Film Accounting Glossary
Tax credit
What is a tax credit?
Also called film tax credit, or production tax credit.
A film tax credit is an incentive delivered through the tax system, reducing the claimant's tax liability by a percentage of qualifying production spend.
Credits are refundable (paid in cash beyond any liability), transferable (sellable to a taxpayer in the jurisdiction), or non-refundable and non-transferable, and that classification determines how much of the face value a production actually realizes. Claims are filed after wrap and paid only after an audit of the final cost report.
Example
Three shows, same 30% rate on $6M of qualifying spend, three different outcomes: refundable pays $1.8M in cash; transferable nets about $1.59M after a 90-cent sale and broker fee; non-refundable and non-transferable is worth nothing to an entity with no local tax liability.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Claimed after wrap through the tax system, paid only after the jurisdiction audits the final cost report. The classification decides what it is actually worth.
Common mistake
Comparing programs on headline rate. Whether the credit is refundable, transferable, or neither changes what the same percentage is actually worth.
Related questions
- What are the three types of film tax credit?
- Refundable, paid in cash beyond any tax liability; transferable, sellable to a local taxpayer at a discount; and non-refundable and non-transferable, usable only against own liability.
- When is a film tax credit paid?
- After wrap, once the jurisdiction has audited the final cost report, which is typically many months after the last shooting day.