Invest in the Spotlight: Exclusive Perks of Feature Film Backing
Investing in feature films offers unique advantages, including various tax incentives that can enhance your returns. Here's an overview of the tax benefits available in Canada, the United States, and the United Kingdom, along with funding organizations that support feature film production.
Canada
Federal Tax Credits:
Canadian Film or Video Production Tax Credit (CPTC)
A refundable tax credit of 25% on qualified labor expenditures for Canadian-owned and produced films.
Film or Video Production Services Tax Credit (PSTC)
A refundable tax credit equal to 16% of qualified Canadian labor expenditures incurred in Canada, available to foreign productions.
Provincial Tax Credits:
Each province offers additional incentives that can be combined with federal credits:
British Columbia
Provides a 28% credit on qualified labor expenditures, which can be combined with federal credits for a total of up to 53% on Canadian labor costs.
Ontario
Offers the Ontario Film and Television Tax Credit (OFTTC), a refundable tax credit of up to 35% on eligible Ontario labor expenditures for Canadian productions.
Manitoba
Provides a Film and Video Production Tax Credit with a base rate of 45% on qualified Manitoba labor expenditures, plus bonuses for frequent filming and rural locations.
Public Funding Organizations:
Telefilm Canada
Offers funding programs to support the development, production, and marketing of Canadian feature films.
Canada Media Fund (CMF)
Provides financial support to Canadian television and digital media content.
Private Funding Organizations:
Bell Media's Harold Greenberg Fund
Supports Canadian storytellers in film and television.
Rogers Group of Funds
Offers various funding programs for Canadian independent producers.
United States
Federal Tax Incentives
Section 181 Deduction
Allows investors to deduct the cost of qualified film or television productions in the year the expenditure is made, up to a certain limit.
State Tax Credits
Many states offer tax credits to attract film productions. Here are the top 10 states with notable incentives:
California
Offers a 20% refundable tax credit on qualified expenditures, with an additional 5% for filming outside the Los Angeles zone or for music scoring/track recording.
Georgia
Provides a 20% transferable tax credit, plus an additional 10% if the finished project includes a promotional logo provided by the state.
New York
Offers a 30% refundable tax credit on qualified production expenditures, with additional credits for post-production.
Louisiana
Provides up to a 40% transferable tax credit on total qualified in-state production expenditures.
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Illinois
Offers a 30% transferable tax credit on qualified expenditures, with an additional 15% credit on salaries of residents from economically disadvantaged areas.
New Mexico
Provides a 25% to 35% refundable tax credit on qualified expenditures, with higher rates for series television and resident labor.
Massachusetts
Offers a 25% transferable tax credit on payroll and production expenses, with a sales tax exemption.
Pennsylvania
Provides a 25% transferable tax credit for film production expenses, with additional credits for qualified post-production expenses.
Ohio
Offers a 30% refundable tax credit on production cast and crew wages plus other eligible in-state spending.
New Jersey
Provides a 30% transferable tax credit on qualified film production expenses, with an additional 2% diversity bonus for hiring women and minorities.
Public Funding Organizations
National Endowment for the Arts (NEA)
Provides grants to support artistic excellence, including film projects.
State Film Offices
Many states have film offices that offer grants and incentives to attract productions.
Private Funding Organizations:
Sundance Institute
Offers grants and labs for independent filmmakers.
Film Independent
Provides grants and awards to filmmakers, along with project involvement programs.
United Kingdom
Tax Reliefs
Film Tax Relief (FTR)
Allows film production companies to claim a payable cash rebate of up to 25% on UK qualifying expenditure.
Animation and High-End Television Tax Reliefs
Provide similar benefits for qualifying productions.
Public Funding Organizations:
British Film Institute (BFI)
Offers funding for film development, production, and distribution.
Creative Scotland
Provides funding and support for Scottish screen projects.
Private Funding Organizations:
BFI Film Fund
Supports emerging filmmakers with production funding.
Film4:
The film production arm of Channel 4, investing in innovative and distinctive films.
Investing in feature films in these countries not only offers potential financial returns but also provides access to a range of tax incentives and funding opportunities unique to the film industry.
Thanks to the strategic use of tax credits and other financial incentives, film productions can offer investors a guaranteed return on their investment for a significant portion of the invested amount, depending on the locations where the films are produced. These incentives, combined with additional funding sources such as public grants, private equity, and pre-sales agreements, create a layered financial safety net. In essence, this structure makes film funding a much safer investment option compared to many other forms of investing, offering both security and the potential for substantial upside.