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OVERVIEW – Information on film tax credit sources in Canada. Financing federal and provincial tax credits is a key part of successful Transmedia finance
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 those tax credits is a key part of any successful project these days. Let's dig in.
Whether the individual tax payer likes it or not Canadian provincial government, as well as the ' feds ‘are quite committed to subsidizing Canadian media via tax credits. 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.
Just the credits for your labor costs alone are generous on their own, often totaling 35-40 per cent depending on what province you are shooting or producing in. Quebec’s is actually at 45% when it comes to labor.
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.
The concept of film (and TV and digital media) 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.
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, pre-sales, Print and Advertising, etc. Times always change in the world of financing and in film, TV and media finance these days ' crowd funding' is the hot new kid on the block, an alternative to the previously mentioned equity component.
The other new trend is ' slate ' financing, allowing producers to generate financing for multiple projects.
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.
Tax credits are generally financed at 70% loan to value, 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.
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.
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 10 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 :
7 Park Avenue Financial = Film Tax Credit Financing Source Expertise
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Email = sprokop@7parkavenuefinancial.com
Stan Prokop
