Film and Animation finance in Canada. What producer/project owner wouldnt agree that it’s a ‘ mad world ‘ when it comes to financing a project. That’s exact where Canadian film tax credits enter from stage left – they play a key component in our overall financing strategy. Let’s examine that a bit.
It’s rarely a perfect world, but when on exists in film financing its a case of equity investors making a reasonable (or great?!) return on their original investment, and those mezzanine and gap type folks also achieving a solid return on principal and interest.
Does that always happen? Of course it doesnt. Sometimes things go awry or a final component to the film financing success puzzle is required. Quite often that final component consists of Canadian film tax credits, as well as those same credits that apply to the digital animation world – the newest and probably fastest rising kid on the block .
So how can the film tax credit and the financing of same become the OSCAR of film finance? Were still waiting for the day when the film industry acknowledges an award for most creative use of a film tax credit – we do know though there are a lot of nominees out there.
When it comes to film and animation (and television) finance in Canada the tax credit is known as a ‘ soft dollar ‘component of your financing package. Canada current has one of the most robust and easily accessible film/animation tax credits environments in the world, and is widely recognized for that.
Simply speaking anywhere from 30-50% of your overall budget can in fact be recovered by the tax credit. And the financing of those tax credits can play a starring role in your project. Why? Because they can cash flow the actual project itself, they can play a key role in the return on equity in your project, and finally, those dollars could in fact be used to help bankroll your next project. Talk about a triple whammy.
So how in fact to tax credits accomplish those key goals for the producer.? It’s not as complicated as you think, they are not refundable government monies that come from the government jurisdictions that you chose to film, produce, and post produce in. When your tax credit certificate is accepted based on your budget and spend criteria that credit becomes cash for your project – and it can be monetized as you spend or at the end of the project.
So you can choose to simply wait to get your cheque from the government (its a combined federal and provincial amount) after your ‘ spend ‘ is verified and audited.
In the U.S. and elsewhere its a battlefield out there when it comes to ongoing availability of tax credit film incentives. However, in Canada there’s a sense of business as usual ‘ normalcy when it comes to film tax credits for movies, TV, and animation projects .
Want to examine next steps ?Its all about discussing your overall financing plan and budget with a Canadian film tax financing expert in conjunction with your tax credit budget which is usually prepared by a qualified film tax credit accountant , thereby maximizing your return in any one of the Canadian provinces .
So yes, its a ‘ mad world ‘ when it comes to film finance – use your Canadian film tax credits to assist you in your overall plan of equity, debt, print and advertising, and gap financing . You just might find the Oscar goes to film tax credits for best supporting role. Speak to a trusted, credible and experienced Canadian business financing advisor when it comes to film finance.