Quebec FX industry alarmed at change to tax credit rules

Quebec's visual effects and animation industry is sounding the alarm after the province tightened tax credits in the budget.

The industry says this will hurt local companies.

"We lost 35 per cent worth of our annual budget for next year," said Jeremie Lodomez, the global head of 2D film at Framestore. "What I fear, it's basically that we lose everything that we built for the last 15 years."

Effective May 31, Quebec is imposing a 65 per cent cap on eligible expenses for the sector. Lodomez said the sudden change will result in major revenue loss, reduced competitiveness and the potential loss of home-grown talent.

"I don't want to announce to my daughter, who is about to start high school next year, that we have to live somewhere else in Canada or maybe in Australia," he said. "We don't know yet."

Members of the sector say the budget change could represent a 28 per cent cut in tax credits for the industry's international clients.

Michel Murdock, president of Hybride, a Montreal-based subsidiary of Ubisoft, said that the province failed to consult the industry.

"So instability is another fator," he said. "To be making a change that quickly has really an impact on the reputation of the province; the reputation of our business and the long term effect of it."

The Quebec Ministry of Finance told CTV News that its decision is about refocusing tax incentives in the film industry overall.

"While support for VFX was disproportionately high, support for film shoots and Quebec cinema was insufficient," said the ministry in a statement.

The ministry said it is the "responsible choice."

With 25 years of experience in the industry, Framestore's global head of texturing, Michael Borhi, said local FX artists deserve more recognition.

"Montreal has always been a very creative, artistic city with lots of artists, creativity and lots of innovation," said Borhi.

The industry is asking the province to postpone the effective date of the tax credit change until Jan. 1, 2025 to allow the government to work with the sector to come up with a measure that benefits all parties.