Film production activity in Canada ranges from the making of Incendies (2010), a classic film that has remained on the list of the top 250 highest rated films on the Internet Movie Database (IMDb), to providing the scenery for Oscar winning films including Titanic (1997), The Revenant (2015), and Best Picture winner Shape of Water (2014). However, the Canadian industry for film and TV struggles to compete with Hollywood and the rest of the world for exposure to its Canadian-owned content. As the industry grows, so does its potential to provide a significant contribution to the domestic economy, especially since the sector receives an allocation of provincial and federal budgets of over half a billion taxpayer dollars to aid its growth (Lester, 2013). Provincial governments in British Columbia and Ontario fund approximately 75% of the available film tax credits funded by Canada (Lester, 2013). British Columbia alone spent $331 million in film tax credits in 2012 (Milke, 2013). Considering the cultural significance of Canada’s film and entertainment sector, it is important to ensure that these funds are allocated at optimal efficiency for the financial benefits to generate a higher return on capital for the government and the industry. This paper will explore fundamental problems to explain why such a large investment into Canadian film activity is not currently yielding a high return on investment, why it matters that it does and how this issue can be addressed. It also illustrates competitive challenges including potentially collusive behaviour and anti-competitive merging on behalf of the US industry, stringent distribution regulations for Canadian content to be exhibited internationally, and inefficient tax credits with potential legal loopholes that make them more effective for foreign producers rather than domestic filmmakers. A comparative analysis of the Canadian and American film industries will also identify structural differences contributing to Canada’s competitiveness, as well as a literature review that explores historical anti-trust cases in Hollywood and a cost benefit analysis for further analysis of tax credit related inefficiencies.