Ontario Book Publishing Tax Credit
Please note: Effective April 1, 2017 there is a new administration fee structure for tax credits which will offset the cost of administering the program. The OBPTC administration fee will continue to be calculated as 0.15% of eligible expenditures for the application. The minimum fee of $50 per application and maximum fee of $200 per application will remain the same; however, the corporate maximum per taxation year has been removed.
As previously announced, effective January 1, 2017 there is an additional filing fee of $100 applied to applications for Certificates of Eligibility received more than 24 months after the first year-end of the claim. As well, there is a fee of $100 for each Amended Certificate requested.
What Is It?
The Ontario Book Publishing Tax Credit (OBPTC) is a refundable tax credit, based upon eligible Ontario pre-press, printing and marketing expenditures incurred by a qualifying corporation with respect to eligible book publishing activities, as well as expenses related to publishing an electronic or digital version of an eligible literary work.
How Much Is the Tax Credit?
The OBPTC is calculated as 30% of the eligible Ontario expenditures incurred by a qualifying corporation with respect to eligible book publishing activities, up to a maximum tax credit of $30,000 per book title.
Who Is Eligible?
A qualifying corporation is a Canadian-controlled corporation, as determined under sections 26 to 28 of the Investment Canada Act (Canada), must carry on a book publishing business primarily through a permanent establishment in Ontario and files an Ontario corporate tax return. A qualifying corporation must allocate more than 50% of its taxable income to Ontario in the taxation year the credit is being claimed and must have published at least two books in the previous year. An exception is made regarding the requirement to have published two books in the previous year where an Ontario book publishing company has transferred its business, amalgamated or wound up its company.
What Types of Literary Works Are Eligible?
- A literary work is an eligible literary work if:
- it is written by an eligible Canadian author, or if it is written by more than one author, at least 90% of the material is written by eligible Canadian authors;
- 90% or more of the literary work is new material that has not been previously published;
- it belongs to an eligible category of writing;
- where it contains pictures, the ratio of the amount of text to pictures is at least 65 % (except in the case of children’s books);
- it is at least 48 printed pages in length (except in the case of children’s books) and is bound as a paperback, or a hardback; and
- it is not a prescribed ineligible publication.
Who Is an Eligible Author?
An eligible Canadian author is an individual who, when the contract is entered into to publish the eligible literary work, is ordinarily resident in Canada and is either a Canadian citizen or a permanent resident.
What Categories of Writing Are Eligible?
The eligible categories of writing are: fiction, non-fiction, poetry, biography, children’s fiction, children’s non-fiction, children’s poetry and children’s biography.
- Fiction is a book-length work of the imagination in prose including novels and book-length collections of short stories or novellas.
- Non-fiction is a work of prose based on factual information including history, travel, social issues and current events; or is an exposition of ideas including works of philosophy, social and art criticism, and political enquiry. Non-fiction educational texts, for use in educational institutions, are eligible as long as they meet the other eligibility requirements. A book-length play or a radio or television drama published in book form will be considered under non-fiction.
- Poetry is a book-length work of imagination written in rhyme, blank verse, or another recognized poetic form, either as a book-length poem or a book-length collection of poems.
- Biography is a book-length work in prose based on fact, telling the story of one (or more) person’s life (or lives) including an autobiography (the author’s own story told as a factual account), or a memoir (a selective but factual retelling of events).
- Children’s books are books designed for readers under 16 years of age. Children’s books may be less than 48 pages and may be illustrated titles. Young adult titles, specifically designed for readers aged 9 to 18 will be considered children’s books.
What Kind of Expenditures Are Eligible?
Qualifying expenditures include 100% of the costs of preparing a literary work for publication in print and digital or electronic formats, and 50% of the production costs with respect to publishing a printed version of a book, as well as the costs relating to transferring a prepared digital or electronic version of a literary work into a form suitable for distribution.
How Is the Credit Administered?
The OBPTC is jointly administered by Ontario Creates - an agency of the Ministry of Tourism, Culture and Sport - and the Canada Revenue Agency. Application is made to the Ontario Creates for a Certificate of Eligibility, which the book publishing company files with the Canada Revenue Agency together with its tax return in order to claim the OBPTC. The amount of the credit, net of any federal and Ontario taxes owing, will be paid to the qualifying corporation. If the qualifying corporation does not owe any taxes, the full amount will be paid out.
*PLEASE NOTE: CANADA REVENUE AGENCY (CRA) ADMINISTERS BOTH FEDERAL AND ONTARIO CORPORATE TAXES. THE CRA IS THE FIRST POINT OF CONTACT FOR ALL CORPORATE TAX ENQUIRIES (1 800 959-5525).
Note: This sheet is a general guide and may not be relied upon in order to determine eligibility for the amount of an anticipated credit. Please consult the OBPTC legislation and regulation for further details.