The following articles outlines the various Canadian tax credits (Federal and Provincial) and digital media grants (OMDC, Telefilm & CMF) available for digital media producers and the amount of credits available for eligible productions. This guide for film producers will help you understand how to your project funded.
It is important that you have the proper agreements, costing structures, and meeting certain budget requirements etc. before considering applying for a grant. It is also important to have a business affairs professional, lawyer and production accountant and finance person to assist you along the way.
Tax Credit Applications
Before applying for Canadian tax credits, ensure that all legal contracts, production documents, accounting, production such as cast and crew lists, production calendars, script, synopsis, key crew bios etc. and other required paperwork are prepared and completed.
Preparing for your application includes review and submission of required documentation to government agencies and liaise with production, accounting, legal, assigned analysts to receive preliminary and final certifications for tax credits, treaty co-productions and film and television funding.
Other Funding Applications
In addition to accessing Canadian tax credits, please note that applications to other funders if you are applicable such as the OMDC Film Fund, NOHFC (Norther Ontario Heritage Fund Corporation), Harold Greenberg Fund, Bell Fund, MaxFax, BravoFact, COGECO Program Development Fund, Independent Production Fund, Rogers Group of Funds, Shaw Rocket Fund, Telus fund) would entail additional fees depending on time commitment.
Assistance with closing of Bank Interim Financing with various banks and or other institutions, including modifications to support other secured lenders (including rendering of corporate legal opinions), including reviewing the following agreements
Bank Loan Agreement and other documentation (for interim financing)
Corporate Searches for Bank Closing
Opinion Letter re: chain of title
Opinion letter re: execution of documents
Preparation of private investor and private lender agreements
Closing Agenda document management and delivery to finalize completion guarantees and to close interim and final bank financing
General Business Affairs Supporting Legal
Assist with chain of title analysis
Arrange production and e&o insurance, script research, title and copyright reports, Canadian and US copyright registration for productions
Supervise project and document status, support and execute film and television delivery requirements
Film festival submissions, publicity and advertising for gala premieres, private screenings
We will also oversee and prepare master document and delivery binders/discs.
The legals are important because you need the proper agreements in place in order to finalize tax credit applications. The legal services include:
Structuring your production company to ensure it meets all legal requirements for tax credits and other financing
Drafting and reviewing co-production agreements
Chain of Title and Securing Rights in Underlying Rights o Chain of title review
Option agreements or literary purchase/life story
Certificate of authorship/employment
Assistance with securing rights for further development including WGC Adherence Agreement
WGC Writer and Story Editor agreements
Review of broadcaster/distribution agreements
Protection of intellectual property and copyright registrations in underlying script and film.
E & O Application Review (including insurance policy) in association with business affairs director (including reviewing Canadian tax credit applications)
Clearance Procedure Review in association with business affairs director
Review, amending of and/or preparation and drafting above-the-line talent agreements and guild set up, including:
Producer Agreement o Executive Producer Agreement
Director Agreement (DGC or non-guild)
Principal Performer Agreements (ACTRA or non-guild)
Review/amending of and/or preparation and drafting of below-the-line deal memo templates memo templates and review;
Appearance Releases/Day Player Agreement o Extras Release o Crew Agreement (Employee)
Crew Agreement (Contractor)
Crew Guild Adherence Agreement
Canadian tax credits
Reviewing and drafting all other standard production related agreements such as:
Sponsorship agency agreement/product placement
Third party product clearances
Stock footage licenses o Website agreements
Review of and preparation of music and assistance with clearing all music rights and obtaining rights from musicians composers, record companies and music publishers including all related music licenses and music/composer agreements
Assistance with the preparation and drafting of trade-mark applications for the title of the project Instead of paying for legal fees on a project basis.
The following information may be helpful in understanding the tax credits available to producers. However, please note that you need to meet some minimum requirements and conditions noted below.
Finance and Cost Reporting
You would also need a finance person to assist with the following: äó¢ Assist with structuring of the production
Review financing and other relevant agreements in the context of the project being eligible for Canadian tax credits
Prepare tax credit calculations based on budgets prepared by the client äó¢ Prepare cash flows for the production, with the assistance of the production accountant
Review agency applications and assist with any questions that may arise during the certification process
Monitor the production to help ensure that the project continues to qualify for incentives
Review cost reports and monitor the use of investor cash advances
Organize and manage the production cost audit/review engagement
Arrange for the filing of tax returns to facilitate the collection of tax credits and assist with any questions that may arise during government review/audit of these tax returns
Review final agency applications and assist with any questions that may arise during the certification process
Canadian Tax Credit Eligibility
In order to qualify for Canadian tax credits, you must have a broadcaster license agreement or distribution agreement (Your platform would not be considered a qualified distributor). The production must qualify as either Canadian content or apply for a production services tax credit.
However, the cost for a production for the period ending 24 months after principal photography has begin must exceed $1 Million Canadian (except for a series consisting of two or more episodes or a pilot for such a series. The cost for each episode in a series, which has a running time of less than 30 minutes, must exceed $100,000 CA per episode and the cost for episodes or a pilot with a longer running time must exceed $200,000 CA per episode. Expenses must be Canadian labour expenditures which were paid to persons who were resident to Canada at the time the payment was made.
Before proceeding with filing your tax credit applications, check to ensure whether or not your production is even an eligible genre. For instance, if your show is a news show or reality television, it would not be eligible for tax credits. The production must also not fall under the excluded genre categories of productions listed by CAVCO such as news programs, talk and game shows, sporting and award events, reality television, productions that solicit funds, pornography, advertising, industrial or corporate productions and productions other than a documentary, all of substantially all of which consists of stock footage.
Canada / Canadian Content Productions & Accessing Canadian Tax Credits:
The following outlines the various Canadian tax credits that are available:
25% of the qualified labour expenditure. Eligible salaries and wages qualifying for the tax credit may not exceed 60 percent of the cost of the production, net of assistance, as certified by the Minister of Canadian Heritage. Therefore, the tax credit could provide a maximum refund of up to 15 percent of the cost of production budget, net of assistance.
PSTC / Canada Production Services Tax Credit (Film or Video Production Services Tax Credit)
16% of “qualified Canadian labour expenditures” (incurred within certain timeframes) for services provided in Canada by Canadian residents or taxable Canadian corporations (for amounts paid to employees who are Canadian residents) for the production of an “accredited production”.
Ontario / Canadian Content Productions:
OFTTC Tax Credit:
35% of the eligible Ontario labour expenditures incurred by a qualifying production company with respect to an eligible Ontario production. (40% on the first $240,000 of qualifying labour expenditure is available for first time producers).
10% Regional Bonus on all labour expenditures for productions that are shot in Ontario entirely outside of the Greater Toronto Area (GTA) or that have at least five location days in Ontario (or in the case of a television series, the number of location days is at least equal to the number of episodes), and at least 85% of the location days in Ontario are outside the GTA
Wholly animated productions which perform at least 85% of key animation in Ontario outside of the GTA qualify for the regional bonus.
OPSTC / Ontario Production Services Tax Credit
OPSTC is 21.5% of all qualifying production expenditures incurred in Ontario with no cap (within certain timeframes). In addition, this credit can be combined with the federal Film or Video Production Services Tax Credit of 16% of qualified Canadian labour expenditures. CAVCO has recently changed their regulations allowing approved on-line services to satisfy the ‘shown in Canada’ requirement. This is a huge change and allows on-line companies like Netflix, Amazon Prime etc. etc. to satisfy the 2 year ‘shown in Canada’ requirement. You still need an agreement with a Canadian Distributor who then contracts with the on-line service. I still think the client’s on-line service wouldn’t qualify as it needs to be approved by CAVCO, and really be for Canadian exhibition. I’m telling this to you for your info. only.
Telefilm Digital Tax Credit
When submitting your application for the Canadian tax credit, ensure that you do not have a poorly written description and synopsis. It is important to be aware of the target audience when doing a synopsis. It is recommended to include demo videos. Show your marketing skills and the level of engagement you already have with your property and that you can attract an audience.
The microbudget program in its 2nd year and is a grant and not a loan. They are looking for emerging film makers or web series. Apply at a university or college which sends list to Telefilm. Last year, they funded 4 projects. They are looking for “Emerging Talent”. Important things to note that the Deadline dates are around Jan 27 or Feb. About $100,000 – $500,000 is available (2/3 given to English Canada and 1/3 to French Canada).
The purpose of the fund is for concept development for early stage development in TV drama so you can test our your script etc. It started a couple of years ago. Theyfundabout 10 projects per year. Around $15,000 in development is available for hiring, writing scripts. They need proof of video concept (not just script but video important). The deadline is Oct 1st and find out in Nov if qualify for next stage (80% of projects in developmentfundqualified). About 15 projects per year out of 180 applications arefunded. They gave a total of $150,000 for development. It is considered an advance or a loan and must be paid back. If you don’t go into production, then you don’t have to pay back
This fund is for gaming, web series, e-learning. They are grants that you don’t have to pay back. It is an Ontario based company and can be incorporated in Ontario or Federally (as long as paying taxes in Ontario).
It is traditional TV transitioning to digital where 25% of revenues come from screen based production.
For digital companies , there must be 50% of expenditures coming from creation of digital projects. The principal of the company of full time employee has at least 3 years of experience in the space. They have an economic development mandate. The definition of “interactivity” means games, e-learning, web series (more subjective). It is intended to be broadcast on a digital platform or network.
The Marketing Support Program provides up to $50,000 for marketing activities.
The OMDCfundeda total of about 40 to 50 projects where 10 or 20 were web series (IMFfund).
The Interactive Digital Mediafundhas 2 streams:
- Production Stream – $25,000 to $250,000 (get 50% of budget)
- Concept Definition Stream – $10,000 to $500,000 ?
- Need a Marketing Plan, target market
- very competitive jury process
- New Concept Development Stream (to help you get ready for production)
- early stage development and crystallizing idea of what product would be
It is a web series = focus groups to create demographic.
- Who Can Apply
- Must be Incorporated
- Experience in creating these projects
- 10% of whatOMDCfundsare web series
- Create content that is marketable and not against public policy (eg. pornographic).
- April 10 – stream deadline
- August 28, 2017 (decision takes a couple of months afterwards with specialty advisors and jurors)
The Canada Media Fund (CMF) is for web series pilot program and the max contribution is $250,000 reviewed by an international jury. They have 2 million available go give away. The following are some of the criteria:
- CMF pilot project recoups 100% and profit participation for 7 years
- Drama and Children only (no documentaries or variety)
- Deadline of January 17th
- It’s a nationalfundand no language barriers and can be in any language
- It must be in the second seasons
- They are only looking for successful projects and not first season projects
- They will look at google analytics
- Must be a top notch project
- Equityfunding– CMF recoups investment and shares in the profits
- To date, they have recouped on some but have never received profits yet
- If you do a subsequent work, they get a percentage of that
- They look at finance plans who is in it, the production team and the creative team
- They take profit participation
- They look at past and presentfunding(eg. did a broadcaster buy again for another season)
- Max up to $150,000 20% to 80% of productionfund(for French Canada, it is usually $75,000)
- they are looking for other sources offunding(CMF, tax credits etc)
- Who Can Apply?
- 75% of budget has to be Canadian
- If a co-production, then they look at the Canadian part
- Any Canadian incorporated company can apply
- If it is tied to a TV project, then it’s ineligible as it has to be created for the web