The term “tax shelter films” refers to feature films made explicitly to take advantage of the provisions of the one-hundred-per-cent Capital Cost Allowance (CCA) for feature films introduced in 1974. This allowance created a tax shelter for investors, enabling them to deduct from their taxable income one hundred per cent of their investment in features certified as Canadian, and thus defer taxes until profits were earned. (To be eligible, films had to be at least seventy-five minutes long, have a producer and two-thirds of the creative personnel who were Canadian, and have at least seventy-five per cent of the technical services performed in Canada.) As a result, there was a boom in the volume of production in Canada, which rocketed from three features and a total budget expenditure of $1.6 million in 1974, to sixty-six feature films and a total budget expenditure of $172 million in 1979.

More than just a tax break or investment incentive, the Capital Cost Allowance (which had existed as a sixty-per-cent write-off since 1954) represented another skirmish in the longstanding battle between culture and commerce in the Canadian film industry – and once again it was the interests of commerce that emerged victorious. Echoing the conclusion of the Tompkins Report – which was issued by the Secretary of State in 1976 and argued, rather myopically, that the film industry in Canada should be structured first and foremost as a business for export – Michael McCabe, CFDC Executive Director from 1978 to 1980, stated in support of tax shelter films that, “The CFDC decided film was essentially an export product and, since it was not normally possible to recoup the budget in the Canadian market, producers should make films that were capable of recouping budgets in other markets….”

Most of the films made (including a considerable number that were never released) were thus designed solely as commercial projects, and usually involved Canadian cities masquerading as American cities or generic stories set in anonymous locales. Leading roles were usually played by second-rate American stars, while Canadian talent in both cast and crew tended to be used in subordinate positions. (In a famous essay, director Allan King identified this as the “coffee boy syndrome.”)

The tax shelter also attracted promoters and professionals more interested in earning high fees for their contributions than in actually making films. Production budgets skyrocketed, bloated in part by salaries paid to Hollywood stars but primarily by the large fees paid to investment brokers, lawyers and accountants, who were needed to interpret the complex federal regulations and restrictions required to comply with the Capital Cost Allowance. As a result, investor resistance grew and by 1982, when the tax rules were changed to reflect a fifty-per-cent write-off, the scheme had run its course.

On the positive side, the production of these films provided valuable experience not only to a large number of craftspeople but also to many producers, including Garth Drabinsky, Robert Lantos, Robert Cooper, Fil Fraser, Harold Greenberg, John Kemeny and Peter O’Brian. A handful of films, while not recognisably “Canadian,” did extremely well at the box office internationally: Meatballs (1979), The Silent Partner (1978), Murder by Decree (1979), Quest for Fire (1982), Porky’s (1981), Atlantic City (1980) and Prom Night (1980).

There were also several gems produced during this period – King’s Who Has Seen the Wind (1977), Francis Mankiewicz’s Les Bons Débarras (1980), Gilles Carle’s Les Plouffe (1981) and Phillip Borsos’s The Grey Fox (1982) – that reflect a distinctly Canadian character and still stand among the best Canadian films ever made.

There has been interest in recent years in re-assessing the cultural value of the films of this period. For example, film scholar Peter Urquhart has noted a thematic preoccupation in the films that mirrors the tensions of the CCA itself and the struggle between commercial and cultural goals. Several films have art versus commerce themes; others reflect a preoccupation with “selling out” or feature citizens battling nefarious commercial interests. (See Peter Urquhart, “You Should Know Something – Anything – About This Movie. You Paid for It,” Canadian Journal of Film Studies, Vol. 12, No. 2, Fall 2003.)