Australia Expands Film Tax Offsets

By Mary Swire, Tax-News.com, Hong Kong

12 July 2010

Australia’s Assistant Treasurer, Nick Sherry, and Minister for Environment Protection, Heritage and the Arts, Peter Garrett, have released draft legislation to expand access to film tax offsets.

The government’s incentives for film, television and other screen production in Australia are available in three streams. The first, the Producer Offset, is a 40% rebate of expenditure on qualifying Australian films and a 20% rebate for other qualifying media.

Secondly, the Location Offset (LO) is a 15% rebate of the Australian expenditure of large-budget productions that do not satisfy the significant Australian content test for the Producer Offset. It is designed to ensure Australia remains competitive in attracting shoots for large-budget film and television productions, and is aimed at providing increased opportunities for Australian jobs in these productions.

Finally, the PDV Offset is a 15% rebate of Australian expenditure on post-production, digital and visual effects work on large budget productions, including those not necessarily shot in Australia. It is aimed at enabling the Australian visual effects, post-production and animation sector to continue to develop its reputation as one of the best and most cost-effective in the world.

Expanded access to those film tax offsets will now be facilitated by reducing the minimum qualifying expenditure threshold for the PDV Offset from AUD5m (USD4.4m) to AUD500,000, and by removing the requirement for productions spending between AUD15m and AUD50m in Australia to spend at least 70% of the total production budget in Australia in order to qualify for the LO. The amendments will apply to productions commencing from July 1, 2010.

"These important amendments will further boost Australia as an attractive destination for the international film industry," said Sherry. "These changes are an important investment in our local film industry, with the potential for more Australian businesses – particularly small businesses – to benefit through increased employment opportunities."

The reforms contained in the draft legislation respond to calls from the Australian film industry to further attract offshore productions to Australia. "The changes remove barriers to offshore productions considering Australia as a production destination and provide opportunities for our world-class PDV providers to bid for additional work," Garrett added.

The measures are estimated to increase the government’s expenditure on the film tax offsets by some AUD6.9m over the fiscal years to 2013-14.

The consultation closes on July 27, 2010.

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