Australia Improves Film Tax Breaks

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

13 May 2010

The Australian government is to make important changes to the eligibility requirements for film tax offsets, to make the country a more attractive destination for significant film making, and to enable more Australian businesses, particularly small businesses, to benefit from them.

The Australian Screen Production Incentive is the government’s primary mechanism for supporting film and television production. It includes the Location Offset, a 15% rebate which supports the production of large-budget film and television projects shot in Australia; and the PDV Offset, a 15% rebate which supports work on post, digital and visual effects production in Australia.

The Assistant Treasurer, Nick Sherry, announced that the government will remove the current requirement under the Location Offset for productions valued between AUD15m (USD13.4m) and AUD50m to spend a minimum of 70% of their production budgets in Australia. The PDV Offset threshold will also be reduced, from AUD5m to AUD0.5m. Both changes will apply from July 1, 2010.

"These changes will provide fresh boost for the Australian film industry," the Arts Minister, Peter Garrett said. "In recent years the requirement for large offshore productions to spend 70% per cent of their budget locally has been a factor in some productions not coming to Australia, particularly smaller budget films wanting to shoot here as one of multiple international locations.”

"The amendments to the eligibility requirements in the tax law will remove some of the barriers to significant offshore productions considering Australia as a production destination and will help local PDV providers to bid for additional work overseas,” he continued. "Reducing the PDV threshold to AUD500,000 will make Australia's smaller PDV providers more competitive when bidding for work outsourced by Hollywood studios, increasing both local employment opportunities and skills within our industry."

Changes to the offsets are part of an initial government response to issues affecting the film industry. The government will further consider the outcomes from the 2010 Review of the Australian Independent Screen Production Sector being conducted by the Department of the Environment, Water, Heritage and the Arts, after it reports later this year.

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