The Australian government has announced a review of its film finance tax incentives in an attempt to stimulate more private sector investment in the industry, which has been in decline in recent years.
Minister for the Arts and Sport, Senator Rod Kemp announced earlier in the month that this "broad-ranging" review will encompass consideration of funding for the Film Finance Corporation for 2008-09 and beyond, taking into account the outcomes from the additional funding provided as part of the Government’s 2004 election commitment, as well as the scheduled review of Film Australia.
Following the 2004 election, the Government introduced a package of measures to strengthen the film sector by attracting greater levels of private finance, redressing the downturn in local production, and keeping the sector competitive through script and skills development.
The newly introduced package of measures is worth A$88 million (US$66 million) over four years (from 2004-05). Funding for Australian Government film agencies in 2006-07 will total over A$160 million.
The review will also look at the tax incentives available to the industry, and assess their effectiveness at attracting investment.
The findings of the current review of the 10BA and 10B tax incentive schemes - which is examining issues relating to clarity of the schemes’ operations - will also inform the broader review, Senator Kemp stated.
Investors in 10BA certified projects can claim an accelerated tax deduction of 100 per cent in the year the investment is made.
10B is a broader-based concession relating to the first ownership of copyright in a production. It allows a 100 per cent tax deduction to initial investors over two financial years, starting when the film is first used to derive income (i.e. when the project is completed).
The Minister also noted the statutory requirement for a review of the Refundable Film Tax Offset will be conducted by September 2006.
“The review is designed to improve the film industry’s effectiveness and enhance its viability and resonance with audiences, both in Australia and overseas,” Senator Kemp explained.
A comprehensive report in our Intelligence Report series examining tax-sheltering arrangements for investors, including Forest Finance, Film Finance, Venture Capital, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report5.asp
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