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 that have gone outside the U.S. to get produced have ended up being in Canada. Under the right circumstances each one of these productions have been, or qualify for a number of federal and provincial tax credits which is often monetized for fast cashflow and working capital.
Just how do these tax credits affect the average independent, and in some cases major studio production owners. The reality is simply that 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 general risk that is assigned to entertainment finance.
Naturally, when you combine these tax credits (as well as your ability to finance them) with owner equity, in addition to distribution and international revenues you clearly have the winning possibility of successful financing of your production in almost any in our aforementioned entertainment segments.
For larger productions that are associated with well known names in the market financing tends to be available through sometimes Canadian chartered banks (limited though) along with 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 might be filmed. We would venture to express that the overall cost of production varies greatly in Canada according to which province is employed, 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 instead of Metropolitan Toronto. We have now often heard ‘follow the money’ – in our example we are after the (more favorable) tax credit!
Clearly what you can do to finance your tax credit, either when filed, or before filing is potentially a major source of funding to your film, TV, or animation project. They secret weapon to success in financing these credits relates to your certification eligibility, the productions proper legal entity status, along with they key issue surrounding repair of proper records and financial statements.
In case you are financing your tax credit when it is filed that is normally done when principal photography is completed. If you are considering financing a future film tax credit, or hold the necessity to finance a production before filing your credit we recommend you work with a reliable, 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 amount of your eligible claim. From beginning to end you may expect that this financing is going to take 3-4 weeks, and the process is not unlike some other business financing application – namely proper support and knowledge related directly 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 can province valuable income and working capital to both owner and investors, and significantly boost the overall financial viability of your own project in film, TV, and digital animation. The somewhat complicated arena of film finance becomes decidedly less complicated once you generate immediate cash flow and working capital via these great government programmes.