Section 5524 - Tax Credit Allocation(a) The amount of tax credit allocated shall be based on the percentage of the qualified expenditures as provided in sections 17053.98(a) and 23698(a) of the Revenue and Taxation Code.(b)(1) For fiscal years 2021-22 and 2022-23, an additional fifteen million dollars ($15,000,000) in credits will be granted exclusively to a television series that relocated to California and seventy-five million dollars ($75,000,000) in credits will be granted exclusively to recurring television series.(2) Once the aggregate amount of credits that may be allocated for a fiscal year is determined pursuant to subdivision (b), the amount of credits available for each classification of production described in 17053.98(i)(2) and 23698(i)(2) shall be determined as follows: (A) Any television series, relocating television series or new television series based on a pilot for a new television series that has been previously approved and issued a credit allocation by the CFC under Revenue and Taxation Code sections 17053.85, 17053.95, 17053.98, 23685, 23695 or 23698 shall be issued a credit for that fiscal year.(B) After the amount of credits necessary to satisfy the credit described in paragraph (1) are subtracted from the total aggregate amount of credits available for the fiscal year, that remaining amount shall be distributed by type of production according to the percentages and in the manner described in Revenue and Taxation Code section 17053.98(i)(2) and 23698(i)(2). The amounts distributed pursuant to this subparagraph shall not exceed $115,500,000 for feature films, $56,100,000 for relocating television series, $10,560,000 for an independent film with a qualified expenditure budget exceeding $10,000,000, and $15,840,000 for independent films with a qualified expenditure budget less than or equal to $10,000,000. In the event that projects drop out, funds will be allocated to the waitlisted projects in the category from which the credits were sourced. If there are no waitlisted projects, the funds will be distributed in the manner described in Revenue and Taxation Code section 17053.98(g)(2)(D)(v) and 23698(g)(2)(D)(v).(c) 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 jobs ratio ranking until one of the following occurs: credits become available that allocation period, the production elects to be removed from the queue, or until the allocation period ends.(d) 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.(e) For the purposes of this section, a five percent (5%) augmentation ("uplift") to the tax credit allocation for non-independent motion pictures (excluding relocating television series in its first season in California) 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 qualified visual effects work totaling a minimum of ten million dollars ($10,000,000) is incurred in California or at least seventy-five percent (75%) of total worldwide visual effects expenditures is incurred in California.(2) 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 by individuals who reside within 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 and/or the CPA performing the Agreed Upon Procedures.(3) 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.(f) A ten percent (10%) augmentation ("uplift") for non-independent productions excluding relocating TV series, is available if the production company pays or incurs qualified wages for services performed by local hire labor 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 and/or the CPA performing the Agreed Upon Procedures.(g) 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%) uplift is not applicable to such productions except for an additional five percent (5%) uplift for local hire labor. As noted in section (f) above, documentation will be required to determine if applicant qualifies for this uplift.Cal. Code Regs. Tit. 10, § 5524
1. New section filed 7-1-2020; operative 7-1-2020 pursuant to Government Code section 11343.4(b)(3) (Register 2020, No. 27).
2. Amendment of subsection (b)(1) and new subsections (b)(2)-(b)(2)(B) filed 8-17-2020 as an emergency; operative 8-17-2020. Emergency expiration extended 60 days (Executive Order N-40-20) plus an additional 60 days (Executive Order N-66-20) (Register 2020, No. 34). A Certificate of Compliance must be transmitted to OAL by 6-18-2021 or emergency language will be repealed by operation of law on the following day.
3. Amendment of subsection (b)(1) and new subsections (b)(2)-(b)(2)(B) refiled 6-14-2021 as an emergency, including further amendment of subsection (b)(2)(B); operative 6-18-2021. Emergency expiration extended 60 days (Executive Order N-40-20) plus an additional 60 days (Executive Order N-66-20) (Register 2021, No. 25). A Certificate of Compliance must be transmitted to OAL by 1-14-2022 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 6-18-2021 order, including further amendment of subsection (b)(1), transmitted to OAL 12-29-2021 and filed 2-10-2022; amendments effective 2-10-2022 pursuant to Government Code section 11343.4(b)(3) (Register 2022, No. 6). Note: Authority cited: Sections 17053.98(a), 17053.98(e), 17053.98(i), 17053.98(j), 23698(a), 23698(e), 23698(i) and 23698(j), Revenue and Taxation Code; and Section 11152, Government Code. Reference: Sections 17053.98 and 23698, Revenue and Taxation Code; and Section 14998.1, Government Code.
1. New section filed 7-1-2020; operative 7-1-2020 pursuant to Government Code section 11343.4(b)(3) (Register 2020, No. 27).
2. Amendment of subsection (b)(1) and new subsections (b)(2)-(b)(2)(B) filed 8-17-2020 as an emergency; operative 8/17/2020. Emergency expiration extended 60 days (Executive Order N-40-20) plus an additional 60 days (Executive Order N-66-20) (Register 2020, No. 34). A Certificate of Compliance must be transmitted to OAL by 6-18-2021 or emergency language will be repealed by operation of law on the following day.
3. Amendment of subsection (b)(1) and new subsections (b)(2)-(b)(2)(B) refiled 6-14-2021 as an emergency, including further amendment of subsection (b)(2)(B); operative 6/18/2021. Emergency expiration extended 60 days (Executive Order N-40-20) plus an additional 60 days (Executive Order N-66-20) (Register 2021, No. 25). A Certificate of Compliance must be transmitted to OAL by 1-14-2022 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 6-18-2021 order, including further amendment of subsection (b)(1), transmitted to OAL 12-29-2021 and filed 2-10-2022; amendments effective 2/10/2022 pursuant to Government Code section 11343.4(b)(3) (Register 2022, No. 6).