Film , Television, and Animation Tax Credit Financing Canada

Growth in film, TV and animation productions in Canada is very strong in 2010. The planets have aligned via an improving economy, a generous increase in the tax credit themselves, and more access to cash flow and working capital for these productions via creative financing.

Although the Canadian dollar is as strong as it has every been the reality is that talent continues to migrate into Hollywood North.

How can your tax credits be financed? Why should you consider financing them? We can categorically say that there is financing available for your Canadian productions and in some cases co-productions. Owners of these productions, often set up as SPE ( Special Purpose Entities ) should consider financing when they see a need for interim working capital to complete the current project, and , in some cases, to monetize the tax credit , allowing the owners to move on to another project . Both cases make good business sense!

The changes by the federal and provincial governments in Canada have been viewed unanimously as very positive for the industry. Grants and tax credits have been increased, and these vehicles have become an important add on to the traditional debt, equity, and distribution financing for Canadian productions. To some extent some of the Canadian banks have also started to get involved.All of these financing vehicles are the alternative to previous strategies such as tax shelters, which are no longer in vogue, and in fact not even currently legislated .

To finance your film, TV and digital media credits it is important to seek out the resources of an expert, which will save your production time, and at the same time allow you’re to maximize the cash flow of the tax credit. Utilizing the appropriate party can also potentially allow you to finance your credits on an accrual basis, which simply means that eligible productions can be financed all along the way – providing an even more immediate monetization of your future claim . That in it can be extremely valuable as a cash flow ‘super charger ‘to your Canadian production.The huge amount of new content in Canada via Canadian productions, co-productions with other countries, and the massive amount of new cable channels, etc bodes well for financing availability.

How do you go about financing that credit? The basics have to be followed. And, as noted seek out the services and expertise of a solid advisor in this area. Ensure your production is properly incorporated and that your have a system, infrastructure, and resources available to document your project from an accounting, payroll, and tax credit filing point of view. Also, ensure you appropriate tax filings for your productions are up to date.When these key elements are all in place you can receive financing, either after your tax credit has been filed (and potentially before) for up to 80% of the final claim value. Financing amounts differ based upon traditional analysis of management, owner’s background, quality of your actual filing, etc.

In summary, owners of individual productions in Canada should make an all out effort to ensure they qualify for and file for any one of the 6 tax credits available. Credits and filings vary a little from province to proving. Bottom line is they are generous. Your credits can be monetized to generated immediate cash flow and working capital for your production. If you need additional or interim financing is needed seek an expert to finance your claims.

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