Word is quickly spreading in the Canadian entertainment industry on how Canadian productions can finance their (substantially increased!) tax credits on projects in Canada revolving around film, televison, and digital animation.
To say that film tax credit financing and working capital and accrued financing is a boutique industry in Canada is a bit of an understatement. As in any aspect of business we urge clients to speak to a credible, trusted, and experience advisor in this specialized area of Canadian financing.
The essence of our information we are sharing is that not only can you file for the new increased tax credits in this industry, but those credits can be financed immediately after you have filed . The clear observation is that you can generate immediate and additional cash flow for your current or future projects based on having filed you claim. Your claim is in effect a receivable for your project, and that receivable can be monetized immediately if it is properly documented and accounted for.
Also, in certain, in fact in most cases, if your proposed filing and claim is well documented and certifiable you can even obtain accrual financing – i.e. cash now for expense you are incurring under your tax credit.
The objective of course of the entire tax credit system in this industry is the support and growth of the industry by the federal and provincial governments. Why not take advantage of these programs and monetize them to the full extent possible?
When you finance a tax credit it should be done via a credible, reputable and experienced advisor in this specialized area of finance. Proper filing of claims by your project will result in maximum financing available under the new tax credits. Most players in the industry know that labour expenditures alone have been increased to 60% of the total cost of your production.
You should also be aware that your production cannot apply for the domestic film and TV credit and the production services credit – so ensure you are certifying for the proper tax credit, which can then be financed.
In most areas of business ‘timing is everything ‘and we advise clients that they can only obtain financing once they are clearly committed to the eligibility and certification process. You are highly encouraged to set up a special purpose entity and ensure that your book keeping records, your government filings, and all CRA super priorities are up to date.
Financing is available on your tax credits, both when filed, or prior (if eligible) for anywhere between 40-80% of your claim. Financing is adjudicated based on owner/mgmt experience, overall financial viability, but, most importantly, and perhaps the easiest for your project, simply your need to be eligible to file for your tax credit. It’s that simple.
In summary, many millions of dollars are available in tax credit financing for the film and related industries. You can maximize those claims by cash flowing them now, thereby accelerating your projects to successful completion. Speak to an advisor in this area who can show you how to maximize working capital for your Canadian owned and controlled projects in film, TV, and digital media.