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Financial Institutions Credit

Description

A credit that may be applied against the Connecticut corporation business tax is granted to financial institutions that build and occupy a facility located in Connecticut of at least 900,000 square feet, and create and maintain an average of 1,200 to 2,000 qualified employees in Connecticut. The credit is allowed for ten consecutive years, but this period may be extended for an additional five years if the taxpayer employs an average of at least 3,000 employees in the income year following the ten year period. The credit is allowed for a maximum of 15 consecutive years.

Depending upon the number of qualified employees employed by the financial institution, the amount of the credit allowed to an eligible financial institution varies from 30% to 50% of its corporation business tax liability. The aggregate credit is limited to between $72 million and $120 million over the ten-year period for which it is claimed. If the credit is taken for the additional five-year period, the amount of the credit allowed to an eligible financial institution for years 11 through 15 is 25% of its corporation business tax liability, and the total aggregate credit is limited to $145 million over the 15-year period.

The Financial Institutions Credit may be claimed against the tax of the combined group in the case of a financial institution included on a Form CT-1120CR, Combined Corporation Business Tax Return.

The Financial Institutions Credit must be claimed prior to any other credits allowed against the Connecticut corporation business tax. A taxpayer claiming this credit is not eligible to claim the Fixed Capital Investment Credit, Conn. Gen. Stat. §12-217w.

Requirements

As described below, a financial institution is entitled to the Financial Institutions Credit if it satisfies certain requirements during the initial qualified year and subsequent qualified years.

Initial Qualified Year (Year 1)

A financial institution is entitled to the credit if, during the initial qualified year, it:

  • Constructs a new facility in Connecticut of at least 900,000 gross square feet for the exclusive purpose of carrying on the business of a financial institution;

  • Obtains a temporary or permanent certificate of occupancy for such facility;

  • Employs during the income year for which the credit is claimed an average of at least 1,200 to 2,000 qualified employees (see Credit Amount, Page 29); and

  • Obtains an initial Certificate of Eligibility from the Commissioner of the Department of Economic and Community Development (DECD).

In the case of a taxpayer receiving financial assistance under Conn. Gen. Stat. §32-236, the initial qualifying year is the year in which DECD executes an agreement to provide financial assistance.

Subsequent Qualified Years (Years 2 through 10)

A financial institution will continue to be entitled to the credit if, during the subsequent qualified years, it:

  • Continues to employ during the income years for which the credit will be claimed an average of 1,200 to 2,000 qualified employees (see Credit Amount, Page 29); and

  • Obtains an annual eligibility certificate from the Commissioner of DECD.

Informational Publication 2006(15), Guide to Connecticut Business Tax Credits Issued: 04/24/07

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