By Tia Walsh.
The typical production life cycle for a motion picture consists of four stages.
- Development to pre-production
This stage includes securing the script and key acting talent, creating a budget and financing the production. For an independent producer, stage 1 often involves bonding—obtaining a third-party guarantee for banks, studios and distributors that a film will be completed. It’s also when the producer lays out the initial legal structure for the project.
Financing can come from equity investors, whether independent or studio-backed. In what’s called pre-sales financing, a producer may help fund their film by offering distribution rights in exchange for a cash advance.
Deferring payment to actors and other participants in the production is another way to help finance a film. Bridge loans—to make up the difference between what you’ve raised and what you need—and tax credits are two more options.
Tip: Walsh King can help facilitate a structure that will maximize tax incentives and avoid issues like withholding taxes.
- Pre-production to production
During this stage, filmmakers hire crew and the remaining talent, scout locations and shoot principal photography. To qualify for federal tax credits, producers and key creative team members also submit a Part A application to the Canadian Audio-Visual Certification Office (CAVCO).
Tip: CAVCO administers two federal tax credit programs with the Canada Revenue Agency. To be eligible for these refundable credits, a production must comply with the relevant sections of the Income Tax Act and the Income Tax Regulations.
Besides editing, this stage includes an external review or audit, and preparing tax returns. During post-production, filmmakers must also submit a Part B application to CAVCO.
Tip: The faster you file a tax return, the faster you get the tax credits back.
- Production release
The final stage of production brings together marketing, distribution and sales.
If you are interested in knowing more, please contact me.
- Client News
- Estate Planning
- Film & Television
- Industry News
- Seminars + Presentations
- Strategic Insights
- Success Stories
- Tax Legislation
- Tax Tips for 2016 Tax Year
- Tax Tips for 2017 Tax Year
- Tax Tips for 2018 Tax Year
- Tax Tips for 2019 Tax Year
- Tax Tips for 2020 Tax Year
- Walsh King
- Walsh King Company Culture
- Walsh King News