Index

CO-PRODUCTIONS AND CO-VENTURES

As Canadian producers of film and television programming, Cinegraphe is interested in co-producing with partners around the world. There are two ways to do this: either as co-ventures or co-productions. Canada has signed co-production treaties with a large number of countries. Each treaty lays down the rules of co-production and these rules must be satisfied before a co-production can go ahead. Co-ventures are simpler but have their own rules.

REIMBURSABLE TAX CREDITS

Cinegraphe has access to various provincial tax credits, in particular the Quebec tax credit (base & bonus) at 48%, the New Brunswick and Nova Scotia tax credit at 40% and 50% respectively and also the Ontario tax credit at 40% (outside Toronto). With the right mix of tax credits, we could theoretically finance a maximum of approximately 40% of your total budget from tax credits alone!

The Quebec tax credit applies to all manpower costs including shooting personnel, film development, sound transfers, mixing studios, and even foreign manpower costs (if billed by individuals)... Yes, even the fee for your director of photography from Amsterdam, Paris or L.A. is admissible, if it is paid to an individual by the Quebec co-producer. Other provincial tax credits are resident specific, meaning that manpower must be resident in the province for which you claim the tax credit. It usually takes some 8-12 weeks to get an evaluation of the tax credit and a government letter of credit for financing.

MINORITY CO-PRODUCTION FINANCING

Cinegraphe is particularly interested in co-producing with partners who already have financing in place for feature and documentary projects. The Quebec film agency (SODEC) has a minority co-production fund for just this kind of collaboration. After reviewing your project and determining the additional funding required, Cinegraphe may decide to take a minority position in the equity of your film. Cinegraphe will then raise a certain number of presales with distributors, Canadian broadcasters, and other funding agencies.

PRODUCTION SERVICE TAX CREDITS

If a co-production is not possible or desirable, then production service tax credits can be quite advantageous. To benefit from these tax credits, you need to shoot or post-produce a substantial portion of your film in Canada. The Quebec and Ontario production services tax credits were recently increased to 25% of all local manpower. So together with a Federal tax credit of 16%, you get a return of some 41% of all your Canadian manpower costs. These tax credits can also be financed by Canadian banks at low interest rates since reimbursement can take time.

On a typical $5.0 million independent film, below-the-line costs would amount to about $2.8 million (55%) of which some 60% would be manpower or $1.7 million. So it is quite conceivable that production service tax credits on this film like this could bring in some $680,000, or a maximum of approximately 14% of the total budget!

Clearly co-productions and co-ventures bring in more free money than production services! Up to some 40% of the budget compared to only 14% in the case of production services.

CLOSING THE DEAL

The majority of feature film projects never go into production because the producers cannot close the deal. It takes imagination and a good deal of flexibility to close the financing on a film. Our priority at Cinegraphe is to close the finance and make the movie. We are very good at doing this.