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, which are non-repayable.
Unbelievably, almost 80% of U.S. productions that have gone outside of the U.S. to be produced have ended up in Canada. Beneath the right circumstances all these productions have already been, or are eligible for several federal and provincial tax credits which can be monetized for fast income and working capital.
How do these tax credits affect the average independent, and in many cases major studio production owners. The truth is simply 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 people who own such productions to minimize the general risk that is associated with entertainment finance.
Naturally, when you combine these tax credits (along with your ability to finance them) with owner equity, as well as distribution and international revenues you clearly hold the winning prospect of a hit financing of your own production in any of our aforementioned entertainment segments.
For larger productions which can be related to recognized names in the business financing is commonly available through in some cases Canadian chartered banks (limited though) as well as institutional Finance firms and hedge funds.
The irony of the whole tax credit scenario is the fact these credits actually drive what province in Canada a production might be filmed. We would venture to say that the overall cost of production differs a lot in Canada according to which province is employed, via labour as well as other geographical incentives. Example – A production might receive 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’ – in our example we have been pursuing the (more favorable) tax credit!
Clearly your capability to finance your tax credit, either when filed, or prior to filing is potentially a significant source of funding to your film, TV, or animation project. They way to succeed in financing these credits pertains to your certification eligibility, the productions proper legal entity status, in addition to they key issue surrounding repair of proper records and financial statements.
In case you are financing your tax credit when it is filed which is normally done when principal photography is finished. Should you be 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 reliable, credible and experienced advisor in this area. Depending on the timing of bfkoab financing requirement, either just before filing, or after you are probably qualified to receive a 40-80% advance on the total quantity of your eligible claim. From start to finish you may expect that this financing will require 3-4 weeks, and the process is not unlike any other business financing application – namely proper backup and knowledge related straight to your claim. Management credibility and experience certainly helps also, along with having some trusted advisors that are deemed experts in this field.
Investigate finance of your tax credits, they can 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 world of film finance becomes decidedly much easier whenever you generate immediate income and working capital via these great government programmes.