Loading...

How To Tag Your Budget for the California Film Tax Incentive in Showbiz Budgeting

California Film Commission Logo and Title Screen for Tagging your Budget for the CA Film Tax Incentive

The California Film Commission demonstrates how to tag your Showbiz budget for the CA film tax incentive.

UPDATE: As a followup to our webinar on the California film tax incentive program 3.0, let’s take a moment to review just how to tag your budget to take full advantage of the California production incentive.

While there are some great new features to the film tax incentive program in California for 2020, this instructional video from the California Film Commission remains an excellent starting place. To get your film budget in shape for taking maximum advantage of the California incentives, watch the video below:

Now let’s break down some of the finer points of tax incentive budget tagging from the California Film Commission here.

What subgroups do I need in my budget for the California film tax credit?

The CFC makes great use of subgroups in Showbiz Budgeting for properly tagging your California film tax incentive items. Here are the four film budget subgroups to use for tracking the California incentive:

  • Qualified Wages – the film commission suggests the subgroup QW
  • Qualified Expenditures (Non-Wages) – here the suggested subgroup is QE
  • Visual Effects – subgroup VU
  • Non-Qualified Expenditures – subgroup NQ

Is there a suggested chart of accounts for the California film tax credit 3.0?

The subgroups above will make more sense in context if you review the downloadable chart of accounts for the California film tax credit program 3.0 from the CFC’s website. You’ll find some additional categories for your project’s budget there, including XX for production expenditures outside the state of California.

After setting up subgroups, CFC demo video goes on to demonstrate how to do the actual tagging of your film budget for the California incentive. This can be done either line-by-line or by highlighting several budget line items at once and applying a subgroup in bulk.

Per the CFC, this includes tagging Visual Effects budget line items as VU in addition to QW or QE, in order to calculate your JOBS ratio bonus points for the film tax incentive in California.

Speak to an entertainment payroll expert today to discuss budget tagging for the CA film tax incentive in more detail.

Former Ambassador Colleen Bell Named New Head of California Film Commission

Production crew member discussing healthcare with doctor

Colleen Bell, a former daytime television producer and President Barack Obama’s pick for U.S. ambassador to Hungary, will take the reins of the country’s largest film commission as its new executive director. The appointment by California Governor Gavin Newsom comes days after longtime director Amy Lemisch stepped down from the post. Lemisch is credited with having replaced California’s unpopular lottery system with a robust new film tax credit in 2014, which has attracted new feature production as well as drawing runaway television series back to the state.

California’s film tax incentive is a hot topic in recent weeks, as controversial new abortion bills in incentives-rich states such as Georgia and Alabama have led some in the industry to call for production boycotts there. There is even talk of a new proposed provision in the California incentive that would reward productions relocating from those states in protest.

No official start date has been named for Bell, whose appointment was reported by The Hollywood Reporter.

L.A. Sees More Production Days as Incentive Program Hits Full Stride

Hollywood production is booming thanks to the newly overhauled California tax credit incentive, according to recent numbers. Fueled partly by a number of high-profile television series relocating to Los Angeles from other states, the so-called “2.0” version of the incentive program has generated a 24% uptick in local production days for TV dramas in the third quarter of 2015, enough to keep local industry vendors busy.

Read more about it in the Los Angeles Times. See all incentive programs across the country in our interactive incentives map.

CA Rolls Out First “New Program” Tax Credit Lottery in May

On April 1, the California Film Commission will accept applications for its last-ever tax credit lottery under what is now being referred to the “old program.” The office made an announcement today that a large number of television series productions currently receiving credits will return for an additional season and remain in the program for its final year – leaving only a handful of credits available to new productions and eliminating studio projects from eligibility for the final lottery.

Ten million dollars will still be available for independent productions via the lottery, with old program rules still in effect.

First Application Period for New Lottery May 11-17

The new program will have two application periods for fiscal year 2015-16 (July 1, 2015 – June 30, 2016). The first will be May 11-17, for non-independent television projects only. Credit allocations will be available July 1 at the earliest. Other details from the film commission:

  • $55.2 million in tax credits available for New TV series, TV pilots, MOWs, Mini-series for any distribution transmission
  • $27.6 million in credits available for Relocating TV Series (defined as a series with $1 M minimum production budget, previous season shot outside CA, and must attest that the tax credit is the primary reason for move to the state)
  • Projects will be selected via a new competitive ranking system based on jobs and other criteria

A second application period, to be announced this summer, will cover other types of production. Read more about the old and new programs at the California Film Commission website here. Learn about production incentives nationwide here.

CA State Assembly Unanimously Votes to Supersize Production Incentives

The California State Assembly has unanimously passed a bill that would greatly expand production incentives in the state, extending tax credits for the first time to big-budget studio films and one-hour shows made for network, premium cable and the web. While production budgets for eligible movies are currently capped at $75 million, features of any size would be able to qualify under the bill, with the tax credit applicable to the first $100 million of the budget.

The legislation does not address the current $100 million annual cap on incentive spending by the state, though that issue is expected to be revisited next month, prior to a vote on the state budget. The bill now goes on to the State Senate for consideration in August.

Meanwhile, this year’s lottery for distributing credits to production companies under the current program will be held on Monday.

The California Film & Television Production Alliance said in a statement: “The strength of the unanimous vote demonstrates the Assembly Members’ clear understanding of the vital economic importance of the motion picture industry to California and their determination to return this state to a competitive position.”

To learn more about production incentives in California and other states, contact our incentives expert Ryan Broussard at 504 296 2502 or email ryanb@mediaservices.com.

Read more at Variety.com

Consortium Pushes for Easing of L.A. Film Permitting Rules

Los Angeles NightA consortium of pro-entertainment business groups in Los Angeles have banded together to offer recommendations to cities across Southern California, which would make it easier to film location days in the area. A revised Model Film Ordinance and Best Practices (MFO/BP) was adopted by the California Film Commission in May, laying out a standardized set of policies for filming in the state. Now the consortium – which includes the state film commission along with the Los Angeles County Economic Development Corporation (LAEDC), FilmL.A. and the Southern California Association of Governments (SCAG) hope to have the policies adopted by local cities as well.

The MFO/BP policies call for relaxing several key permitting rules, some of which have been championed vigorously by local residents in response to filming issues in their neighborhoods. The recommended provisions from the MFO/BP include:

  • Eliminating the city’s business license requirement for film productions.
  • Adjusting the film permit structure to a weekly rate of $650 for the first week and $500 thereafter.
  • Reducing the advanced notice requirements from two weeks to five days.
  • Requiring law enforcement on an as-needed basis only.
  • Reducing the radius required to notify businesses and residents of filming from 500’ to 300’.
  • Reducing the radius required to survey businesses and residents of filming for extended hours from 500’ to 300’.

SCAG’s regional council voted unanimously earlier this month to encourage its 191 member cities and six counties to adopt some version of the MFO/BPs.

“Southern California is home to ‘Hollywood’ – it is our heritage, but cannot be taken for granted,” said Glen Becerra, SCAG President and City of Simi Valley Council Member. “By including the MFO/BP in Phase II of our Economic Recovery & Job Creation Strategy, we are clearly stating that supporting the entertainment industry is critical to our region’s economy and future. In addition, this is only the beginning of government, business and an industry specialist working together to adopt business-friendly principles that secure a prosperous California.”

In making their case for change, the consortium points to some 176,700 jobs and $30 billion in spending the entertainment industry is estimated to bring to the region. A 2005 report commissioned by the CFC reported that 10 “feature films” (budgets greater than $70 million) that leave the state means a loss of $106 million in state revenues… in addition to high value jobs and less quantifiable losses to ancillary small businesses such as hotels, restaurants and dry cleaners. The group is concerned that if it is easier to film in other, tax-incentive-rich states, it will give filmmakers that much more reason to go.

“One of the constant refrains I hear from filmmakers is the need for predictability and uniformity in the film permit process,” FilmL.A. President Paul Audley said. “SCAG’s adoption of the Model Film Ordinance will help urge local communities and county governments to work within a framework of policies that can create a region that is attractive to the Industry.”

Get a Quote

Get a Payroll Quote

Leave the numbers to us.