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California Competes Tax Credit – $30 Million Up for Grabs by April 14, 2014

The California Competes Tax Credit is a newly enacted discretionary incentive available to companies that are considering an expansion in, or relocation to, the State of California. The benefit of this credit could be remitted over a period of five years for an individual project and can be taken against corporate income tax.

The value of the tax credit is negotiable, and the California Competes Tax Credit Committee will evaluate expansion and relocation projects on a case-by-case basis. Specific to the State’s fiscal years (July through June) of 2013 and 2014, the State’s credit allocation is expected to approach $30 million; and, for the initial round of applications, closing on April 14th, 2014, the maximum credit award, per applicant company, is $6 million. 

According to the Governor’s Office of Business and Economic Development, an additional $150 million in tax credit will be available for the upcoming fiscal year starting July1,2014. The application deadlines are not available at this time for this additional amount.

ELIGIBILITY
The basis of eligibility is on the creation of new employment positions and/or retaining incumbent positions and incurring capital investment in California. When evaluating a project, the California Competes Tax Credit Committee will consider a variety of factors, including, but limited to the following:

  • U.S. Census Unemployment & Poverty Rates for potential project locations
  • Demonstrate that receipt of the tax credit is a material factor in decision to expand or relocate
  • Availability and value of economic incentives in competing states
  • Number of jobs to be created and/or retained
  • Employee wages and total compensation
  • Amount of capital investment
  • Potential for company’s long-term growth in California

 TRIGGERING EVENTS
Companies, having tax liabilities in the State of California, which are about to undertake the following activities, or fall within one of the following classifications PRIOR to the April, 14 2014 application deadline, may be in position to take advantage of this opportunity. 

  • Creating net new jobs in the State
  • Facility consolidations and job retention in the State
  • Purchase of machinery and equipment
  • Facility construction
  • Facility expansion or renovations 

If your company falls within one of these categories, do not delay, you must file your applications before April 14, 2014.

Learn more about leveraging tax credits and incentives such as this with help from ADP.


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