Many producers, directors and owners of Canadian projects in film, television and digital animation are not aware of their potential capability to finance film tax credits and monetize those tax incentives into real cash flow, working capital, while enhancing return on equity for their projects.
Let’s examine how these credits work, who they are available to, and why Canadians and foreign owners of projects should consider the monetization of these valuable non repayable film tax incentives. Although we traditionally talk to clients around ‘ film ‘ you should never forget that both television and animation in Canada is eligible for these same incentives.
In essence you are simply taking advantage of the Canadian federal and provincial governments desire to in effect ‘ subsidize’ the cost of your productions. If they’re offering, why aren’t you taking?!
In essence its basically about geography and content -as the two levels of Canadian government are focused on attracting employment and foreign capital to Canada – it is their belief ( and why would we even question it ) that these productions advertise Canada, bring capital spending to Canada and, probably most importantly, stimulate employment – thereby generating tax revenue . But enough of our economics lecture – let’s get down to real world basics on film tax incentives and film tax credit financing in Canada.
Owners of productions are eligible for pure non repayable grants under approximately 6 different programs based on the four genres of film, tv, animation, and the sometimes forgotten ‘ music’ industry .
The grants, as we mentioned are non repayable, and very generous, often approximating 30 – 40% of your production budgets in various categories. We tell clients it is essential to tie yourself to a solid entertainment accountant who focus and expertise will allow you to craft a budget that maximizes the most eligibility of your expenses. Certain categories of expenses are known as ‘ qualifying ‘and the include labor and actual non labour expenses. The government issues guidelines on these budgets and what qualified – you can spend 1 , 5 or ten hours looking through government literature, or, alternatively, do as we recommend, speak to a trusted, credible and experiences film tax financing consultant who can guide you through the whole process of film tax credit financing in Canada .
Film tax incentive financing can be accomplished when you have received your final approval and certificates – for example, if you are shooting or filming in Ontario you would file under what is known as the OPSTC — The Ontario Production Services Tax Credit.
So you have filed your claim, and completed your production. Next item on the agenda – waiting! Care not to wait – then finance you claim, which essentially is the financing and discounting of your claim with the claim as the key collateral. Want an even more supercharged solution – finance your claim while you are in production and receive cash flow and working capital to enhance the overall financing plan.
Film tax credit financing in Canada – its available, its generous, use it, and, if you need to, finance your claims!