Film Tax Credit Financing in Canada


Film tax credit financing in Canada is a unique and specialized type of financing. While many of the larger film, TV, and digital media firms in Canada are aware of and are utilizing this type of financing, many smaller and independent firms are either unaware that the financing exists, or alternatively know there are substantial tax credits, but were not aware that they can be monetized into immediate cash flow for either project completion, or even moving on to your next project.

All of this activity stems from federal and provincial legislation that was recently amended to increase tax credits to Canadian firms in the three aforementioned sectors:

Film

Television

Digital Media - i.e. Animation, etc

All these program obviously boost Canadian content and help foster Canadas reputation in the industry, and the government, both at the federal and provincial level seems keenly comfortable that these tax credits and incentives, which are non repayable in most cases (yes we said non repayable) generate additional tax and revenue for Canada many times in excess of the tax credit values.

While federal legislation is of course standardized across the country each province has different organizations under different ministries to handle the provincial portion of the grants.

In Ontario as an example you can claim tax credits for 6 different credits - but did you know that if properly claimed you can generate immediate cash flow and financing of these film credits. (The six credits are: Production services/book publishing/sounds recording/interactive media/film and tv/computer animation).

How can these credits be financed ask our clients? Simply speaking if you have valid tax credit claims and the proper certificates in place you can monetize these into immediate cash flow. From a terminology perspective we can almost say that you are monetizing, factoring, or discounting your claim now based on cash flow you will receive from the federal and provincial authorities. In effect they are accounts receivable now on your special purpose entities (i.e. your current project/production) balance sheet.