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, which are non-repayable.
Unbelievably, almost 80% of U.S. productions which have gone outside of the U.S. to become produced have ended up being in Canada. Under the right circumstances all these productions have been, or qualify for a number of federal and provincial tax credits which may be monetized for immediate cashflow and working capital.
How can these tax credits impact the average independent, and in many cases major studio production owners. The fact is simply the government is allowing owners and investors in Kia Jam, television and digital animation productions to acquire a very significant (typically 40%) guaranteed return on the production investment. This most assuredly allows content people who own such productions to lower the overall risk that is associated with entertainment finance.
Naturally, once you combine these tax credits (along with your capability to finance them) with owner equity, in addition to distribution and international revenues you clearly possess the winning prospect of a hit financing of the production in any in our aforementioned entertainment segments.
For larger productions that are associated with well known names in the industry financing tends to be available through sometimes Canadian chartered banks (limited though) in addition to institutional Finance firms and hedge funds.
The irony from the whole tax credit scenario is the fact these credits actually drive what province in Canada a production could be filmed. We would venture to say that the total cost of production varies greatly in Canada according to which province is used, via labour as well as other geographical incentives. Example – A production might receive a greater tax credit grant treatment when it is filmed in Oakville Ontario rather than Metropolitan Toronto. We now have often heard ‘follow the money’ – in our example we have been after the (more favorable) tax credit!
Clearly what you can do to finance your tax credit, either when filed, or prior to filing is potentially an important supply of funding for the 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 maintenance of proper records and financial statements.
In case you are financing your tax credit after it is filed which is normally done when principal photography is completed. In case you are considering financing a future film tax credit, or have the necessity to finance a production prior to filing your credit we recommend you work with a trusted, credible and experienced advisor in this field. 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 that this financing is going to take 3-four weeks, and the process is not unlike some other business financing application – namely proper support and knowledge related right to your claim. Management credibility and experience certainly helps also, as well as having some trusted advisors who are deemed experts in this field.
Investigate finance of the tax credits, they are able to province valuable cash flow and working capital to both owner and investors, and significantly enhance the overall financial viability of your own project in film, TV, and digital animation. The somewhat complicated realm of film finance becomes decidedly less complicated when you generate immediate income and working capital via these great government programmes.