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, which are non-repayable.
Unbelievably, almost 80% of U.S. productions who have gone outside of the U.S. to become produced have wound up in Canada. Underneath the right circumstances all these productions happen to be, or are eligible for many federal and provincial tax credits which may be monetized for immediate cashflow 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 Kia Jam, 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 overall risk that is assigned to entertainment finance.
Naturally, whenever you combine these tax credits (along with your capacity to finance them) with owner equity, along with distribution and international revenues you clearly have the winning prospect of a success financing of your production in every of our own aforementioned entertainment segments.
For larger productions which can be associated with well known names in the business financing is commonly available through in some cases Canadian chartered banks (limited though) in addition to institutional Finance firms and hedge funds.
The irony of 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 differs a lot in Canada depending on which province is utilized, via labour along with other geographical incentives. Example – A production might get a greater tax credit grant treatment if it is filmed in Oakville Ontario rather than Metropolitan Toronto. We have often heard ‘follow the money’ – inside our example our company is 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 way to obtain funding for the film, TV, or animation project. They way to succeed in financing these credits pertains to your certification eligibility, the productions proper legal entity status, as well as they key issue surrounding upkeep of proper records and financial statements.
In case you are financing your tax credit after it is filed that is normally done when principal photography is finished. If you are considering financing a potential film tax credit, or hold the necessity to finance a production prior to filing your credit we recommend you deal with a dependable, credible and experienced advisor in this field. Depending on the timing of bfkoab financing requirement, either before filing, or once you are probably qualified to receive a 40-80% advance on the total quantity of your eligible claim. From beginning to end you can expect the financing will require 3-4 weeks, and the process is not unlike every other business financing application – namely proper support and knowledge related directly to your claim. Management credibility and experience certainly helps also, in addition to having some trusted advisors who definitely are deemed experts in this region.
Investigate finance of your tax credits, they are able to province valuable cash flow 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 less complicated once you generate immediate income and working capital via these great government programmes.