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Politics Federal budget 2019: Ottawa outlines criteria for media funding package, introducing tax credits, non-profit status

Budget experts and reporters look over copies of the 2019 federal budget booklet at a lockup session in Ottawa on March 19, 2019.

Fred Chartrand/The Canadian Press

The federal government is laying out specific criteria that journalism organizations will have to meet in order to qualify for its $595-million package supporting Canada’s struggling news media.

According to the budget, only “qualified Canadian journalism organizations” – or QCJOs – will be eligible for the three measures first laid out in last November’s fall economic statement to assist an industry that has seen revenues steadily decline in the face of competition from global digital platforms such as Facebook and Google.

The measures include allowing QCJOs to transform into tax-exempt non-profit organizations, which can raise tax-deductible donations from individuals; providing refundable tax credits on labour costs associated with producing original news; and providing a temporary, non-refundable tax credit for “qualifying subscribers of eligible digital news media.”

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Tuesday’s budget provides additional details on the conditions to qualify as a QCJO.

The government says a QCJO must be primarily engaged in the production of original news content and that it “must be primarily focused on matters of general interest and reports of current events, including coverage of democratic institutions and processes.” Excluded are publications focusing primarily on “industry-specific news, sports, recreation, arts, lifestyle or entertainment.”

Other media organizations excluded from all or part of the package include government-owned organizations such as the Canadian Broadcasting Corp., as well as special-interest or promotional publishers. In addition, broadcasters will not qualify for the biggest part of the incentive program, a 25-per-cent refundable tax credit on newsroom salaries.

The federal budget includes new spending in a range of areas including support for first-time homebuyers, ensuring seniors are enrolled in CPP and the further advancement of reconciliation.

The budget also forecasts that all but $5-million of the budgeted media package will be spent in the fiscal year beginning April 1, 2020, several months after this fall’s federal election.

“The Globe and Mail believes independent journalism is very important to the democratic process in Canada, and we would support any initiative that helps that type of journalism thrive in our industry,” said Phillip Crawley, publisher and chief executive of The Globe and Mail.

“However, it is clear nobody will get any instant help from the proposals. There isn’t going to be a sudden infusion of money into the industry any time soon. Anybody waiting for relief from financial pressures will be waiting well into 2020.”

The media aid plan has drawn criticism from the Conservatives and some outspoken journalists, who have said government funding could threaten perceptions of the industry’s objectivity. “While a free press is a cornerstone of our society, it can only remain so when it is free of political influence,” Banff-Airdrie Conservative MP Blake Richards wrote in a December column for the Cochrane Times.

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To address that perception, the government will establish an independent panel of experts from the Canadian journalism sector to provide advice on eligibility criteria for its measures.

John Hinds, CEO of News Media Canada, which represents 800 daily, weekly and community publishers, including The Globe, dismissed concerns about government money influencing editorial output. He noted that local TV stations, magazines and the CBC receive public funding. “I haven’t seen any evidence this has compromised these media. I just don’t think it’s a valid argument,” he said.

The 25-per-cent tax credit, which the government forecasts will cost $360-million combined in reduced revenue over four fiscal years starting in the spring of 2020, will apply to “eligible newsroom employees” who gather and prepare news at qualifying news-generating journalism organizations. The tax credit will apply only for labour costs earned since last Jan. 1 of up to $55,000 per employee, meaning a maximum annual tax credit of $13,750 per person. Organizations that already receive funding from the Canada Periodical Fund will not qualify.

News organizations that register for tax-exempt status must have an arm’s length board of directors of trustees; must not be “factually controlled by a person”; and can raise no more than 20 per cent of their funding from any one source. They will be required to file an annual return with the Canada Revenue Agency and disclose the names of any donors giving more than $5,000, specifying the amount given.

Publicly traded companies applying for the program must be listed on a Canadian exchange and cannot be controlled by non-Canadian citizens, while private corporations must be at least 75-per-cent controlled by Canadian citizens.

The budget also revealed that the government’s temporary digital subscription tax credit will end in 2025. Under the plan, individuals paying for digital subscriptions to qualifying news organizations can claim a non-refundable 15-per-cent tax credit on $500 worth of subscriptions annually – for a maximum credit of $75 per year. The government estimated the measure will cost $138-million through early 2024.

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