California's New Film Production Credit
In an effort to retain film and television production in California, the state has enacted a film production tax credit, to be claimed against California personal income and corporate franchise taxes. The credit applies to costs of production starting July 1, 2009 although the credit may not be claimed on tax returns for years prior to 2011. The amount of the credit is 20% of production costs for feature films with a production budget between $2 million and $75 million, for certain mini-series or made-for-television movies and for television series licensed for basic cable, and 25% of the production costs for a television series that filmed all of its prior episodes outside California, or for an independent film (a film with a budget between $1 million and $190 million not produced by a publicly-traded company or a company in which publicly-traded companies own more than a 25% interest).
In addition, to qualify for the credit, at least 75% of the production days or production budget must be in California, the producer must apply for the credit at least 30 days before commencement of principal photography, principal photography must start within 180 days after the application is approved and post-production must be completed within 30 months of application approval. Applications are processed by the California Film Commission ("CFC").
The total amount of credits available is $100 million per year for 5 years, i.e. through the state's 2013/14 fiscal year. Of this amount, $10 million per year is set aside for independent films. The credit is allocated on a first-come, first-served basis.
Commercial advertising, music videos, news, game, and sports shows do not qualify for the credit. Not all production costs are eligible for the credit. Costs incurred prior to approval of the application are not eligible, nor are the compensation costs of writers, directors, music composers and directors, producers, and all performers other than background actors with no scripted lines. An unused credit can be carried forward up to 6 years. However, the credit for independent films may be sold to unrelated parties.
The CFC is still working on credit application procedures, and applications cannot be made before July 1, 2009. More information will be available at the CFC website.
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