Canada Puts Media Tax Credits on Hold During Outbreak

Canada isn’t delivering tax benefits to news corporations and trusts as planned because of the coronavirus pandemic.

The Canada Revenue Agency’s ability to review applications for three tax credits meant to help news organizations hit by disruptions during the digital era has been restricted by the outbreak, spokeswoman Pamela Tourigny said in an email Wednesday.

Work on the program will resume once operations have normalized, she said.

The tax credits, which were announced in the 2019-20 budget, are worth C$594 million ($421 million) over four years. They were the cornerstone of a government plan to keep the Canadian media landscape sustainable by offsetting the costs of labor, news subscriptions, and donations made to non-profit media outlets.

News outlets can receive a 25% refundable labor tax credit for salary or wages paid to a newsroom employee, news consumers can get a 15% non-refundable personal income tax credit for digital news subscriptions, and philanthropists are entitled to a tax credit for donations to news enterprises.

An independent panel hired to certify eligible organizations was announced in late March, but the agency is only working on essential services like emergency benefits because of Covid-19, Tourigny said.

Ad Revenues Drop Up to 70%

The delay couldn’t come at a worse time for Canada’s news industry, which is seeing advertising revenue fall precipitously because of the pandemic, the country’s largest news companies and union said in interviews.

They’re asking for the federal government to fix the stalled program soon.

“There needs to be some kind of cash in-flow so people can get paying their bills,” John Hinds, CEO of News Media Canada, said in an interview Tuesday.

The organization represents hundreds of print and digital outlets, and members, in a recent canvas, said they are are seeing ad revenue drop 60% to 70% since mid-March, Hinds said.

Heritage Minister Steven Guilbeault, who heads the federal department charged with media oversight, has spoken with the industry about the fall in ad sales and the crisis Covid-19 is creating, his office said in an email Tuesday.

“We are studying all the options in this regard and are working on more measures to support the industry,” spokeswoman Camille Gagne-Raynauld said.

To make up for the delay, Ottawa could raise spending in other programs, send the money for the tax credits in direct payments or raise government advertising, said Howard Law, director for media at Unifor, said in an interview Tuesday.

Unifor, the country’s largest private union, has 11,000 members in the news sector, Law said.