California Film & Television Tax Credit Program
Assembly Bill 1839, the California Film & Television Job Retention and Promotion Act, co-authored by Assemblymembers Mike Gatto and Raul Bocanegra, cleared the state Senate with broad bi-partisan support on August 29th.
The bill proposes a new five-year film and TV tax credit program beginning in fiscal year 2015/16 with expanded eligibility to include big budget feature films, 1-hr TV series for any distribution outlet and TV pilots. The bill would also provide an added incentive for productions that film outside of the 30-mile zone and for visual effects and music scoring/recording performed in-state. Funding for the new program would be $330 million per fiscal year. This legislation will replace the current lottery system with a jobs based ranking system.
If AB 1839 is signed into law, California Film Commission staff will develop regulations, program guidelines and other administrative procedures over the next several months. Please check http://www.film.ca.gov/Incentives.htm periodically for program updates and information.
The California Film Commission (CFC) received a record number of applications on June 2, 2014. All credits are exhausted. Due to a very long waiting list, the CFC is no longer accepting applications for the current fiscal year.
Applicants with projects on the waitlist will be informed via email when there is significant movement. However, applicants may email firstname.lastname@example.org with their project title and queue number (F-XXX) to request updated queue status information.
Any project that begins principal photography prior to receiving a Credit Allocation Letter is NOT eligible for the program.
Please inform the CFC if your waitlist project is not going forward or has already started principal photography so that we may remove your project from the waitlist.
All approved applicants who applied on June 2nd, for which we have credits, will receive their Credit Allocation Letter no earlier than July 1, 2014. Principal photography can begin no earlier than 30 days after application submission, which would be July 2nd.
Expenditures incurred prior to the date on the Credit Allocation Letter are not eligible for tax credits.
The Qualified Expenditure Charts (QEC) have been revised and are posted on the CFC website. In addition to clarifications and additions of expenditures, there are two significant changes: For productions with a completion bond, the bond fee percentage is applicable only on the qualified spend budget amount, not the total production budget. The completion bond change is effective for all projects applying for the upcoming fiscal year - it is not retroactive.
The second significant change involves digital assets. Previously, all digital assets, regardless of cost, were subject to a value equal to 20% of the purchase price with respect to tax credits. The CFC will now allow assets valued at $250 or less the full purchase price against tax credits.
For your convenience, we have highlighted in yellow the line items that have been added, revised, or updated. In an effort to be as transparent and comprehensive as possible, the CFC encourages approved applicants to contact us with questions or additions with respect to the QEC.
The tax credit programGuidelines have been updated and will provide both new and returning applicants with information regarding the program and updated application procedures.
The Expenditure Tracking Tips document has been updated; please review so as to familiarize yourself with the information provided.
The following is a brief description of the program parameters:How the Tax Credit Works
Qualified taxpayers are allowed a credit against income and/or sales and use taxes, based on qualified expenditures, for taxable years beginning on or after January 1, 2011. Credits applied to income tax liability are not refundable. Only tax credits issued to an "independent film" may be transferred or sold to an unrelated party. Other qualified taxpayers may carryover tax credits for 5 years and transfer tax credits to an affiliate.
What Types of Productions Qualify for the Program?
To apply for the California Film and Television Incentive Program, a "qualified motion picture" must be one of the following:
Eligible for 20% Tax Credit:
- Feature Films ($1 million minimum - $75 million maximum production budget)
- Movies of the Week or Miniseries ($500,000 minimum production budget)
- New television series licensed for original distribution on basic cable ($1 million minimum budget; one-half hour shows and other exclusions apply)
Eligible for 25% Tax Credit:
- A television series, without regard to episode length, that filmed all of its prior seasons outside of California.
- An "independent film" ($1 million total production budget - $10 million qualified expenditure budget that is produced by a company that is not publicly traded and that publicly traded companies do not own more that 25% of the producing company.)