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 who have gone away from the U.S. to be produced have ended up in Canada. Beneath the right circumstances each one of these productions have been, or are eligible for many federal and provincial tax credits which can be monetized for fast cashflow and working capital.
How do these tax credits change the average independent, and perhaps major studio production owners. The reality is simply that this government is allowing owners and investors in Kia Jam, television and digital animation productions to acquire a very significant (on average 40%) guaranteed return on the production investment. This most assuredly allows content people who own such productions to reduce the overall risk that is associated with entertainment finance.
Naturally, once you combine these tax credits (as well as your ability to finance them) with owner equity, along with distribution and international revenues you clearly hold the winning possibility of a success financing of your production in any in our aforementioned entertainment segments.
For larger productions which are related to well-known names in the business financing is usually available through in some instances Canadian chartered banks (limited though) along with institutional Finance firms and hedge funds.
The irony in the whole tax credit scenario is that these credits actually drive what province in Canada a production might be filmed. We may venture to express that the total cost of production differs a lot in Canada based on which province is used, via labour and other geographical incentives. Example – A production might obtain a greater tax credit grant treatment if it is filmed in Oakville Ontario instead of Metropolitan Toronto. We have often heard ‘follow the money’ – in our example our company is pursuing the (more favorable) tax credit!
Clearly what you can do to finance your tax credit, either when filed, or just before filing is potentially an important way to obtain funding for your 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 after it is filed that is certainly normally done when principal photography is finished. In case you are considering financing a potential film tax credit, or hold the necessity to finance a production just before 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 after you are probably eligible for a 40-80% advance on the total level of your eligible claim. From start to finish you could expect that the financing will require 3-four weeks, and the process is not unlike some other business financing application – namely proper backup and information related straight to your claim. Management credibility and experience certainly helps also, in addition to having some trusted advisors that are deemed experts in this field.
Investigate finance of the tax credits, they could province valuable cash flow and working capital to both owner and investors, and significantly improve the overall financial viability of your 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.