Tax Shelter Terror: How the Canadian government created a whole new generation of fright flicks

A mineshaft kill in "My Bloody Valentine"

Hollywood North. We’ve all heard that term but where did it originate? Back in the ’70s, the government introduced the one-hundred-percent Capital Cost Allowance (CCA) for feature films deemed certifiably Canadian which was a marked increase from the sixty-percent CCA that had previously existed since 1954. This meant that anyone who put money into a  film that  had a Canadian Producer, two-thirds Canadian  crew and  talent  and  seventy-five percent of their technical services performed in the country  could defer paying taxes on their investment until the profits started rolling in.  Not surprisingly, many enterprising producers cottoned on to this benefit and were soon hightailing it north to start production on films that had previously been rejected by the Hollywood studio system. Hence, “Hollywood North.”

The film genre that most benefited from this was one that had previously shown high return on a relatively low budget thanks to its tendency towards appealing to a younger demographic who were repeat viewers at drive-ins and grindhouse-type movie theatres all across North America. Yes, suddenly the horror genre seemed like a  worthy investment to the film world and consequently the late ’70s into the early  ’80s and its tax shelter cinema spawned quite a few films that genre fans might count among their favourite guilty pleasures.

Here are a few worth noting:

The Changeling  (1979)

Inarguably the movie many people would cite as one of the scariest films ever made (especially if they saw it as a child), The Changeling was produced in 1979 following the run of deliberately-paced creepfests  starting  with   The Exorcist in 1973  and continuing on with films like The Omen , Burnt Offerings and The Amityville Horror . The film was co-produced by the infamous Garth Drabinsky (not surprisingly, with him at the helm, there was a small scandal involving the film’s shareholders) and starred George C. Scott as a man trying to move on after his wife and daughter are killed in front of him in a roadside accident. He moves into a dusty old mansion that turns out to be haunted by the ghost of a crippled boy who was murdered by his Father and replaced by a changeling who’s now a powerful senator (Melvyn Douglas).   The Changeling was Canada’s only offering into the spookhouse sub-genre but it made a definite impression, winning big at the first annual Genie Awards as well as a Golden Reel Award for achieving the biggest box office numbers for the year.

Prom Night  (1980)

Notable mostly for having Jamie Lee Curtis as its leading lady post- Halloween success, Prom Night was the first in a franchise that continued to keep Canadian film crews working for three additional iterations (1987′s Hello Mary Lou: Prom Night 2 is a childhood favourite of mine). The film was shot at the height of the tax shelter productions, when the number of features being produced in Canada far outnumbered what was being shot in the States. The film was conceived as a commercial genre property by Director Paul Lynch who got the idea from seeing a billboard advertising for prom formal wear. William Gray, who also wrote The Changeling , then shaped the idea into a story about a group of friends being stalked on prom night by a killer intent on revenge for an incident  that occurred six years  before  that left a young girl dead. The film originally started out as a moodier psychological thriller but after the intial cut, additional scenes were shot to transform the film into a more standard issue slasher flick (a move that reportedly angered Curtis) which was a sub-genre that was slowly becoming guaranteed box office gold. The film wasn’t well-reviewed but it more than delivered profit-wise. It also cemented Curtis’ scream queen title, launched Lynch’s career and created one of Canada’s few franchises – pretty impressive for a movie that was only ever meant to be a cash grab.

Happy Birthday to Me (1981) and My Bloody Valentine  (1982)

Produced by the so-called godfathers of Canadian schlock-ertainment, John Dunning and André Link, and shot in late 1980, these two films continued on the slasher trend that was quickly becoming the dominant sub-genre of horror that was coming out of Canada. Happy Birthday to Me was meant to be more of a slow burn whodunit whereas My Bloody Valentine was a pretty straight-forward  maniac killer on the loose story. Neither film set the box office on fire but have since gained cult status with Happy Birthday to Me being a direct inspiration for the Scream series and My Bloody Valentine getting a renewed life via a recent  limited re-release with restored footage that was originally cut to a avoid an x-rating. Both have also become cult favourites and classic examples of the “slash for cash” time period in Canadian film history.

Visiting Hours  (1981)

More thriller than horror, Visiting Hours was a departure from the types of films that were being made in the tax shelter era. The film stars a wealth of actual Canadian name talent–Michael Ironside, William Shatner and Helen Hughes–and although slightly  overlong, is an intriguing cat-and-mouse story about a stalker making repeated attempts on the life of a feminist newscaster (played by Lee Grant). Directed by French-Canadian director Jean-Claude Lord, the film fizzled at the box office but the  memorable poster art (also seen on its VHS box which was a constant presence in the horror sections of  ’80s-era  video stores) and its move away from the more simplistic psycho killer movies of the time make it worth a second look.

The Beginning of the End of Hollywood North

Despite the CCA creating a boom in production, critics of the program blamed it for the downfall of the way Canada was regarded in the film world as abuse of both the tax laws and its rules regarding what made a film Canadian were pretty rampant. Nefarious people were making less-than-great movies for nefarious reasons, often casting B-level American stars in lead roles while fulfilling the Canadian two-thirds rule with locals in supporting roles and using Canadian cities masked as American ones. Investors were more interested in earning high return than in being part of a quality production and soon budgets were skyrocketing as lawyers and accountants were brought in to help interpret (and one assumes, look for loopholes in) the complex tax laws. The CCA was reduced to fifty-percent in 1982 after numerous terrible–some awesomely so–titles were produced (some of which were never actually released) and investor interest tapered off. The tax shelter scheme may have run its course but at least genre fans were left with a handful of memorable horror films to remember it by.


Kristal Cooper has been a film buff since the age of two when her parents began sneaking her into the drive-in every weekend. Since then, she's pursued that passion by working for the Toronto International Film Festival and the Canadian Film Centre as well as spending many a happy hour inside Toronto's wonderful theatres (she still mourns the loss of The Uptown). She is a freelance writer specializing in pop culture and feminist issues, and continues to slog away at her day job as a small cog in the giant machinery of the Toronto film community.

1 Comment

  • Reply October 22, 2012

    David Friend

    What films that never were released? Do we know any of the titles?

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