Film financing in Canada (we’re 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 who have gone away from the U.S. to be produced have wound up in Canada. Underneath the right circumstances each one of these productions have been, or qualify for many federal and provincial tax credits which can be monetized for fast cash flow and working capital.
How can these tax credits change 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 get a very significant (normally 40%) guaranteed return on the production investment. This most assuredly allows content owners of such productions to lower the overall risk that is associated to entertainment finance.
Naturally, when you combine these tax credits (and your ability to finance them) with owner equity, as well as distribution and international revenues you clearly hold the winning prospect of a success financing of your own production in almost any of our aforementioned entertainment segments.
For larger productions that are associated with well-known names in the market financing tends to be available through in some cases 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 would venture to state that the overall cost of production differs a lot in Canada according to which province is used, via labour and other geographical incentives. Example – A production might obtain a greater tax credit grant treatment when it is filmed in Oakville Ontario instead of Metropolitan Toronto. We have now often heard ‘follow the money’ – within 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 before filing is potentially an important way to obtain funding for the film, TV, or animation project. They key to success in financing these credits relates to your certification eligibility, the productions proper legal entity status, in addition to 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 done. In case you are considering financing a potential film tax credit, or possess the necessity to finance a production prior to filing your credit we recommend you deal with a dependable, credible and experienced advisor in this region. Depending on the timing of bfkoab financing requirement, either before filing, or once you are probably eligible for a 40-80% advance on the total quantity of your eligible claim. From beginning to end you could expect that the financing will take 3-4 weeks, and the procedure is not unlike any other business financing application – namely proper back up and information related right to your claim. Management credibility and experience certainly helps also, as well as having some trusted advisors who definitely are deemed experts in this area.
Investigate finance of your tax credits, they can province valuable cashflow and working capital to both owner and investors, and significantly boost the overall financial viability of your project in film, TV, and digital animation. The somewhat complicated arena of film finance becomes decidedly much easier whenever you generate immediate income and working capital via these great government programmes.