Can You Afford Not To Use Film Tax Credits When Financing a Film In Canada - An Investor Primer

Whether it’s a 1 Million dollar independent production, or a 10 Million (or more) project how can you possibly overlook financing a film via film tax credits in the Canadian marketplace? It's no secret if you are ' in the know ' that the utilization of tax credit financing for Canadian film, television and animation projects is often a ' make it , or break it ' component of ultimate success for the financing of your project

The financing of film, TV and digital media productions has radically changed going back to the 1970's. There is even a school of thought that the independent or ‘indie’ projects are in effect impossible to finance. We'll admit that the challenge is significant , but we don’t buy into the ' indie movies are dead' school of thought , especially when you can utilize Canadian film tax credits for a huge ( often 30- 45%) of your production budget . And your ability to arrange independent financing for the tax credit just adds cash flow and working capital to your venture.

The other components of the producers total finance plan of course involve other elements such as foreign pre sales, completion bonds, and the debt and equity component of your project.

So is there a fool proof method to arrange, certify and finance tax credits in Canada in order to appease and satisfy your project investors. In Canada there is only a very small handful of banks which participate in film financing - therefore access to the key players and being able to satisfy their financial requirements is critical.

In Canada there are a number of film tax credits that are spread over Canada's ten provinces. The reality is that sometimes the nature of your project makes it more sensible to focus on a specific province based on your filming or production needs.

The Canadian government, similar to other world geographies, takes a bullish stance on the film, TV an animation industry. Their focus is jobs, tax revenue, and nationalism. Your focus is on getting your project financed.

Let's assume you have a solid finance plan, you have arranged the various components of your equity and debt... how can you now take advantage of financing a film via the tax credit component. It's simple if you have a solid team and advisor in place. By selling and or assigning your tax credits to an independent finance firm or bank you can monetize the credits for cash flow and working capital.

Solid detail in your production budget, a qualified opinion by a film tax accountant, and your experience in completing a project allow you to now monetize your tax credit either on completion of your project, or, if you prefer, on an accrual basis as you start spending on the production.


Financing film tax credits is done by structuring what in effect is a bridge loan based on the collateral of the tax credit . Your ability to provide investors with a solid return on investment through the utilization of effective film tax credits and their financing will only enhance your reputation and chances of project success . Speak to a trusted, credible an experienced Canadian business financing advisor on the proper benefit and utilization of tax credit in successful film, TV an animation financing.

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

Why You Need Film Tax Credits and Why the Canada Film Tax Credit System Works For Your Project

If they are offering, why aren’t you taking? That's what we ask clients when they bring us questions on film tax credits, how the Canada film tax credit system works, and , most importantly, how can they get their share!

You can call it of course anything you want, an incentive, a non repayable grant/credit, but the bottom line is that Canada has proven itself very serious in the introduction of very healthy tax credits that are non repayable and can form a significant part of your overall film, tv and animation credit financing strategy .

Ours is not to question why... but its pretty clear Canada is serious about stimulating and growing the Film, video and animation industries. The latter, animation is slowly gaining more traction everyday. Naturally job creation and tax and revenue generation from these projects is probably high on the list of ' why' for the government, but again, we want our clients to take advantage of the program, not to debate it!

The credits themselves come out of the government’s tax policy and while they used to be viewed as cumbersome the process has been significantly streamlined over the years, and the overall generosity of the program has continually been increased.

The tax credit is clearly a financial incentive, but at the end of the day we find out clients aren’t viewing it as much as an incentive as in fact a key part of their overall financing strategy. It's necessary to step back and understand the key components of a project financing and why film tax credits have clearly gone straight to the top of the pile as a ' must have ' relative to your overall project financing .

Depending on where you shoot, product, or post produce your project the credits can be anywhere from 25- 45% as a general range. (It varies by project and by genre of project - i.e. Film vs. animation, etc).

The Canada film tax credit provides you with a certificate which is then monetized by the government in the form of a non repayable cheque. Naturally in a perfect world you would arrange your debt and equity financing for your project, calculate your tax credit on the project and then consider yourself fully financed. The tax credit cheque would come from Ottawa after you have filed for it along with the tax filings you have submitted for the specific legal entity project.

But, alas, it’s not a perfect world apparently, and boy could your independent project utilize those funds sooner rather than later. That’s where film tax credits, when financed, can bring valuable cash flow and working capital to your project. When properly financed with the right partner finance firm your credits can greatly assist in the cash flowing of your project, providing valuable working capital during production. We read one article recently that referred to your overall project financing as a ' toolkit ' with a number of potential financing tools inside. Clearly the Canadian film tax credit is one of those tools!

The logistics around the financing of your tax credit can be as simple or as complicated as you make them. Our clients choose simple, so they surround themselves with a good media accountant and legal advisor, they have a finance budget and strategy in place, and they borrow against that eligible tax credit. With the right team around you, you can specifically identify exactly how much you will receive and what amount can be financed.

So , bottom line, call it a subsidy, call it a grant, call it a tax credit, call it anything you want, but utilize the Canada film tax credit as a key role in your independent film, tv or animation strategy . Speak to a trusted, credible, and, oh yes, experienced Canadian business financing advisor who can assist you to prepare and monetize your claim.
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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_credits_canada_film_tax_credit.html