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 that have gone away from the U.S. to get produced have wound up in Canada. Beneath the right circumstances each one of these productions have already been, or qualify for several federal and provincial tax credits which can be monetized for fast income and working capital.
How can these tax credits impact the average independent, and in some cases major studio production owners. The fact is simply that this government is allowing owners and investors in Kia Jam, television and digital animation productions to acquire a very significant (typically 40%) guaranteed return on the production investment. This most assuredly allows content those who own such productions to minimize the general risk that is associated to entertainment finance.
Naturally, when you combine these tax credits (and your capability to finance them) with owner equity, along with distribution and international revenues you clearly hold the winning potential for successful financing of your production in almost any of our aforementioned entertainment segments.
For larger productions that are connected with well known names in the market financing is usually available through in some cases Canadian chartered banks (limited though) as well as 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 could be filmed. We would venture to say that the overall cost of production differs a lot in Canada depending on which province is employed, via labour and other geographical incentives. Example – A production might obtain a greater tax credit grant treatment if it is filmed in Oakville Ontario as opposed to Metropolitan Toronto. We have now often heard ‘follow the money’ – in our example we have been following the (more favorable) tax credit!
Clearly your ability to finance your tax credit, either when filed, or before filing is potentially a significant supply of funding for the film, TV, or animation project. They secret weapon to success in financing these credits concerns your certification eligibility, the productions proper legal entity status, in addition to they key issue surrounding repair of proper records and financial statements.
If you are financing your tax credit after it is filed which is normally done when principal photography is completed. Should you be considering financing a future film tax credit, or possess the necessity to finance a production just before filing your credit we recommend you work with a dependable, credible and experienced advisor in this field. 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 amount of your eligible claim. From beginning to end you may expect that the financing will require 3-4 weeks, and the procedure is not unlike some other business financing application – namely proper back up and data related directly to your claim. Management credibility and experience certainly helps also, along with having some trusted advisors who are deemed experts in this area.
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 the project in film, TV, and digital animation. The somewhat complicated realm of film finance becomes decidedly much easier whenever you generate immediate cashflow and working capital via these great government programmes.