The deadline to submit online applications for the 2013-2014 fiscal year is 11:59 p.m. PDT on April 14th. Please note that the California Competes Tax Credit (CCTC) is only available for tax years beginning on or after January 1, 2014. Taxpayers that have not started the 2014 tax year are unable to apply for the credit until their 2013 tax year has ended. Future application periods will be announced prior to July 1st of each year. This is Phase I of the application process. Applicants whose applications are moved into Phase II will be notified via email no later than April 25, 2014.
As a reminder, Governor Brown signed AB 93 into law on July 11, 2013. This legislation introduced several new tax incentives including the CCTC. The CCTC is an income tax credit available to businesses that want to relocate to California or remain and grow in the state for taxable years beginning on and after January 1, 2014 and before January 1, 2025.
Taxpayers enter into a written agreement with the Governor’s Office of Business and Economic Development (GO-Biz) which sets forth the amount of CCTC to be allocated to the taxpayer. The amount of CCTC to be allocated to a taxpayer is based on the following factors:
- The number of jobs the business will create or retain in this state.
- The compensation paid or proposed to be paid by the business to its employees, including wages and fringe benefits.
- The amount of investment in this state by the business.
- The extent of unemployment or poverty where the business is located.
- The incentives available to the business in this state, including incentives from the state, local government, and other entities.
- The incentives available to the business in other states.
- The duration of the business’ proposed project and the duration the business commits to remain in this state.
- The overall economic impact in this state of the business.
- The strategic importance of the business to the state, region, or locality.
- The opportunity for future growth and expansion in this state by the business.
- The extent to which the anticipated benefit to the state exceeds the projected benefit to the business from the tax credit.
The aggregate amount of CCTC that may be allocated in any fiscal year is as follows:
- $30 million in fiscal year 2013-2014.
- $150 million in fiscal year 2014-2015.
- $200 million in fiscal years 2015-2016 through 2017-2018.
- No maximum allocation has been set for fiscal years after 2017-2018
Each fiscal year, 25 percent of the aggregate amount of the CCTC permitted to be allocated is reserved for small businesses with net gross receipts less than $2 million and no more than 20 percent may be allocated to any one taxpayer. Any CCTC that is not utilized may be carried over to reduce the net tax in the following taxable year and succeeding five taxable years. The CCTC earned by members of a combined reporting group may be assigned to an affiliated corporation that is a member of the same combined reporting group.
Additional information is available at http://www.business.ca.gov/Programs/CaliforniaCompetesTaxCredit.aspx. Do not hesitate to contact us if you have any questions or if we can be of assistance.