This will only help you if you're a Quebecker; the rest of you, talk amongst yourselves.Martine
writes to let me know that, because writers are officially considered artists under Quebec law, they are entitled to a special deduction on screenplay fees. These are considered "droits d'auteur" (royalties) and the first $15,000 of them can be directly deducted from your gross annual revenue; that's $15K you don't pay Quebec taxes on. The deduction only applies to Quebec taxes and not federal ones. The Ministère du Revenu has thoughtfully made its opinion available as a PDF
. The letter only mentions members of SARTEC (the French writers' union) but the law applies equally to English writers. Here's some details from a friend:
The provision applies to all writers, artists, filmmakers, musicians, performers and anyone who produces copyrighted material that generates income. Since copyright is clearly defined through the Copyright Act, such a provision is very easy to administer. There can be no argument as to who the first copyright holder is. It is the creator, exactly the person we must encourage throughout our country.
Quebec Tax Program
The Quebec Taxation Act (Loi sur les impôt) provides income tax deductions based on the copyright revenue of individuals.
In section 726.26, the Taxation Act states:
Any individual who, in a tax year, is a professional artist, within the meaning of the Act respecting the professional status of artists in the visual arts, arts and crafts and literature, and contracts with promoters (L.R.Q. c. S-32.01), or an artist, under the Act respecting the professional status and conditions of engagement of performing, recording and film artists (L.R.Q., c. S-32,1), can deduct, in assessing his/her taxable income for that tax year, the lesser of the following amounts:
a. copyright income for that year;
b. the amount in excess of $15,000 of any amount equal to 1.5 times the excess copyright revenue for the year above $20,000.
Songwriters and other targeted artists enjoy full tax exemption for all copyright income below $15,000. For copyright income between $15,000 and $20,000, the $15,000 tax deduction is maintained. For copyright incomes higher than $20,000, every dollar over $20,000 reduces the exemption by $1.50.
This fiscal exemption is a form of incentive for Quebec creators. Given their average annual income from reproduction and performing rights, no doubt many of them are beneficiaries.
Some songwriters and music publishers have suggested that this incentive would become more significant if the Canadian government were to adopt a similar measure. In their opinion, that fiscal measure, for one thing, helps compensate for the fact that, unlike others in the cultural industry, authors and composers only start collecting copyright revenues long after creating a work.
Deduction for copyright income
If you are an artist (within the meaning of the Act respecting the professional status of artists in the visual arts, arts and crafts and literature, and their contracts with promoters, or within the meaning of the Act respecting the professional status and conditions of engagement of performing, recording and film artists) or a performing artist, you may be entitled to a deduction, for the 2005 taxation year, for your income from copyrights (including public lending rights) of which you are the first owner.
You may claim this deduction if the total copyright income included in your business income or shown in box H of your RL-3 slip is less than $60,000. In this case, complete work chart 297.
I am not a tax attorney, of course. Use this suggestion at your own risk! And, again, if you're not from Quebec: nya, nya nya-nya nya.