Friday, January 3, 2014

R And D Tax Credits In Canada : The SRED Credit And Fil Finan!in" In!enti#es Are $%re &ithin '%ur Rea!h Than '%u Th%u"ht

(nli)e All $%#ie Endin"s The Tax CREDIT Finan!in" St%ry Ends In A *%%d &ay

+,ER,IE& - In.%r ati%n %n SR/ED and Fil .inan!in" in!enti#es in Canada0 R and D 1 R/D2 tax !redits in Canada .%r resear!h, as 3ell as edia !redits in .il s, t# and ani ati%n are .inan!ea4le and #alua4le !ash .l%3 and 3%r)in" !a5ital s%ur!es

Both R and D 1 R/D2 tax !redits in Canada , as well as .il .inan!in" in!enti#es , properly done, almost always have what movie pundits call the ' happy ending'. We speak to clients about both of these two types of tax credits because they are the two most ' robust' government programs in Canada, providing Billions (yes that s Billions with a ' B'!" of # of funds for claimants in either program. $et's dig in! $ets first take a look at film finance tax credits, which are actually offered in % separate segments of the media&entertainment industry ' television, film, and animation&special effects ' the latter being the hot new kid on the block given all the incredible changes in technology . (s we have pointed out in the past it's actually possible to file a )*+,(.sred " claim based on your productions work in animation. )o we think we can be forgiven for intertwining these two separate federal&provincial programs in our discussion. FI6$ FI7A7CI7* I7CE7TI,ES: /hese claims are based on what your pro0ect spends on labor, services and e1uipment ' the key point being that you follow the guidelines under each category of spend per the government re1uirements. ,ach province has difference per cent age enhancements in these categories, and depending on which way the wind is blowing in provincial governments there is often a fierce competitive rivalry among very provinces to lure your pro0ect&production to their neck of the woods so to speak.

2sing 3ntario as a good example of the above ' competition' claimants is allowed to claim 456 more of their 1ualified expenditures if they film outside the 7reater /oronto (rea. /ypically media property owners of pro0ects in film, /8 and the digital area set up what is known as an ' )9, ' ' ( separately incorporated ' special purpose entity ' that allows them to properly capture what they spend . /his is typically done by a tax credit accountant who should be well versed in what you can claim and how you file to get a valid tax credit certificate SR/ED Tax Credits: :;4% was a watershed year

for claiming, and financing *+- tax credits in Canada. Change came from every direction. /hat included the following< 7e3 and si 5li.ied %nline .%r s t% .ile y%ur !lai In!reased audits .r% CRA the .ederal 5%rti%n %. the 5r%"ra that8s ad inistered 4y

An industry 3ide re#ie3 4y a !% 4% %. the "%#ern ent and 5ri#ate se!t%r9 3hi!h !ul inated in the release %. a :%li!y Re#ie3 - a)a ; The Jen)ins Re5%rt< Eli inati%n %. !ertain )ey as5e!ts %. the !redit, n%t the least %. 3hi!h 3as the a4ility t% n% l%n"er !lai !a5ital assets=e>ui5 ent re>uired .%r resear!h Intense s!rutiny %n the 3rd 5arty !%nsultants that ty5i!ally 5re5are SR/ED !lai s 9 these .%l)s are s% e3hat the e>ui#alent %. the tax !redit a!!%untants 3e re.erred

t% in the tax !redit ar%und .il

.inan!in" in!enti#es

)o while the media&/ransmedia industry powers on at what seems to be 4;; miles an hr around technology and consumer shifts (What= >ou can watch a movie on your phone&tablet=!" ,

and while )*,- survived the purge and change of :;4% did anything in fact stay the same=

?t did, and that s the financing of your film or )*+,- tax credits. @inancing from the private sector is abundant and laser focused, even becoming more innovative as many 1ualified claims can now be financed prior to even being filed. /he ' bridge loans' around your tax incentive are structured as no monthly payment & balloon payment loans that are collateraliAed by your claim in either of the two programs we have spoken of. $ooking to finance your claim =)eek out and speak to a trusted, !redi4le and ex5erien!ed Canadian 4usiness Finan!in" Ad#is%r 3ith a tra!) re!%rd %. su!!ess who can assist you with structuring the type of cash flow loan that makes sense for your tax credits.

Stan :r%)%5 ' ? :ar) A#enue Finan!ial <

htt5:==3330?5ar)a#enue.inan!ial0!% Business financing for Canadian @irms , specialiAing in working capital, cash flow, asset based financing , ,1uipment $easing , franchise finance and Cdn. /ax Credit @inance . @ounded :;;B ' Completed in excess of C; Dillion # of financing for Canadian corporations . ?nfo &Contact < ? :ar) A#enue Finan!ial @ Canadian Tax Credit Finan!in" Ex5ertise 9 SR/ED / $edia

Aa#e A Buesti%n =C% Alternati#es D

ent +n +ur Cl%" +r Canadian Cusiness Finan!in"

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E 9ark (venue @inancial )outh )heridan ,xecutive Centre :C4; )outh )heridan Way )uite %;4 3akville, 3ntario $FG EGH Dire!t 6ine I B4F %4C 5EFC +..i!e @ C;5 H:C :F5%

E ail @ sprokopJEparkavenuefinancial.com 8 Canadian Cusiness Finan!in" 3ith the intelli"ent use %. ex5erien!e 8

Stan :r%)%5