Here Are All The Ways To Finance Tax Credits ( SR&ED / Film ) In Canada – It’s A Science Not A Séance
OVERVIEW – Information on financing SRED ( ‘SR&ED’) credits in Canada . Together with the Film finance credit the ability to monetize and cash flow refundable tax credits accelerates business success in research and Media

 

Financing SRED credits (SR&ED) or the Film Finance Credit shouldn’t come with ‘ performance anxiety’! Let’s discuss some of the key issues/points around maximizing tax credit claims under these two major programs. In our ( humble ) opinion these two programs , which provide Billions ( yes that’s with a ‘ B’ ) of refundable credits and ‘ cash back‘ need to be maximized and provide great recovery of cash flow and working capital . Let’s dig in.

It might seem strange to some that we talk about R&D recovery and film/TV/digital animation tax credits in the same breath but the similarities of the two programs in what’s required to file and what’s require to finance are quite uncanny .

Let’s take a look at SR ED (The Scientific Research / Experimental Development) first. When it comes to financing and tax credit, and SRED is no exception it’s about the quality of the claim. While we meet some clients who are comfortable and knowledgeable in writing and filing their research credit the fact is that the majority of these claims are prepared by 3rd parties called SRED consultancies.

This group of folks created a small industry over the years, billing their clients on contingency and taking all the risk in preparing and filing your claim. What a nice bunch of folks right? Well, in return they typically took 15-30% of all funds recovered. We won’t get into the merits of what’s fair and reasonable, as thousands of firms over the years certainly felt this was an ok arrangement. But these days you’re required to align yourself with a credit SR&ED consultant, as well as divulging on your filing who prepared the claim and what the fee was.

When it comes to financing your claim your SRED credits are evaluated under a small handful of key criteria – i.e. general stability and prospects of your firm, owner experience, previous filings ( nice to have , but not required ) , and as stated, quality of the claim . So aligning yourself with a solid preparer is key.

Since financing a tax credit claim in both SR&ED and film is all about shortening the time it takes to receive your funds a quality claim will shorten audits, requests for info, as well as speed up financing approval, which typically only takes days anyway.

When it comes to the film finance tax credit it’s key to know that financing media tax credits is one of the most straightforward and less ‘risky’ aspects of the ‘ exciting’ (?) world of media entertainment production . While many might view this industry as ‘ losing a shirt’ and dependent on public success the reality is that the tax credit portion of a project in film, television or transmedia provides anywhere from 30-50% of an entire budget , and when properly financed allows the other portions of a project to come together quite nicely – i.e. equity,. Pre-sales, gap, etc.

The film tax credit accountant mirrors the role of the SR&ED consultant – providing a quality claim via their expertise in the various provincial and federal programs that are combined into your filing.

In our opinion financing sred credits and the film finance credit is an art and science, not the mystery of a séance. Seek out and speak to a trusted credible and experienced Canadian business financing advisor who can assist you with eliminating ‘ performance anxiety ‘ in tax credit financing.

Author: Stan Prokop – founder of 7 Park Avenue Financial

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies, specializing in working capital, cash flow, and asset based financing. In business 10 years – has completed in excess of $90 Million of financing for Canadian corporations. Core competencies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details:

CONTACT:

Greg LaBella
7 Park Avenue Financial
Off.   905 829 2653

Cell   905 302 4171
greg@7parkavenuefinancial.com

 

 

7 Park Avenue Financial
Canadian Business Financing