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 which have gone away from the U.S. to be produced have ended up being in Canada. Underneath the right circumstances all these productions have been, or are eligible for many federal and provincial tax credits which is often monetized for fast cash flow and working capital.
How do these tax credits affect the average independent, and perhaps 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 (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, 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 possess the winning potential for a hit financing of your own production in every in our aforementioned entertainment segments.
For larger productions that are related to well-known names in the market financing is usually 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 that these credits actually drive what province in Canada a production may be filmed. We may venture to express that the total cost of production varies greatly in Canada based on which province is used, via labour and other geographical incentives. Example – A production might get a greater tax credit grant treatment should it be filmed in Oakville Ontario as opposed to Metropolitan Toronto. We have now often heard ‘follow the money’ – in our example we are following the (more favorable) tax credit!
Clearly your ability to finance your tax credit, either when filed, or just before filing is potentially a significant source of funding for the film, TV, or animation project. They key to success in financing these credits concerns your certification eligibility, the productions proper legal entity status, along with they key issue surrounding upkeep of proper records and financial statements.
If you are financing your tax credit when it is filed that is normally done when principal photography is completed. Should you be considering financing a potential film tax credit, or possess the necessity to finance a production before filing your credit we recommend you work with a reliable, credible and experienced advisor in this region. Depending on the timing of bfkoab financing requirement, either just before filing, or once you are probably qualified to receive 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 procedure is not unlike some other business financing application – namely proper back up and knowledge related straight to your claim. Management credibility and experience certainly helps also, as well as having some trusted advisors who are deemed experts in this region.
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 the project in film, TV, and digital animation. The somewhat complicated arena of film finance becomes decidedly less complicated when you generate immediate cashflow and working capital via these great government programmes.