To promote independent filmmaking in Connecticut
Summary of the proposed changes to the Film Tax Credit program that were in the last budget bill
§§ 81-85 & 104 - FILM AND DIGITAL ANIMATION PRODUCTION AND INFRASTRUCTURE INVESTMENT TAX CREDITS
Credit Administration
The law establishes tax credits against the corporation and insurance premium taxes for film and digital animation production and infrastructure investment related to both. The bill transfers the administration of the credits from the Connecticut Commission on Culture and Tourism (CCCT) to the Department of Economic and Community Development (DECD). It transfers to DECD the CCCT's powers and duties concerning digital media and motion picture promotion activities. It also requires state agencies and institutions that contract for digital media or film productions to send copies of their requests for proposals to DECD, rather than CCCT.
Interim Film Production Tax Credit. The bill eliminates a company's ability to obtain an interim film production tax credit. It does this by eliminating the process that allows a company to apply for a tax credit voucher while a production is in progress, starting three months after submitting its eligibility application, for its expenses up to that time. It continues to allow a production company to apply for and receive credits on an annual basis or after it incurs its last production expense.
Cost Certification. Currently, a film production or digital animation company must provide independent certification of the amount of its production expenses and costs when it applies for a tax credit voucher. The bill requires that an audit professional, which the company chooses from a list DECD compiles, provide the independent certification.
Reporting Requirement. Currently, CCCT must report to the General Assembly every two years on its digital media and movie production promotion activities, the economic impact of all productions, and the impact of each state-assisted production. The bill transfers the reporting requirement to DECD and requires that DECD report annually, starting by January 1, 2010. It eliminates a requirement that the report include the impact of each state-assisted production and instead requires that it include (1) an analysis of all three credits and (2) for each project or production issued a tax credit, (a) a description of the project, (b) the amount of the credit, and (c) the total production expenses or costs the taxpayer issued the credit incurred in the state.
Eligible and Ineligible Production Expenses
Minimum Qualifying Expenditure. Under current law, a company is eligible for the film or digital animation production tax credit if it incurs at least $ 50,000 in eligible production expenses in the state. For income years starting January 1, 2009, the bill increases the minimum expenditure for both credits to $ 1 million.
In- and Out-of-State Expenditures. The bill requires, for the film production tax credit, that the company (1) conduct at least 50% of its principal photography days and (2) incur at least 50% of its postproduction costs within the state.
Current law allows a company to count 50% of the production expenses it incurs outside the state and 100% of the expenses it incurs in the state towards the film production credit if they are used in the state. This applies from January 1, 2009 to January 1, 2012, after which no out-of-state expenses will count towards the credit. The bill moves up the phase-out date, to January 1, 2010, for out-of-state production expenses.
Star Salaries. Under current law, the first $ 15 million paid to a single person, or the person's representative, for services on a film or digital media production counts as a credit-eligible expense. Anything over this amount does not. Starting January 1, 2009, the bill limits credit-eligible compensation for all star talent featured in a film or digital media production to $ 20 million in the aggregate.
Audit Costs. The bill excludes any costs related to an independent audit of film or digital animation production project costs and expenses that DECD requires before certification.
Film and Digital Animation Infrastructure Investment Tax Credit
Under current law, the credit amounts for infrastructure investments in the film and digital media industry depend on the project's cost. Currently, projects costing at least (1) $ 15,001 qualify for a 10% credit, (2) $ 150,000 qualify for a 15% credit, and (3) $ 1,000,000 qualify for a 20% credit.
Starting January 1, 2009, the bill makes the credit a flat 20% and increases the minimum qualifying expenditure to $ 5 million. The bill also requires that the project be 100%, rather than at least 60%, complete before it can receive a tax credit voucher.
EFFECTIVE DATE: July 1, 2009 and applicable to income years starting on or after January 1, 2009. The repeal of statutes to conform to the transfer of the film responsibilities from CCCT to DECD take effect upon passage.
Credit Administration
The law establishes tax credits against the corporation and insurance premium taxes for film and digital animation production and infrastructure investment related to both. The bill transfers the administration of the credits from the Connecticut Commission on Culture and Tourism (CCCT) to the Department of Economic and Community Development (DECD). It transfers to DECD the CCCT's powers and duties concerning digital media and motion picture promotion activities. It also requires state agencies and institutions that contract for digital media or film productions to send copies of their requests for proposals to DECD, rather than CCCT.
Interim Film Production Tax Credit. The bill eliminates a company's ability to obtain an interim film production tax credit. It does this by eliminating the process that allows a company to apply for a tax credit voucher while a production is in progress, starting three months after submitting its eligibility application, for its expenses up to that time. It continues to allow a production company to apply for and receive credits on an annual basis or after it incurs its last production expense.
Cost Certification. Currently, a film production or digital animation company must provide independent certification of the amount of its production expenses and costs when it applies for a tax credit voucher. The bill requires that an audit professional, which the company chooses from a list DECD compiles, provide the independent certification.
Reporting Requirement. Currently, CCCT must report to the General Assembly every two years on its digital media and movie production promotion activities, the economic impact of all productions, and the impact of each state-assisted production. The bill transfers the reporting requirement to DECD and requires that DECD report annually, starting by January 1, 2010. It eliminates a requirement that the report include the impact of each state-assisted production and instead requires that it include (1) an analysis of all three credits and (2) for each project or production issued a tax credit, (a) a description of the project, (b) the amount of the credit, and (c) the total production expenses or costs the taxpayer issued the credit incurred in the state.
Eligible and Ineligible Production Expenses
Minimum Qualifying Expenditure. Under current law, a company is eligible for the film or digital animation production tax credit if it incurs at least $ 50,000 in eligible production expenses in the state. For income years starting January 1, 2009, the bill increases the minimum expenditure for both credits to $ 1 million.
In- and Out-of-State Expenditures. The bill requires, for the film production tax credit, that the company (1) conduct at least 50% of its principal photography days and (2) incur at least 50% of its postproduction costs within the state.
Current law allows a company to count 50% of the production expenses it incurs outside the state and 100% of the expenses it incurs in the state towards the film production credit if they are used in the state. This applies from January 1, 2009 to January 1, 2012, after which no out-of-state expenses will count towards the credit. The bill moves up the phase-out date, to January 1, 2010, for out-of-state production expenses.
Star Salaries. Under current law, the first $ 15 million paid to a single person, or the person's representative, for services on a film or digital media production counts as a credit-eligible expense. Anything over this amount does not. Starting January 1, 2009, the bill limits credit-eligible compensation for all star talent featured in a film or digital media production to $ 20 million in the aggregate.
Audit Costs. The bill excludes any costs related to an independent audit of film or digital animation production project costs and expenses that DECD requires before certification.
Film and Digital Animation Infrastructure Investment Tax Credit
Under current law, the credit amounts for infrastructure investments in the film and digital media industry depend on the project's cost. Currently, projects costing at least (1) $ 15,001 qualify for a 10% credit, (2) $ 150,000 qualify for a 15% credit, and (3) $ 1,000,000 qualify for a 20% credit.
Starting January 1, 2009, the bill makes the credit a flat 20% and increases the minimum qualifying expenditure to $ 5 million. The bill also requires that the project be 100%, rather than at least 60%, complete before it can receive a tax credit voucher.
EFFECTIVE DATE: July 1, 2009 and applicable to income years starting on or after January 1, 2009. The repeal of statutes to conform to the transfer of the film responsibilities from CCCT to DECD take effect upon passage.
Replies to This Discussion
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Permalink Reply by Alec Asten on -
To all CT Filmmakers, actors, & those interested in preserving the CT Tax incentive,
Take a moment to read the changes that have been submitted to the CT Tax Incentive on the discussion board.
If you haven't done so yet....PLEASE contact your State Rep and State Senator and voice your opinion.. let them know that :
INCREASING THE TAX CREDIT THRESHOLD FROM $50K TO $1M WILL HURT INDEPENDENT CT FILMMAKERS
-- THE REAL LONG-TERM FUTURE OF THE CT FILM INDUSTRY.
PLEASE DON'T WAIT.
WE ASK FOR YOUR SUPPORT HERE.
Here is a link to a website that allows you to look up who your State Representative and State Senator are.
http://www.cga.ct.gov/asp/menu/CGAFindLeg.asp
Otherwise, below is the list is of the key legislators:
If you have the time and energy... Please contact these people..
IT IS IMPORTANT THAT THEY HEAR OUR VOICES!
Chairs of Finance Committee
Cameron Staples, (860) 240-8585, Cam9123@hotmail.com
Eileen Daily, 1-800-842-1420, Daily@senatedems.ct.gov
Sen. Gary LeBeau, 860-240-0511, LeBeau@senatedems.ct.gov
Appropriations
Toni Harp, 860-240-0393, Harp@senatedems.ct.gov
John Geragosian, (860) 240-0394, John.Geragosian@cga.ct.gov
House Leaders
Speaker Chris Donovan, (860) 240-8500, Christopher.Donovan@cga.ct.gov
Minority Speaker Larry Cafero, 800-842-1423, larry.cafero@cga.ct.gov
Senate
Don Williams, 860-240-8600, Williams@senatedems.ct.gov
Majority Leader Martin Looney, 860-240-8600, Looney@senatedems.ct.gov
Minority Leader John McKinney, 203) 254-1639, John.McKinney@cga.ct.gov
Governor Rell, 860-566-4840, Governor.Rell@ct.gov
Joan McDonald (new head of DECD), 860-270-8205, joan.mcdonald@ct.gov
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