Scrapping the film tax credit was the most controversial move to come out of the 2012 provincial budget, but Friday the Saskatchewan government announced the tax credit’s replacement.

The Sask. government is offering is a 25 per cent non refundable tax credit on all production expenses, including labour costs.

The credit would begin in July.

This is a non-refundable tax credit and not a grant type program, which is how the Saskatchewan government claims the previous program operated.

The film industry proposed the idea, but were hoping for a grant-type program, but Bill Hutchinson, minister of tourism, parks, culture and sport said that wasn’t fair.

“What it was doing was simply attracting business activity that paid no tax to the people of Saskatchewan, everybody else does.”

Hutchinson admits in the long run this could prove more expensive than the old tax credit because it is offered to all in the entertainment industry. But he adds that is a goal worth striving for.

“Then what it’ll indicate is there are a lot more Saskatchewan based companies succeeding in their industry.”

There was also an announcement of consultations to expand digital production in the province and find new uses for the sound stage which currently doesn't make any money.

“All of these industries can find a home, it will be a creative hub, it will an incubator if you will. All of these small businesses can have a home there and they can work together. They’ll rub shoulders, there’ll be creative sparks, all kinds of things will happen,” said Hutchinson.

The new program will cost about a million dollars a year, but it could become far more costly the more companies that jump board.

The film industry reacts.

Those in the film industry aren’t excited about the new tax credit announced by the Saskatchewan government Friday. 

On Thursday, Ron Goetz, president of the Saskatchewan Motion Picture Industry Association, was meeting with the provincial government, proposing a working model for a new tax incentive, which he said was well received by them.

Then the next day the new tax credit was announced.

Goetz said the announcement was a bit early, there was still one part of the credit they didn’t agree on.

“The model does accomplish much of what we wanted it’s just that the non-refundable part makes it almost impossible to reach any of those, because if companies aren’t paying high enough tax base they won’t be able to use that non-refundable tax credit.”

Goetz called the non-refundability a paramount issue - and he anticipates plenty of talks to iron out how to make it work.

Goetz points out no other area has only a non-refundable film tax credit, 6 or 7 have a non-refundable which are transferrable to someone else who has to pay tax.

That’s one solution that could work here, because if they can't fix it – Goetz said they won't be able to convince companies to film in Saskatchewan.

Edited by CJME's Lisa Schick.

-------------------------

A new plan has been put forward by the Saskatchewan government for the film industry, which balked at an employment tax credit being cut in the last provincial budget.

The plan includes a new tax credit proposed by the film industry. The move to digital will get more focus and support, including looking at using the Canada-Saskatchewan Production studio for digital content.   

The new tax credit, which could be available July 1, offers a 25 per cent non-refundable credit on production expenses.

The credit recognizes extra costs around buying and using goods and services in Saskatchewan.

There are bonuses for copyright and intellectual ownership as well as work done in and using workers from Saskatchewan. The bonuses can add up to 43 per cent.

The provincial government calls it a “true tax credit as it is fully deductible from taxes paid in Saskatchewan”. Under the previous tax credit, companies could be eligible without having paid tax in Saskatchewan.

The plan also acknowledges the industry’s move to digital. Discussions with begin this year to be implemented in 2013.

Also, the tax credit could be possible extended to the digital sector.

This story was first reported 2:43 P.M. Friday, May 4 2012.

Reported by Sarah Mills, Courtney Mintenko, Karen Brownlee.

Edited by CJME's Karen Brownlee.