Canadian Film Tax Credit Financing Explained

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We can forgive non-Canadian producers for not being up to date on Canadian film tax credit policy or the financing mechanisms available around film tax credit scenarios in Canada.

It's a little difficult to stay up to date on what's happening in the U.S., the U.K. and other parts of the world as it relates to the film tax credit part of the entertainment industry - that involves of course film, TV, and the last, but not least, rapidly growing digital animation industry.

But let's be clear on this - the film tax credit and its related credits are a major incentive to any producer planning to shoot or product a film television and animated feature in Canada. There is not a day when we don't receive a call from U.S. folks inquiring about the credit. (The key tax credit in question is called The Canadian Film and Video Production Services Tax Credit)

Similar to its foreign counterparts at its simplest we can just say it’s a major incentive to grow film, TV and animation production in Canada. It’s a financial incentive; it’s as simple as that.

Prior to current systems and governance, there was a perception that the tax credit application and funding system was cumbersome. We feel very comfortable in saying that feeling has gone away to the point where applications are actually submitted online.

The Canadian film tax credit is a refundable, non-repayable credit that can play a very significant role in the overall financing of your project. Books are written around the challenges that independent producers face in putting together a complete financing package for their project. And don't even talk to us about the timelines involved in film finance!

But, imagine this, receiving anywhere from 30-45%, or more of your entire financing via the ultimate receipt, or monetization of your film tax credit. Haven’t we just taken a huge piece of your financing challenge and workload away? The credits are heavily focused on labour expenditures; naturally, the feds feel that employment in the industry is a very positive identifier for the program's success.

We've referenced a number of times here the monetization of your film tax credit. Using the tax credit policy as a financing mechanism can help you cash flow your project and provide a decent part of the overall working capital you need. Tax credit film financing is a boutique industry in Canada, only a small number of players, and pricing and structures vary. A very small handful of Canada’s largest chartered banks have boutique divisions that focus on this type of financing if you can meet general bank criteria. An even smaller number of firms finance the tax credits outside the bank.

So do we have anything against the U.S. or other film tax jurisdictions? Absolutely not, but check into the Canadian scene in this area and we are positive it might be a driving factor in your decision to film or produce in Canada.

Seek a credible, trusted, and experienced Canadian business financing advisor in this area to help you put together a core team around the application, approval and monetizing of your credit.

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' Canadian Business Financing With The Intelligent Use Of Experience '

ABOUT THE AUTHOR: Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil

Canadian Film Tax Credit Policy Financing 7 Park Avenue Financial

canadian film tax credit policy financing