Two Year Tax Credit Extension Signed into Law

Two Year Tax Credit Extension Signed into Law

Assembly Bill 2026 and Senate Bill 1197 were signed into law on September 30, 2012 by Governor Edmund G. Brown Jr. to extend funding for California’s Film & Television Tax Credit Program. The two-year, $200 million extension ensures that tax credits will be available through fiscal year 2016-17.

The original five-year Program enacted in 2009 was part of an economic stimulus package to increase film and TV production spending, jobs and tax revenues in California. Last year, the Program was extended for a single year through fiscal 2014-15 when the Governor signed AB 1069 into law. The new two-year extension provides added continuity and certainty to a program that has proved very successful. To view full Production Alert, click here.

Application Procedures for Next Round of Available Funds

The California Film Commission (CFC) accepted applications for the new fiscal year on June 1, 2012. Due to overwhelming demand, the program is now oversubscribed with a long waiting list. Any productions interested in applying for tax credits are advised to contact the CFC to ascertain the status of the waiting list prior to submitting any applications. Historically, projects drop out of the Program throughout the fiscal year for a number of reasons and credits may become available for waitlisted applicants.

The California Film Commission is pleased to offer incentives for the fourth year of the Tax Credit Program, along with all of our existing services.

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.)

A “qualified motion picture” must also meet the following conditions:

  • 75% test (production days or total production budget) in California
  • Application must be submitted at least 30 days prior to commencement of principal photography
  • Once an application is approved, principal photography must begin within 180 days

How much was allocated to the program?

  • $100 million annually beginning fiscal year 2009/2010 through fiscal year 2016-2017
  • A minimum of $10 million of the annual funding is available for independent films each year
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