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Show me the money! It's a 'well worn' phrase from a movie that we'll use as a 'stunt double' for Canadian film, TV, and animation tax credit financing. The finance of those incentives has helped make Canada one of the strongest centres for production in the genres of film, TV and animation.
And talk about a growth industry - it's actually growing, with 2011 productions in the 5 and 1/2 billion dollar range.
A tax credit incentive is available in each of those three genres or sectors of the entertainment industry. In reality in the past year tax credits accounted for 28% of the entire industry, a staggering number.
So why Canada? It's not that hard of a sell, it's all about the same word that people all over the world associate with Canada, its economy, its banking, and its general all-around.... stability!
Canada is also a great foreign shooting location, geographically, and from a cost perspective.
Everyone has heard the term 'Hollywood North', and it's not hard to determine why when key provinces such as Ontario have begun a 25% all spend tax credit, surpassing British Columbia for the first time in several years.
In film, TV and animation projects it's all about the budget. That’s why many foreign productions seem to be shot here, due to your project's ability to generate strong tax credit, and resultant tax incentive financing from banks and Canadian independent non regulated financial firms specializing in tax credit finance.
Certain Canadian banking institutions have become leaders in tax credit monetization, and in some cases have started to rival U.S. firms in tax incentive financing. And every so slowly many other firms are getting back into the riskier areas of entertainment finance, areas such as gap and mezzanine financing.
Tax credits are one of the other components of equity or the producer’s proverbial 'skin in the game'.
Canadian refundable tax credits focus on Canadian content and production spending in Canada. Typically each project is set up a separate legal entity, although it can be foreign controlled. Many projects in all three of our genres are part of international treaties between Canada and certain other countries.
There are numerous technical aspects to co-production type credits. As an example, a Korean project which domiciles itself in Canada as an international business gets a corporate tax refund of 10%.
As a producer/owner you can benefit from film, TV and animation tax credit financing via your Canadian content credit. The Canadian Film/Video Production tax credit provides you with a credit equal to 25% of qualified labour spend, to a maximum of 60% of the cost of the total production.
Financing your tax credit simply accelerates your cash flow and overall return on investment. To qualify for the credit, and of course the financing of that credit your project must be a Canadian controlled entity. Your Canadian tax credit accountant qualifies you for the tax credit certificate based on a points system around Canadian content and who is involved with the project re: the producer, production costs spent in Canada, etc.
Certain projects don't qualify for the tax credit, for example, game shows, 'reality TV', sports, porn, or blatant 'advertising'. It's an accumulation of specific points that qualify you for the tax credit certificate.
Your tax credit financing is accomplished on a when filed, or accrual type basis. Simply speaking you can monetize the tax credit when you have received and filed it, and when your production is complete. Many projects qualify for 'accrual financing', reimbursing you for expenses you incur, in effect helping to 'cash flow' your project.
A quick example on a 1 Million dollar budget for, say an independent production might net you a total of 40% or more in total tax credits, which are financeable to provide working capital for the current (or your next project). So whether you are a 100% Canadian project, or if you're associated with one of Canada’s 56 treaty countries consider the tax credit as part of your overall financing plan.
We have focused on film and TV, but animation and transmedia are 100% eligible for significant tax credit finance.
Speak to a trusted, credible and experienced Canadian business financing advisor on the financing of tax credit incentives in film, television, and animation/transmedia genres. That tax credit will 'show you the money'!
Film TV tax Credit Financing Finance Incentives