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, that are non-repayable.
Unbelievably, almost 80% of U.S. productions which have gone outside the U.S. to get produced have wound up in Canada. Underneath the right circumstances each one of these productions happen to be, or are eligible for a number of federal and provincial tax credits which may be monetized for fast income and working capital.
How do these tax credits affect the average independent, and in many 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 get a very significant (on average 40%) guaranteed return on the production investment. This most assuredly allows content people who own such productions to minimize the overall risk that is associated with entertainment finance.
Naturally, once you combine these tax credits (and your capability to finance them) with owner equity, as well as distribution and international revenues you clearly have the winning potential for successful financing of the production in almost any of our aforementioned entertainment segments.
For larger productions that are connected with well-known names in the business financing is commonly available through sometimes Canadian chartered banks (limited though) along with institutional Finance firms and hedge funds.
The irony from the whole tax credit scenario is the fact these credits actually drive what province in Canada a production may be filmed. We might venture to express that the total cost of production differs a lot in Canada according to which province is used, via labour along with other geographical incentives. Example – A production might get a greater tax credit grant treatment when it is filmed in Oakville Ontario rather than Metropolitan Toronto. We have now often heard ‘follow the money’ – in our example our company is following the (more favorable) tax credit!
Clearly your capability to finance your tax credit, either when filed, or just before filing is potentially a major source of funding for the film, TV, or animation project. They way to succeed in financing these credits relates to your certification eligibility, the productions proper legal entity status, along with they key issue surrounding upkeep of proper records and financial statements.
Should you be financing your tax credit after it is filed that is normally done when principal photography is finished. In case you are considering financing a potential film tax credit, or have the necessity to finance a production just before filing your credit we recommend you work with a trusted, credible and experienced advisor in this region. Depending on the timing of bfkoab financing requirement, either just before filing, or after you are probably eligible for a 40-80% advance on the total quantity of your eligible claim. From beginning to end you may expect the financing will take 3-4 weeks, and the process is not unlike every other business financing application – namely proper backup and knowledge related straight to your claim. Management credibility and experience certainly helps also, in addition to having some trusted advisors who definitely are deemed experts in this area.
Investigate finance of the tax credits, they are able to province valuable cashflow and working capital to both owner and investors, and significantly enhance 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 cashflow and working capital via these great government programmes.