Film financing in Canada (we are including television and digital animation productions) has significantly benefited from the Canadian government’s very aggressive stance on increasing tax credits, which are non-repayable.
Unbelievably, almost 80% of U.S. productions which have gone outside of the U.S. to be produced have ended up being in Canada. Beneath the right circumstances all of these productions happen to be, or qualify for many federal and provincial tax credits which can be monetized for immediate income and working capital.
How do these tax credits affect the average independent, and perhaps major studio production owners. The fact is simply that the government is allowing owners and investors in kjammedia, television and digital animation productions to get a very significant (typically 40%) guaranteed return on the production investment. This most assuredly allows content owners of such productions to reduce the overall risk that is assigned to entertainment finance.
Naturally, whenever you combine these tax credits (along with your capacity to finance them) with owner equity, along with distribution and international revenues you clearly possess the winning possibility of a hit financing of your own production in every of our aforementioned entertainment segments.
For larger productions which can be connected with well known names in the market financing is usually available through sometimes Canadian chartered banks (limited though) in addition to institutional Finance firms and hedge funds.
The irony in the whole tax credit scenario is the fact these credits actually drive what province in Canada a production may be filmed. We may venture to say that the total cost of production differs a lot in Canada depending on which province is utilized, via labour and other geographical incentives. Example – A production might receive a greater tax credit grant treatment when it is filmed in Oakville Ontario instead of Metropolitan Toronto. We have now often heard ‘follow the money’ – in our example we have been pursuing the (more favorable) tax credit!
Clearly what you can do to finance your tax credit, either when filed, or prior to filing is potentially a major way to obtain funding to your film, TV, or animation project. They key to success in financing these credits relates to your certification eligibility, the productions proper legal entity status, along with they key issue surrounding repair of proper records and financial statements.
If you are financing your tax credit when it is filed which is normally done when principal photography is done. Should you be considering financing a future film tax credit, or possess the necessity to finance a production prior to filing your credit we recommend you work with a reliable, credible and experienced advisor in this area. Depending on the timing of bfkoab financing requirement, either just before filing, or once you are probably eligible for a 40-80% advance on the total amount of your eligible claim. From beginning to end you may expect the financing will require 3-four weeks, and the process is not unlike any other business financing application – namely proper support and information related directly to your claim. Management credibility and experience certainly helps also, in addition to having some trusted advisors who are deemed experts in this area.
Investigate finance of your own tax credits, they are able to province valuable cash flow and working capital to both owner and investors, and significantly boost the overall financial viability of your project in film, TV, and digital animation. The somewhat complicated realm of film finance becomes decidedly much easier when you generate immediate income and working capital via these great government programmes.