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Fi14. Are per diem expenses,living allowances,and car and meal allowances eligible for the Film Production Credit?
Although a qualifying expenditure does not necessarily have to be taxable to
the production company itself,the expenditure must nevertheless be "subject to
taxation in this state" in order to comply with the statutory requirement. MCL
208.1455(12)(c). In general,per diems are not taxable as compensation at the
federal level,therefore they do not get taxed at the state level in Michigan.
Additionally,per diems and allowances themselves are not subject to sales,use or
other Michigan taxes. As such,while per diem expenses and living,car and meal
allowances all constitute payments from a production company directly to
employees,in most cases such payments are not "subject to taxation in this
state." Therefore,they will not qualify as "direct production expenditures"
eligible for the film production credit.
It is important to note,however,that the federal exclusion from income tax of
per diems is a preferential tax treatment with certain dollar thresholds on
their non-taxability. When those thresholds are exceeded,the excess payment
amount becomes taxable compensation at the federal level which will flow through
to Michigan's income tax,also as taxable compensation. Because this excess per
diem payment amount is "subject to taxation in this state" the excess payment
amount would qualify for film production credit if it meets all other qualifying