Film Accounting Glossary
Non-qualified spend
What is non-qualified spend?
Also called non-qualifying spend, or excluded spend.
Non-qualified spend is production cost that does not count toward an incentive claim, because of where it was incurred, what it was for, or who was paid.
Common exclusions are out-of-state or out-of-country purchases, non-resident labor above a cap, development costs, financing fees, above-the-line salaries above a threshold, and marketing. Tracking qualified and non-qualified spend in separate accounts from the first invoice is the only practical way to survive the incentive audit.
Example
Of $7M spent in-state, $900,000 fails to qualify: an out-of-state camera package, non-resident wages above the cap, $242,000 of development, and the financing fees. At a 30% rate that is $270,000 of credit the show does not get.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Coded into separate accounts from the first invoice. Sorting a mixed ledger retroactively costs far more than coding it correctly the first time.
Common mistake
Planning to separate qualifying and non-qualifying spend at claim time. Sorting a mixed ledger after wrap costs far more than coding it apart from the first invoice.
Related questions
- What spend does not qualify for a film tax incentive?
- Commonly out-of-jurisdiction purchases, non-resident labor above a cap, development costs, financing fees, marketing, and above-the-line salaries above a threshold.
- How do productions track non-qualified spend?
- In separate accounts within the chart of accounts, coded from the first invoice, so the qualifying total can be produced and evidenced without reconstruction.