a 10% "tax credit" on a $100,000 (Canadian dollar) project, that is $10,000 that they wouldn't have to pay to the govnernment? If that's the case, I wouldn't mind that if I owned my own studio. I also always wondered, how Canadian animators could make a living. I know, Canada has very high taxes, at least compared to the US, and Vancouver isn't a very cheap place to live. I'm using Vancouver as an example since I've visited there, and there are several studios there. I guess that was more of a statement rather than a question.

Once again, thanks for helping to clear these things up.

The Ape

Animated Ape's picture

...we must all face a choice, between what is right... and what is easy."

...we must all face a choice, between what is right... and what is easy."

That 10% example is essentially correct--albeit its usually some complex forumla that addresses a lot of different things and the actual deduction is technically "less than" 10%--or whatever the value is.
The thing is....its not a automatic credit--the production and studio have to meet qualifications for it and there's reams of paperwork involved.
To my understanding, its also a staggered credit, meaning that the more qualifications you meet the more credits that can be assigned. Provincial, federal, foreign etc. they can add up--but no money actually goes into anyone's pocket at the outset.

The key thing to remember with wages in the biz up here in Canada is this: The exchange rate makes a salary possible on a service job.

That 25%-35% difference in the dollar makes ALL the difference.....

For example: if a storyboard budget allocated $10,000 US for the episode's 'board that would work out to around $13,500 Cdn.
If the $3,500 is skimmed as overhead that STILL leaves $10,000 left for the 'board artists. if the schedule is three weeks for that show, and the team is split three ways--each artist taking a traditional act, then its about $3,300 a artist--or $1,100 a week, which is not bad dough for a single person.
If the gig is steady ( a whole series) and the 'boards come one right after the other, it works out to $4,400 a month, which up here is good enough for a mortage payment on $200,000 home, car lease and living expenses ( two income family though).

Because there's no unions in the animation biz, there's no dues taken at source, so the deductions taken off a salaried wage are simply tax, Unemployment insurance premiums, Canada Pension plan, and the odd occasional provincial tax thingie........and offset by a vacation pay addition. On a bi-weekly income of $2,200 you'd probably take home about $1,700 or that, more or less.
A freelancer gets the WHOLE amount as the deal memo would have them acknowledge that they are responsible for their own taxes etc.
They also get business expense deductions to help off-set these things though.

So, the wages are, in reality, modest compared to the US--they are workable up here, and in some case its possible to not just survive, but to thrive.

As for our taxes.......well, if an American animator is thinking the lure to points North and frozen are too strong to resist, well........hold on a sec.

Our taxes are based on income thresholds with percentages assigned to various brackets of income. Once your income hits a certain bracket you get dinged that percentage--both federal AND provincially.
Usually income around $50,000 a year is where you need to start sweating this stuff.
Add to this is our (opressive) GST--or general sales tax (I call it the gurgle and scream tax--or gouge and screw tax) that is on most goods and service you'd consume up here. The tax is 7% with provincial taxes at around 6%-7% depending on where you live. Alberta has no provincial sales tax.
The tax system is so pervasive in canada that it affects the cost of good all across the board.
A carton of milk might be exempt from GST, but the shipper of that milk is dinged, as is the gas he uses.......so if the gas prices rise, the shipping costs go up, and milk goes from $3 to $3.50 in a eye-blink and it'll STILL be "GST-Exempt".

Ya--go figure.

If you work freelance and own your own company ( self-employed) and earn over $26,000 to $28,000 a year, then you yourself have to collect the GST on income you make once you hit that threshold. it means that you can add GST to your job pay, but you have to remit to to the Feds on a schedule.
Oh what fun.

It boils down to the cost and standard of living approximating the same as in the USA--so the attraction to coming up here remains.......as always........our beer, our hockey, maple syrup, and our pine-cone encrusted, beaver-bitten wilderness.

--Ken

"We all grow older, we do not have to grow up"--Archie Goodwin ( 1937-1998)