YOU’RE LOOKING FOR FILM TAX CREDIT FINANCE!
FUNDING THE FILM AND TELEVISION AND MEDIA REFUNDABLE TAX CREDIT
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Film Tax credit sources allow Canadian producers of film, TV and digital media content to fast track their productions. Having said that it's never easy in that world to beat the clock when it comes to completing the financing of projects in those 3 genres. But, as we maintain, financing tax credits is a key part of any successful project these days. Let's dig in.
CANADA IS COMMITTED TO FINANCING FILM, TV AND DIGITAL MEDIA PROJECTS
Whether the individual taxpayer likes it or not the Canadian provincial government, as well as the ' feds ‘are quite committed to subsidizing Canadian media via tax credits - it's almost a part of our Canadian heritigage. Participants in the industry love it when the different provinces that compete for your production square off and try to ' one-up ' each other when it comes to the generosity of these funds.
LABOUR IS A LARGE PART OF TAX CREDIT REFUNDS
Just the credits for your labour costs alone are generous on their own, often totalling 35-40 percent depending on what province you are shooting or producing in for principal photography . Quebec’s is actually at 45% when it comes to labour.
While many pundits feel this all is just one example of a type of ' corporate welfare ' we can only suggest to clients that they make the most of current legislation and funding. We do recognize that there are a lot of taxes and jobs and economic activity around this quite thriving industry.
HOW DO FILM TAX CREDITS WORK
The concept of film (and TV and digital media) video production services tax credits is quite simple. You receive cheques for a percent of your expenditures on your project. It's as simple as that. Canadian tax credits as a percentage of your expenditures are among the most generous in the world, and coupled with the stability of Canada’s financial system as well as our diverse geographies and talent pool simply make a case that Canada has... you guessed it.. earned the name Hollywood North. Producers must prove chain of title to Canada Revenue Agency.
FINANCING FILM PROJECTS REQUIRES FUNDING FROM VARIOUS SOURCES
Film tax credit sources address just one part of the overall ' capital cycle ' of any production. The other components of course include the owner equity component, debt, presales, Print and Advertising, etc. Times always change in the world of financing and in film, TV and media finance these days ' crowdfunding' is the hot new kid on the block, an alternative to the previously mentioned equity component. Labour expenditures are a large part of your production company budget.
The other new trend is ' slate ' financing, allowing producers to generate financing for multiple projects.
DO BANKS FINANCE TAX CREDITS
In Canada, there are a small handful of bank financing sources for film tax credits. Another alternative is commercial finance entities that are generally faster when it comes to addressing your financing need. They have ' niche' experience in your industry.
HOW DOES THE FILM TAX CREDIT LOAN WORK
Tax credits are generally financed at 70% loan to value for production companies and are typically structured as ' bridge loans' with no payments made until your tax credit is monetized by the government. Key to successful tax credit financing is your ability to have a credible team around your production, including strong tax credit accounting expertise to ensure you qualify for maximum financing.
CONCLUSION
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in financing the value in your tax credit.
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Stan Prokop
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