Film financing in Canada (we are including television and digital animation productions) has significantly taken advantage of the Canadian government’s very aggressive stance on increasing tax credits, that are non-repayable.
Unbelievably, almost 80% of U.S. productions which have gone outside the U.S. to become produced have ended up being in Canada. Underneath the right circumstances all of these productions happen to be, or are eligible for several federal and provincial tax credits which can be monetized for fast cash flow and working capital.
Just how do these tax credits affect the average independent, and in some cases major studio production owners. The fact is simply the government is allowing owners and investors in themoviedb, television and digital animation productions to obtain a very significant (on average 40%) guaranteed return on the production investment. This most assuredly allows content people who own such productions to minimize the general risk that is associated with entertainment finance.
Naturally, whenever you combine these tax credits (along with your capacity to finance them) with owner equity, as well as distribution and international revenues you clearly possess the winning possibility of a success financing of your production in any of our own aforementioned entertainment segments.
For larger productions which are connected with well known names in the industry financing is commonly 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 that these credits actually drive what province in Canada a production could be filmed. We might venture to express that the total cost of production varies greatly in Canada based on which province is used, via labour as well as other geographical incentives. Example – A production might obtain a greater tax credit grant treatment should it be filmed in Oakville Ontario instead of Metropolitan Toronto. We have now often heard ‘follow the money’ – in our example we are pursuing the (more favorable) tax credit!
Clearly your capability to finance your tax credit, either when filed, or before filing is potentially a major supply of funding to your film, TV, or animation project. They key to success in financing these credits concerns your certification eligibility, the productions proper legal entity status, as well as they key issue surrounding maintenance of proper records and financial statements.
If you are financing your tax credit after it is filed that is certainly normally done when principal photography is done. If 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 work with a reliable, credible and experienced advisor in this field. Depending on the timing of bfkoab financing requirement, either prior to filing, or once you are probably qualified for a 40-80% advance on the total level of your eligible claim. From beginning to end you can expect that the financing will require 3-4 weeks, and the process is not unlike any other business financing application – namely proper backup and data related directly to your claim. Management credibility and experience certainly helps also, along with having some trusted advisors that are deemed experts in this area.
Investigate finance of your own tax credits, they are able to province valuable cashflow and working capital to both owner and investors, and significantly enhance the overall financial viability of the project in film, TV, and digital animation. The somewhat complicated world of film finance becomes decidedly much easier whenever you generate immediate income and working capital via these great government programmes.