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South Sheridan Executive Centre
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Oakville, Ontario
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SR&ED financing and a film media tax credit incentive loan continue to be a mystery to many successful applicants of both of these two programs. So who wouldn't appreciate a ‘front-row seat ' when it comes to monetizing both of these claims?
THE REFUNDABLE TAX CREDIT IN CANADA
Let's take a look at the ' SRED ' program first, and then we'll move on to media tax credits. For the thousands of firms who claim R&D tax credits in Canada, the last couple of years have been somewhat ' tumultuous', and that’s a bit of an understatement. And that’s for the applicants themselves, let alone the tax accountants and the SR&ED consultants who prepare these claims on behalf of clients. The formal name of the program is the Scientific Research and Experimental Development Program - aka ' SR&ED!
THE ROLE OF THE SR&ED CONSULTANT
We're reminded of the cliché ' do you want the good news or the bad news 'as it seems appropriate here. From a ' bad ' news perspective some of the actual percentage credit amounts came down, capital expenditures were eliminated, and the claim preparers were forced to disclose their fees and identify themselves. The 'goods news' could basically best be summarized as a simplified application process.
While it would appear the govt will save well over a billion dollars in payments to claimants that’s little consolation to the SME (small to medium-sized entities) sector which relies on cash refunds on research to further growth/competitiveness, etc.
FINANCING YOUR TAX CREDIT
On average, successful claimants can still recoup about 30% of their research spent on average.
Successful claims prepared by qualified SR&ED consultants still force firms to be in the 'waiting line' for the approval and auditing of their claims. That’s when financing your claim might make the most sense!
MEDIA TAX CREDITS - (Film/Television/Animation) FINANCING THE VIDEO PRODUCTION TAX CREDIT AND THE PRODUCTION SERVICES TAX CREDIT
When it comes to the film media tax credit incentive programs things are a bit more exciting! Canadian provinces seem more excited, and interested in further developing the cache around ' HOLLYWOOD NORTH '. Film or video and media tax credits are generally recognized all over the world as being generous
A tremendous amount of time is spent by producers/owners getting financing together for a project. Tax credits in any of our aforementioned genres more often than not help leverage the other financing required for projects. Those financings include debt, equity, gap, pre-sales, etc, etc, etc.
CO-PRODUCTIONS ARE ELIGIBLE FOR TAX CREDITS
Many projects are in fact ' co-productions' with other countries such as the U.S. These days ' visual effects' are a large part of most budgets, and a lot of the costs associated with technology in that area can be financed by the tax credit program of the particular province in combination with the federal govt.
In fact, animation/effects is probably the fast-growing segment of the industry and Canada has the talent base, complemented by the tax credit program, to address that challenge.
HOW DOES A SR&ED BRIDGE LOAN WORK
Financing a ‘SRED’ or film media tax credit incentive is remarkably similar and straight forward. Claims financing is typically structured as a bridge loan, with an advance made against the combined provincial and federal credits. Even more exciting these days is the ability to finance claims that have not been formally filed - talk about a cash flow win!
Financing is closed and completed when Ottawa and the province you've filed under approve and refund the claim. Financing eliminate the wait and allows you to complete a project, or start the next one!
CONCLUSION - LET 7 PARK AVENUE FINANCIAL FUND YOUR CLAIM
Don't let tax credit finance be a mystery when it comes to R&D capital recovery, of the financing of a Media tax credit in film. tv and Fx. Get a front-row seat by seeking out and speaking to a trusted, credible and experienced Canadian business financing advisor who can assist you with your bridge loan needs under either of these two programs.
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Stan Prokop
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