Canada’s Tax Shelter Era

March 14, 2019

By: Paul Corupe

While Canada’s film industry turned out many distinguished films in the 1970s, including The Apprenticeship of Duddy Kravitz (1974), Les Orders (1974) and Who Has Seen the Wind? (1977), the decade—commonly called the “tax shelter era”—was more defined by an increase in commercial genre filmmaking, thanks to newly available tax incentives. Following the government’s pledge of additional financial support, Canada produced more films than ever before, including a steady stream of homegrown horror, comedy, sex and science-fiction movies—an approach that not everybody was pleased with. While some controversy remains over Canada’s ‘70s film output and the tax rules that helped spawn it, the film boom gave many local filmmakers their start and helped lay the groundwork for future generations. Here are just a few of the distinct personalities that shaped this unique era in Canada’s film history.


1. Don Johnston

As tax lawyer working out of Montreal in the 1960s, Don Johnston made a discovery that would forever change the course of the Canadian film industry. While putting together the financing for Paul Almond’s film The Act of the Heart (1970), Johnston realized that Canada’s tax rules included little-used provisions that allowed investors to claim a 60% Capital Cost Allowance deduction for funding qualifying film productions. What this meant was that, for every dollar an investor put into a qualifying film production, they could reduce their taxable income by 60 cents, effectively lowering their overall tax bill. Though it would take many years for these rules to become widely exploited, their popular exposure helped set the stage for future support of Canada’s film industry under the government of then-Prime Minister Pierre Trudeau.


2. Michael Spencer

The tax shelters weren’t the only behind-the-scenes economic force that boosted Canadian film production in the ‘70s. In 1967, Canada’s government created the Canadian Film Development Corporation (CFDC), a crown agency that provided funds to local filmmakers to help get their movies off the ground. The first executive director of the CFDC, Michael Spencer was a former editor and cameraman at the National Film Board who believed Canada’s industry had enough room for both arthouse and genre films, and provided support to fledgling filmmakers for a wide variety of films throughout the 1970s—from Goin’ Down the Road (1970), and Outrageous! (1977) to Shadow of the Hawk (1976) and The Haunting of Julia (1977). The opportunity to access government funding, mixed with the increasingly popular tax shelters, proved a powerful cocktail that helped increase the number of Canadian film productions across the country.


3. John Dunning and Andre Link

One immediate effect of the tax shelter rules and the availability of CFDC funding was that several Canadian film distribution companies moved into production. Co-founded by John Dunning and André Link in the early 1960s Cinépix became one of the most successful (and also contentious) film production companies of the 1970s. Following a run of Francophone sex comedies, Dunning and Link moved on to horror and exploitation fare for English markets, including The Possession of Virginia (1972) and The Pyx (1973). Cinépix soon became home to those looking for an alternative to Canada’s stuffier arthouse film scene, attracting not only fledgling Canadian producers like Don Carmody and Ivan Reitman, but also directors including David Cronenberg and William Fruet. Cinépix specialized in controversial tax shelter productions like Death Weekend (1976), Blackout (1978), and the grindhouse gross-out Ilsa, She Wolf of the SS (1977). But their biggest successes came at the tail end of the tax shelter era, with Reitman’s Meatballs (1979), and the early slasher horror films My Bloody Valentine (1981) and Happy Birthday to Me (1981), which remain classics among fans of the genre.


4. Harold Greenberg

Cinépix wasn’t the only Montreal company that made the leap to film production. From his early career running a department store photo developing concession, Harold Greenberg built another success story on the back of the shelters and CFDC support with his company Astral Bellevue Pathé Limited. Astral’s first offering, The Neptune Factor (1973) was a star-heavy underwater disaster film that seemed to set the template for Greenberg’s earlier tax shelter output, which often featured well-known American actors and aimed for impressive production values (even if it didn’t always achieve them). Astral was behind notable Canadian genre efforts like Oliver Stone’s debut Seizure (1974), The Little Girl Who Lived Down the Lane (1976) and Rituals (1979), and he even lured away former Cinépix producer Don Carmody to handle production on later tax shelter successes. Following notable efforts like Death Ship (1980), Terror Train (1981) and Porky’s (1981), Carmody went on to become an extremely successful independent producer in his own right.


5. Pierre Trudeau

With national film production on the rise, the Canadian government—at that time headed by Prime Minister Pierre Trudeau—decided to further sweeten Canada’s film tax shelters. In 1974, the tax rules were tweaked to bump the CCA up to 100% so that producers could write off their full investments in Canadian films. Not surprisingly, the scheme worked, and Canadian film production went into overdrive, peaking with a then-record 77 films made in 1979, compared to just a handful a few years prior. But even Trudeau wasn’t sure that the tax shelters were the right approach, famously noting in 1980 that, “There are now many Canadian films. But there aren’t too many good ones, are there?”


6. David Cronenberg

Of all the filmmakers who came of age during the tax shelter years, few have matched the impressive legacy of David Cronenberg, who turned both heads and stomachs with his horror films throughout the 1970s and early ‘80s. Following a series of shorts made while attending the University of Toronto, Cronenberg teamed with Cinépix for his debut feature, Shivers (1975), a CFDC-supported body horror shocker that was among the first films made in the wake of the increased tax shelters. Despite facing antagonistic critical response, the maverick director continued creating some of the most challenging horror films of the tax shelter era, including Rabid (1977), The Brood (1979) and Scanners (1981). It’s hard to imagine what Canada’s film landscape would look like without Cronenberg’s towering influence, as he built on the skills he developed during the 1970s to become one of Canada’s most celebrated film talents.


7. Robert Fulford

Despite the increase in local film production, many critics were not particularly thrilled with the government’s new tax policies, since they didn’t promote a national cinema of cultural importance. While many tax shelter films were panned for being “too American,” it was writer Robert Fulford’s scathing review of Cronenberg’s Shiver in Saturday Night magazine that most forcefully opposed this new strain of commercial filmmaking. His article, “You Should Know How Bad This Film Is. After All, You Paid For It,” took aim at the Cronenberg’s graphic portrayals of sex and horror, and accused the CFDC of funnelling hard-earned tax dollars into “the most repulsive movie I’ve ever seen.” The article stirred up a controversy that was debated in the House of Commons and even reportedly convinced Cronenberg’s landlord to evict the young director from his Toronto apartment.


8. Peter James and David Perlmutter

With Cinépix and Astral making waves in Montreal, Toronto’s Quadrant Films quietly became one of Canada’s most prolific Anglophone film companies of the 1970s. Started by British writer Peter James and his business partner David Perlmutter, Quadrant Films pushed just as many boundaries as their French-Canadian contemporaries by tapping upcoming filmmakers like John Trent, Paul Lynch, Bob Clark and even David Cronenberg, whose drag race film Fast Company (1979) was among their most notable productions. Though less prolific than Cinépix, they still managed an impressive slate of horror, thriller and exploitation titles, including Vengeance is Mine (1974), Death Weekend (1976) and Prom Night (1980).


9. Bob Clark

One of Quadrant Films’ most significant contributions to the tax shelter era was to bring Florida filmmaker Bob Clark into the Canadian film fold. Though American by birth, Clark arrived up north in 1972 to finish some post-production work and never looked back, cranking out a remarkable series of films including Black Christmas (1974), which is generally acknowledged as North America’s first slasher movie, the Sherlock Holmes thriller Murder by Decree (1979) and the popular (if critically reviled) teen sex comedy Porky’s. A little more experienced than many of his Canadian peers, Clark brought technical proficiency and a thoughtful approach to his genre work that helped him make an indelible impact on our national film landscape with post-tax shelter favourites like A Christmas Story (1983).


10. Garth Drabinsky

As the tax shelter incentives continued into the ‘80s, Canadian films began to reach new levels of popularity and craftsmanship, thanks in part to producers like Cineplex Corporation CEO Garth Drabinsky. Working in the peak tax shelter years and often benefitting from CFDC funding, Drabinsky showed it was possible to infuse genre concepts with sophisticated production values. The films he produced, including The Disappearance (1977), The Silent Partner (1978), The Changeling (1980) and Tribute (1980) still rank among the better Canadian films made before the tax shelters were finally eliminated in 1982, the victim of increasingly questionable financial schemes and continued controversy over films like Porky’s and Scanners. And while the tax shelters and the films they inspired remained divisive throughout their short lifespan, the 1970s production boom—perhaps best exemplified by Drabinsky’s own contributions—had an undeniable impact on Canada’s cinematic legacy.

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