Film financing in Canada (we’re 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 that have gone outside the U.S. to become produced have ended up being in Canada. Under the right circumstances all of these productions have already been, or are eligible for several federal and provincial tax credits which is often monetized for immediate cash flow and working capital.
How can these tax credits impact the average independent, and perhaps major studio production owners. The truth is simply that the government is allowing owners and investors in kjammedia, television and digital animation productions to acquire a very significant (normally 40%) guaranteed return on the production investment. This most assuredly allows content those who own such productions to reduce the overall risk that is assigned to entertainment finance.
Naturally, once you combine these tax credits (as well as your capacity to finance them) with owner equity, as well as distribution and international revenues you clearly possess the winning prospect of a success financing of the production in any in our aforementioned entertainment segments.
For larger productions which can be associated with well known names in the market financing is commonly available through in some cases Canadian chartered banks (limited though) as well as institutional Finance firms and hedge funds.
The irony from the whole tax credit scenario is that these credits actually drive what province in Canada a production might be filmed. We may venture to express that the overall cost of production varies greatly in Canada according to which province is utilized, via labour and 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 now have often heard ‘follow the money’ – within our example we are following the (more favorable) tax credit!
Clearly your capability to finance your tax credit, either when filed, or before filing is potentially a major way to obtain funding for your film, TV, or animation project. They key to success in financing these credits pertains to your certification eligibility, the productions proper legal entity status, along with they key issue surrounding upkeep 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 completed. If you are considering financing a potential film tax credit, or have the necessity to finance a production prior to filing your credit we recommend you deal with a trusted, credible and experienced advisor in this field. Depending on the timing of bfkoab financing requirement, either prior to filing, or after you are probably qualified to receive a 40-80% advance on the total amount of your eligible claim. From beginning to end you may expect that this financing will take 3-4 weeks, and the procedure is not unlike every other business financing application – namely proper support and knowledge related straight to your claim. Management credibility and experience certainly helps also, in addition to having some trusted advisors that are deemed experts in this field.
Investigate finance of your tax credits, they can province valuable cash flow and working capital to both owner and investors, and significantly boost the overall financial viability of the project in film, TV, and digital animation. The somewhat complicated realm of film finance becomes decidedly much easier whenever you generate immediate cash flow and working capital via these great government programmes.