Financing film tax refunds on Canadian productions is presently a fundamental element of the general financing for projects in film, television, and animation in Canada. Individuals knowledgable know that typically a legitimate tax credit could be financing quickly after production continues to be completed.
A much more little know fact, (and we’re amazed at the amount of people who have no idea this ) is when you tax credit is certifiable and you’re somewhat experienced in the market your tax credit can really be financing on your production, getting necessary income and dealing capital for your project.
Whenever we talk with clients we’re not obviously surprised to listen to that most of the total project participation within the 3 key areas (film, TV, and digital animation) is allocated to sourcing financing for his or her project. As the overall financing atmosphere has improved significantly this year (and boy has individuals great government tax credit increases helped) it’s still challenging for many productions to cobble together financing for the whole project.
You will find, obviously, several options and techniques open to proprietors associated with a particular production. Our focus within our details are mainly the monetizing from the elevated and generous tax credits which come within the form on non repayable cheques in the government. What you can do to monetize, (we are able to say ‘cash flow ‘) individuals credits is really a key area of the industry today.
Tax credit financing is generally done with the other kinds of financing within our three key focus areas. Individuals other kinds of financing obviously include equity, pre-sales, etc.
To be able to finance certain important elements must exist. The main one key area to pay attention to is certification and eligibility, with criteria as being a bit different, but basically exactly the same, based on which showing your production is domiciled in. Ontario and B.C. appear to garner the majority of the action…
Proprietors that surround themselves with solid accounting and legal partners and who’ve a clear special purpose entity setup are 90% of how there! What we should are actually saying is when your production is qualified, and you’ve got documented your bidets and charges carefully, and they’re cleanly having a separate legal entity (more suitable) you’re safe to visualize you could have your tax credit financed.
We highly recommend that you train with somebody that reaches reliable, experienced and credible consultant in this region who’ll use you to definitely increase the total dollars that you could derive from your tax credit. Naturally a clear tax credit represents 100% from the dollars because of your production. To err along the side of safety and conservatism tax credits are usually financed at 50-80% ltv. (You will find exceptions around the upside and downside of course!). No debts are paid in your financing, and final financing costs emerge from the ultimate receipt of funds make up the government, with any extra balances remaining because of your manufacture of course.
The opportunity to finance your production creatively, with the help of the monetization of the tax credit is really a effective strategy unavailable in most parts around the globe, due in many a part of course towards the generous non repayable credits the Canadian government as considered for that industry. Utilize tax credit financing to enhance the general success of the projects.