With the California Enterprise Zone Program (CAEZ) allowed to expire, California continues its efforts to encourage businesses to create jobs and make investments in California with new and expanded tax credit and incentive programs.
California Enacts Additional Film Tax Credit Program
Assembly Bill 1839, the California Film and Television Job Retention and Promotion Act, was signed into law by Governor Brown on September 18, 2014. The California Film Commission is currently developing regulations, program guidelines, and other procedures to administer the newly expanded tax credit program. The legislation creates a new 5-year film and tv tax credit program beginning in fiscal year 2015-16 with expanded eligibility to include big-budget feature films, one-hour television series (for any distribution outlet) and television pilots.
The new tax credit increases tax credit program funding for qualified productions from $100M under the existing film tax credit amount available in certain specified circumstances. For example, there is a 5% “uplift” for productions that film outside the 30 mile zone as well as for visual effects and music scoring/recording performed in the state. Additionally, while there are no budget caps for studio and independent films are eliminated, tax credit eligibility will apply only to each project’s first $100M in qualified spending for studio films or the first $10M for independent films. Funding for the new program is $230M in fiscal year 2015-2016, and $330M per fiscal year from 2016-17 through 2019-20. This legislation replaces the current lottery system for allocating tax credits with a jobs-ratio based ranking system. For tax years beginning on or after January 1, 2016, the bill allows, in lieu of the credits authorized under the corporate income and franchise tax laws, a credit against qualified sales tax and use taxes (a similar in-lieu-of sales tax credit is available with respect to the existing credit). Also, for tax years, beginning on or after January 1, 2016, the bill allows the new credit to reduce the tentative minimum tax (the existing credit cannot reduce the tax below the tentative minimum tax).
California Competes Tax Credit — Annual Allocation and Applications
Applications for the California Competes Tax Credit for fiscal year 2014-15 are being accepted by Go-Biz during the following periods:
- September 29, 2014 – October 27, 2014 ($45 million available)
- January 5, 2015 – February 2, 2015 ($75 million available)
- March 9, 2015 – April 6, 2015 ($31.1 million available plus any unallocated amounts from the previous application periods)
The aggregate amount of the California Competes Tax Credit that may be allocated to taxpayers each fiscal year has been increased by $25 million per fiscal year through 2017-16 fiscal year.
The California Competes Tax Credit is an income tax credit available to businesses that want to relocate or expand in California. While the California Competes Tax Credit does not have any industry, sector, or geographic restrictions, its primary purpose is to attract and retain high-value businesses in California industries with high economic multipliers and that provide what are considered good wages and benefits. The amount of credit is based on such factors as number of jobs created or retained, compensation paid, benefits, amount of investment in California, extent of unemployment or poverty at the business location, other incentives received, duration of project, and strategic importance of business.