Canadian Film Tax Credit – Let Movie & Animation Financing Refund Loans Enhance Your Project

Updated: June 12, 2011

The reality is, and of course we're sorry (kind of ...) that more and more U.S. regions are eliminating or downsizing the film and animation tax credits that can often make or break your projects final success. In fact, using Hollywood California as an example, as at June 2011 the state has in fact used up all their tax credits for the remainder of the year! No wonder why U.S. and of course Canadian producers and owners realize the Canadian system is still committed to job creation and support of the industry.

Ours has never been to debate the merits of the Canadian film tax credit (animation and TV included of course)... Ours has been to promote it and ensure our clients are using it. In Canada , aka Hollywood North the tax credits are viewed in all provinces as great economic and tourism development, and, as we said , we're not arguing!

In Canada the film, TV, movie and animation credits can generally get up to 40% of your project financed. That of course leaves the other 60% up to you, but what a great head start!

Although most producers and owners think of the Canadian film tax credit in terms of movies/ film etc. the Digital media area is probably growing the quickest. 6 of Canada's ten provinces already have a separate special digital media tax credit in place.

B.C. has a very strong and growing animation environment (could that be because of its proximity to California?!) and provides 17 1/2% credit to your total labour cost on any project.

While most U.S. and Canadian producers always tend to think in terms of Toronto, Montreal and Vancouver as major film and production and animation centres the reality is currently that the most lucrative digital tax credit is out of Nova Scotia. They have a very simple formula, 50% of expenditures that qualify under the legislation, or 25% of your total budget. Your tax credit accountant and Canadian business financing advisor can assist you in maximizing what works best for your project.

Quebec also increased and broadened its tax credits, with 25% of all expenditures qualifying for a Canadian film tax credit refund. When you compliment this with the federal Productions Services tax credit an additional 16% of financing becomes available.

Naturally there are all sorts of nuances in maximizing and qualifying for your tax credits. Producers should in general always set up a special purpose entity and typically should own the copyright or content.

Your tax credits in Canada can be financed, either through traditional sources, or independent firms specializing in this type of financing, also at the same time usually helping you maximize the credits. Financing is available on a ‘when completed ' basis, or, often more desirable, on an accrual basis as you start to spend on your project. Bottom line: Cash flow and working capital for your project.

So, as we said your challenge is equity, debt, gap pre -sales, etc. But let tax credits be the final component to your projects success.

If you choose you could creatively carve out the tax credit from your overall finance plan and enhance the equity position, of simply finance the credit refund on its own. Use your tax credit to either attract an investor, or as a stand alone component.

Featured Research
  • The Social Side of Service

    Did you know that 83% of Twitter users who tweeted a complaint said they loved receiving a response from the brand? In order to provide the best possible service to your customers, you MUST provide service on the channels that they are utilizing. Social customer service might seem scary and undefined, but can be much more effective and less expensive than traditional channels. more

  • Video Conferencing

    For many, the mere mention of video conferencing brings about bad memories of conference rooms full of people staring at a screen with dodgy sound, fuzzy images, and broken connections. What if we were to tell you that over the past decade, video conferencing solutions have evolved to where they are affordable to businesses of every size and have evolved beyond just the standard boardroom. Today, 74% of B2C marketers and 94% of B2B marketers use video in their marketing efforts. more

  • EHR Implementation

    More and more medical practices are selecting and implementing electronic health records (EHR) than ever before. In fact, statistics show that the number of practices who have purchased an EHR has doubled in just three years. That being said, many practices fail to prepare for their new EHR and thus do not gain the full benefits that come with implementing a solution. more

  • Selecting the Right EHR for Your Practice

    The purchase and implementation of an electronic health record (EHR) system is no small feat and is a big step for a practice, small or large, to take. Selecting your new EHR is one of the most important decisions that you will make for your practice. more

  • 8 Ways Business Travelers Can Save with VoIP

    Do you or any part of your workforce travel for work, or even telecommute? If that answer is yes, then you should be utilizing mobile VoIP. With VoIP, businesses have been found to save as much as 40% on local calls and a whopping 90% on international calling expenses. more