State Incentive Highlights: CA
The California Film Tax Credit 2.0 Program is in full swing with an effective date on July 1, 2015 increasing the program cap from $100M to $300M. Proving this was a successful move by the State of California, numerous television series have moved back to California due to the film credit incentive including “Mistresses”, “Scream Queens”, “American Horror Story”, “Veep” and “American Crime” to name a few. The CFC has been hard at work amending and finalizing regulations for productions applying under the 2.0 program.
The Re-Adopted Emergency Regulations have been finalized for approved projects with Credit Allocation Letters (CALs) issued between January 1, 2016 and June 30, 2016. Permanent Regulations have also been issued for approved projects with CALS issued on or after July 1, 2016.
Out of LA Zone (OZ) Expenditures
A key change under the new Permanent regulations includes changes for expenditures Out of the L.A. Zone (OZ). Under the Emergency Regulations (for projects with CALs issued in 2015), post-production, insurance, and legal expenditures were subtracted from total qualified non-wage spend and were pro-rated by OZ principal photography days in relationship to total principal photography days to reach the amount eligible to qualify for the additional 5% bump. Under the new Permanent regulations (for approved projects with CALs issued on or after July 1, 2016), applicants must now “tag” out of zone non-wage expenditures when budgeting and during the applicable period as ZE – zone expenditures or ZC – zone consumables, then pro-rate the same as previously computed. Out of Zone wages should continue to be tagged and tracked as ZW.
Modified Bonus Points Ratios
Another key change under the new Permanent Regulations was that the bonus points have been modified for the jobs ratio. VFX bonus points range increased from 1-8 to 1-10 points in an effort to further encourage film production within the State. The CFC also has a bonus points chart and jobs ratio calculator available online here.
The Approved Production Facility definition was also updated under the Permanent Regulations. For applications that receive a CAL under the 2nd re-adoption, the new definition of Approved Production Facilities now includes movie ranches and facilities whose primary use is film production, even if they may not meet the city and county fire authority approval as a “certified facility”. If no approval, the applicant must request approval from the CFC prior to principal photography in order to utilize bonus points.
To learn more or for more clarification on these changes or applications, contact a KPM specialist today.