OVERVIEW – Information on tax credit funding in Canada . Film and SR&ED ( ‘ SRED ‘ ) incentives can be financed for maximized cash flow .
Tax credit funding in Canada (SR&ED / SRED and Film Incentives) is the ability to harness the power of two powerful government programs that provide refundable credits to business. It’s only the right strategy when you need the cash flow of course which is almost always these days. Let’s dig in.
The Scientific Research & Experiment Development Program in Canada is your businesses way of maximizing eligible expense that your firm incurs in various aspects of your R&D.
How much you can recover
How are claims submitted/who submits them
Filing a ‘ SRED ‘ claim puts you that much closer to working capital and cash flow nirvana. Being able to maximize your claim (typically done with the help of a ‘ SR&ED Consultant) and then cash flow it puts you one step ahead of your competition – which these days is pretty well nationally and globally. Top experts tell us that those firms that continually re-invest in new products and services are able to ensure their long term position in their marketplace.
Just how big is this program in Canada? In recent years well over 20,000 firms (of all sizes by the way – from start ups to much larger firms) take advantage of the program. In fact well over 4 Billion dollars annually is claimed. By the way top experts tell us that by far the large majority of claimants are in the SME COMMERCIAL area of the economy – it’s not just for the big boys!
Your actual claim under the program is filed by your regular accountant, but the majority of claims are in fact ‘ written up’ by a small industry in Canada known as SR&ED Consultants. They are the ones that carefully analyze your expenses in the area of salaries, contractors paid, and overheads to ensure you are maximizing your claim. There are very specific formulas as provided by the feds and your province that allow you to maximize your refund.
Moving along to making movies, TV shows, documentaries and Digital animation..…..! While those subjects seem worlds away from the laboratory or plant work involved in R&D the bottom line is that the other very powerful tax credit in Canada is in the Media industry. These film tax credit incentives are provided by the federal government and the provinces to ‘ lure’ producers to complete projects in Canada.
From the governments prospective it’ about jobs and the economy and national culture. From the producer/owners point of view it’s about taking advantage of one of the best ways to help complete the financing of any project. It’s not unusual for film tax credit funding to finance anywhere from 30-50% of any particular project.
The role of the SRED CONSULTANT in R&D is replaced by the role of the film tax credit accountant. He or she helps you calculate maximum percentages of your costs under various federal and provincial tax credit incentives.
Weren’t we discussing financing of tax credits? Here is where some of the similarity comes together quite nicely in our two subject areas. Tax credits are financeable for both SRED and Media. In effect you are ‘ selling’ or ‘ cash flowing ‘ credits to receive cash flow today.
Typical financings are structured as bridge loans for up to 75% or more of the value of your credits. And the monthly payments? There are none! You receive funding today and the loan is collapsed when the federal govt and the province remit your claim. Naturally this could be many months, sometimes quite longer, so cash flow today becomes very appealing.
Canada is a major beneficiary of the HOLLYWOOD EFFECT – many U.S. and international productions that qualify can take full advantage of the film tax incentives.
If you are looking to harness the power of film and Sr&ed tax incentives as well as eliminating ‘ the waiting time ‘ seek out and speak to a trusted, credible and experienced Canadian business Financing Advisor with a track record of success who can help you harness the power !
Stan Prokop – 7 Park Avenue Financial :
Business financing for Canadian Firms , specializing in working capital, cash flow, asset based financing , Equipment Leasing , franchise finance and Cdn. Tax Credit Finance . Founded 2004 – Completed in excess of 90 Million $ of financing for Canadian corporations . Info /Contact :
Author Stan Prokop
7 PARK AVENUE FINANCIAL = CANADIAN TAX CREDIT FINANCING
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