You Can Finance A Tax Credit? Are You Kidding? Financing Film, Media and SRED ( SR&ED ) Credits In Canada

The Art Of Tax Credit Financing – Easier Than You Think!


OVERVIEW – Information on the financing of tax credits in Canada . Film financing, SRED research and Media credit claims can all be financed for cash flow and working capital finance solutions.



Are we kidding? Definitely not! Canadian business owners, including those in the film and video industry in this case can access much needed funds when it comes to film tax credit financing and SRED (SR&ED) finance. And that includes media tax credits also, as that is probably one of the fastest growing aspects of the entertainment industry.

The good news is that you don't need any secret techniques to complete the monetization of tax credits in Canada. Frankly, compared to some comparable U.S. programs it could not be easier and more straightforward.

As we have noted, today we are primarily talking about 2 specific tax credits when it comes to financing - the first is the ' SRED' program, and , at the opposite end of the spectrum an industry fraught with excitement ( and frustration?) , film, TV and digital media projects.

Let’s do the SR&ED recap first! We can safely say that, more than ever, its all about the quality of your claim. The ' advisors' and ' SRED Consultants ' are a mini industry in Canada - in effect they are the brain trust preparing the majority of claims in Canada.

The majority of transactions completed by these consultants and advisors bill their work on a contingency basis, in other words they are assuming a large part of the risk on the acceptance and approval of the claim. It's of course up to you as a business owner/manager to source a consultant that’s capable and experienced, as different industries have different nuances.

It's their work that will be viewed by your CRA office when it comes to legitimacy and amount requested. The fact that the SRED credit is a non repayable cheque from the government allows thousands of Canadian corporations to access billions - yes that’s billions with a ' b ‘, of dollars that is used for further research , working capital, basically any general corporate purpose .

Timing is always a discussion point in SRED claims. First time claimants typically might have their claims audited from both a combination of technical and financial accuracy. That of course always comes back to the quality of your claim.

Let's move on to the subject of... ‘Cash '. Not all SRED claimants know their SR&ED claim can be financed. And the good news, it’s hardly a complex proposal. A basic business application that includes your firm’s financials, a copy of the SRED claim, and some supporting information on the claim and you company is all you need. SRED loans are typically done at 70% loan to value, simply meaning that for every $ 100,000.00 of claim your loan amount be in the 70k range. And the monthly payment? 0. Yes Zero. That’s because your loan is repaid when you receive your government chq - the remaining 30% comes back to you less financing costs.

One of the most dramatic changes in SRED financing is that fact that you can even get accrual financing these days. That simply means you can cash flow your claim prior to filing it, as you spend and recoup funds. Now that’s creativity.


Canada is a leader in film, TV and digital media incentives. And those incentives, aka the ' tax credit ' can be monetized. And that includes, as we have noted the digital media tax credits that are starting to be a huge part of the industry. The largest factor in the make up of the digital credits is the emphasis placed on recovering your actual labor expenses. Simply speaking, you're recovering, via a non repayable credit, a majority of your salaries on your projects.

Using Ontario as an example it is safe to say that your actual programmers, contractors, employees, etc must reside in Ontario. That makes sense, but the Media tax credit is available in pretty well all the provinces of course.

Generally speaking your film, TV and media claim has significantly less risk from an audit or claw back perspective. In other words, you just have to prove you spent the money which can easily be verified via your payroll records, etc.

The process for financing film, TV and media credits. Same as our SRED. A basic application, copy of your claim and supporting data, etc. And those same financing criteria remain intact, relative to amounts financed, etc.


Our bottom line today? Film tax credit financing, SRED finance, and Media tax credits are viable cash flow assets for any owner of the credits. Use them to grow your company, complete your projects, or start another project. Speak to a trusted, credible and experienced Canadian business financing advisor today.

7 PARK AVENUE FINANCIAL
CANADIAN SRED, TV, FILM, AND DIGITAL MEDIA TAX CREDIT FINANCING!






Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/tax_credit_financing_film_sred_media_finance.html

Leverage Canadian tax credits for film finance success via film tax credit financing

Is there a better way of leveraging your film, TV or animation project other than utilizing film tax credit financing on Canadian projects? We don’t think so, but we will let you decide.

Canadian tax credits for film continue to grow in popularity and make a strong case for many projects to be shot, produced, or post produced in the Canadian environment.

Difficult to understand? Not really... Canada's stable political and financial environment, coupled with a very generous and straight forward non repayable tax grant system for productions drive new interest to Canada every day.

Naturally Canada competes with major cities and geographies all over the world for its share of media production in film, tv and animation .These days its more often than not about cost , and Canada has a positive statement to make in the area qualified crews, great geographies, and the cost effectiveness . No one area takes Canada over the top, but when you add the aforementioned facts on top of the Canadian film tax credit system you have a strong power play .

Even the strong Canadian dollar, which seems to be approaching par in 2010-2011 is no longer a concern - previously the lower value Canadian ' loonie ' was a weak currency and a key benefit of shooting in Canada was quite simply, the Canadian dollar.

But the real kicker in all this is the Canadian governments film tax credit financing policy which now plays a key part in most decision to film or produce in Canada

Simply speaking Canadian tax credits for film refund to Canadian and foreign owned products a very large portion of their production costs. The ten Canadian provinces augment that program by adding in their own credits, further increasing the generosity of the program.

An interesting historical point is that in recent years may political regimes in the U.S. and elsewhere lobbied hard to compete against the Canadian film tax credit system. In 2003 the federal authorities increased the tax credit, and the provinces jumped on board again.

Certain of the tax credits were even increased in areas of non labour, i.e. your other below the line production expenses.

How could you not want to take advantage of any system that offers in the percentage range of 30-45% as a non repayable refund on your project? It makes no sense to not consider that option. And as long as the Canadian government feels that benefits outweigh cost who are we to disclaim the program - instead simply take advantage of it.

It's more often than not all about cash flow and working capital for your project. so owners of projects should strongly consider monetizing , i.e. financing their tax credits . Your ability to receive financing on a future tax credit receivable can great improve the confidence of your debt and equity investors, and enhance the overall returns on your project.

The entire process can be completed in a manner of weeks and involves a basic financing application, ensuring your tax credits are legitimate and vetted, and requires that you can properly demonstrate good accounting and financial controls re the preparation and filing of financial statements for your project. Naturally this sort of fiscal responsibility makes sense even if you weren’t going to finance your Canadian tax credits for film, TV, and animation.

Speak to a trusted, credible and experienced film tax credit consultant. Monetize or cash flow your claim if it makes sense. That a solid entertainment finance strategy.


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Stan Prokop - founder of 7 Park Avenue Financial - http://www.7parkavenuefinancial.com
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 6 years - has completed in excess of 50 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/film_tax_credit_financing_canadian_tax_credits.html