How to play Hollywood North

Two Calgarians decided to ditch their day jobs and start a film company.

Gregory Mackenzie and Brett Walsh are two Calgarians who decided to ditch their day jobs and start a film company. Mackenzie directed commercials but wanted to make the move from short to long form; Walsh, an acquaintance from high-school days, had been working for investment bank Morgan Stanley. They formed Golconda Films, in 2002 — “Golconda,” explains Mackenzie, refers to a city in India synonymous with wealth because of its diamond mines — a perhaps vainglorious name for a fledgling film company. Especially a Canadian film company.

But Golconda is not a Canadian film company. And Golconda's first film, Camille, which just finished shooting in Toronto and Niagara Falls, is not a Canadian film. The money is American. The star is British. And these two Canadians don't live in Canada. They live in London, where Golconda is based. Mackenzie and Walsh illustrate the portability of film production, a quality that makes film a double-edged sword for Canada.

Canada's film-production industry is called, vaingloriously, Hollywood North. But Hollywood North is a misnomer — designed to make us feel we actually have a film industry. The truth is strictly economic: it's less expensive to shoot in Canada than in the U.S. But as the loonie creeps up in value against the greenback, and with more U.S. states such as Rhode Island and Louisiana offering production tax credits to rival or better those in Canada, that truth will become false.

As a foreign-financed film, Camille qualifies for the federal Production Services Tax Credit, which provides a rebate of 16% of salaries paid to Canadian residents employed by the production. By shooting in Ontario, the production qualifies for the Ontario Production Services Tax Credit (OPSTC), which rebates 18% of salaries paid to Ontario residents employed by the production. By the standards of foreign production, Camille is low-budget. Walsh won't confirm the amount, but says for argument's sake it is about US$10 million. The tax-credit rule of thumb would be 15-20% of the budget; in this case, a saving of US$1,500,000.

Given both Mackenzie and Walsh are Canadian, they considered structuring the film as a “Canadian” production, thus tapping into far more generous tax credits. (The Canadian Film Production Tax Credit returns 25% of qualifying labour costs, while the Ontario Film and Television Tax Credit returns 30%.) Then they realized screenwriter Nick Pustay's U.S. passport prevented the production from reaching the necessary points for Canadian-ness. And even so, going that route “is too restrictive in terms of cast and crew,” says Walsh. “There were too many artistic sacrifices and commercial changes we weren't willing to do, and that has commercial implications.” Lead actress Sienna Miller is a foreigner, so the second lead would have had to be Canadian, which, says Walsh, “wasn't in the interest of the project.”

Golconda's next project, Little Green Men, is based on the novel by humourist Chistopher Buckley. John Malkovich is in negotiation to star. Mackenzie co-wrote the screen adaptation. He will produce it with Walsh. “We'd like to shoot it in Toronto,” says Mackenzie, “but Rhode Island is rearing its head.”