California Code of Regulations
Title 10 - Investment
Chapter 7.75 - California Film Commission
Article 2 - California Film and Television Job Retention and Promotion Act California Film and Television Tax Credit Program 2.0
Section 5512 - Tax Credit Allocation

Universal Citation: 10 CA Code of Regs 5512

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

(a) The amount of tax credit allocated shall be based on the percentage of the qualified expenditures as provided in sections 17053.95(a) and 23695(a) of the Revenue and Taxation Code.

(b) If all tax credits have been allocated for any application period, qualified motion pictures shall be placed in a prioritized waiting list according to their project type and in the order of their job ratio ranking until one of the following occurs: credits become available that allocation period, the production elects to be removed from the queue, the credit is revoked, or until the allocation period ends.

(c) If the applicant is producing a series of feature films that will be filmed concurrently and the series of films continues the narrative of the original work and financing is confirmed, then the CFC shall have the authority to divide the allocation over multiple fiscal years if it is determined that the production schedule occurs over more than one fiscal year.

(d) For the purposes of this section, a five percent (5%) augmentation to the tax credit allocation shall be made by the CFC when any of the following conditions have been met:

(1) The production company pays or incurs qualified expenditures relating to music track recording and/or music scoring in California;

(2) The production company pays or incurs qualified expenditures relating to qualified visual effects work totaling a minimum of ten million dollars ($10,000,000) or at least seventy-five percent (75%) of total worldwide visual effects expenditures incurred in California;

(3) The production company pays or incurs qualified wages for services performed outside the Los Angeles zone during the applicable period relating to original photography outside the Los Angeles zone. The foregoing amounts shall be substantiated by documentation including but not limited to timesheets and payroll records as requested by the CFC;

(4) The production company purchases or leases tangible personal property outside the Los Angeles zone during the applicable period and the personal property is used or consumed outside the Los Angeles zone. Tangible personal property must be purchased, rented or leased from an outside of Los Angeles vendor through an office or other place of business outside the Los Angeles zone. Rentals or purchases from a pass-through business do not qualify for the five percent (5%) augmentation.
(A) If the tangible personal property purchased or leased outside the Los Angeles zone was not completely used or consumed solely outside the Los Angeles zone, the production company shall apportion amounts paid or incurred for tangible personal property outside the Los Angeles zone during the applicable period by multiplying these non-wage outside the Los Angeles zone expenditures by the ratio of days of principal photography outside the Los Angeles zone to the total number of days of principal photography.

(B) If the tangible personal property purchased or leased outside the Los Angeles zone was completely used or consumed solely outside the Los Angeles zone, the production company may elect to substantiate that with its records. Tangible person property purchased or leased outside the Los Angeles zone shall be deemed to be completely used or consumed provided the property was of a type or nature such that it would have no residual material value remaining after its use or consumption outside the Los Angeles zone. Examples of such property include, but are not limited to, food and catering items, rented hotel or corporate housing usage, construction supplies and materials for sets, automotive or other fuels, security services, location and stage services, government permit fees, personnel services, printing, equipment rentals for the applicable period outside the Los Angeles Zone, transportation services, dry cleaning, and shipping and travel costs from within the state to and from the out of zone location.

(e) The maximum amount of tax credits allowed for independent films and/or relocating television series for their initial season in California is twenty-five percent (25%) and therefore the five percent (5%) augmentation is not applicable to such productions.

1. New section filed 4-13-2015 as an emergency; operative 4-13-2015 (Register 2015, No. 16). A Certificate of Compliance must be transmitted to OAL by 10-12-2015 or emergency language will be repealed by operation of law on the following day.
2. New section refiled 10-15-2015 as an emergency; operative 10-15-2015 (Register 2015, No. 42). A Certificate of Compliance must be transmitted to OAL by 1-13-2016 or emergency language will be repealed by operation of law on the following day.
3. New section refiled 1-7-2016 as an emergency, including amendment of subsection (d)(2); operative 1-7-2016 (Register 2016, No. 2). A Certificate of Compliance must be transmitted to OAL by 4-6-2016 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 1-7-2016 order, including amendment of subsections (d)(2) and (d)(4)(A)-(B), transmitted to OAL 3-29-2016 and filed 5-11-2016; amendments operative 5-11-2016 pursuant to Government Code section 11343.4(b)(3) (Register 2016, No. 20).

Note: Authority cited: Sections 17053.95(e) and 23695(e), Revenue and Taxation Code; and Section 11152, Government Code. Reference: Sections 17053.95 and 23695, Revenue and Taxation Code; and Section 14998.1, Government Code.

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