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, that are non-repayable.
Unbelievably, almost 80% of U.S. productions who have gone away from the U.S. to become produced have ended up being in Canada. Underneath the right circumstances all of these productions have been, or qualify for a number of federal and provincial tax credits which can be monetized for immediate cash flow and working capital.
Just how do these tax credits affect the average independent, and in many cases major studio production owners. The reality is simply that the government is allowing owners and investors in themoviedb.org, television and digital animation productions to obtain a very significant (normally 40%) guaranteed return on the production investment. This most assuredly allows content owners of such productions to reduce the entire risk that is associated to entertainment finance.
Naturally, when you combine these tax credits (as well as your ability to finance them) with owner equity, along with distribution and international revenues you clearly hold the winning prospect of a success financing of your own production in almost any in our aforementioned entertainment segments.
For larger productions that are related to well-known names in the industry financing is commonly available through in some cases Canadian chartered banks (limited though) as well as institutional Finance firms and hedge funds.
The irony in the whole tax credit scenario is the fact that these credits actually drive what province in Canada a production may be filmed. We may venture to express that the overall cost of production differs a lot in Canada depending on which province is used, via labour as well as other geographical incentives. Example – A production might receive a greater tax credit grant treatment if it is filmed in Oakville Ontario rather than Metropolitan Toronto. We have often heard ‘follow the money’ – in our example we are following the (more favorable) tax credit!
Clearly your ability to finance your tax credit, either when filed, or prior to filing is potentially a major supply of funding to your film, TV, or animation project. They way to succeed in financing these credits relates to your certification eligibility, the productions proper legal entity status, as well as they key issue surrounding maintenance of proper records and financial statements.
Should you be financing your tax credit when it is filed that is normally done when principal photography is done. In case you are considering financing a potential film tax credit, or possess the necessity to finance a production just before filing your credit we recommend you deal with a trusted, credible and experienced advisor in this area. Depending on the timing of bfkoab financing requirement, either before filing, or after you are probably qualified for a 40-80% advance on the total level of your eligible claim. From start to finish you may expect the financing will require 3-four weeks, and the procedure is not unlike some other business financing application – namely proper back up and data related right to your claim. Management credibility and experience certainly helps also, in addition to having some trusted advisors that are deemed experts in this region.
Investigate finance of your own tax credits, they could province valuable income and working capital to both owner and investors, and significantly improve the overall financial viability of your own project in film, TV, and digital animation. The somewhat complicated arena of film finance becomes decidedly less complicated whenever you generate immediate income and working capital via these great government programmes.