Costello Announces Surprise Tax Initiatives For Australian Film Industry

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

05 September 2001

Following an outraged response to the ATO ruling which stated that investment in films made in Australia such as 'The Matrix', and 'Moulin Rouge' would not be eligible for tax breaks, Australian Treasurer, Peter Costello has stunned the country's film industry by announcing new tax incentives for investors.

It was feared at the time that the ruling would crush the Australian film industry, and there was little hope that the government would act ahead of the forthcoming general election, due to take place in November or December of this year. However, earlier this week, Mr Costello announced that films with an Australian production budget of between $15 million and $50 million would qualify for a 12.5% tax break if more than 70% of the film's total budget is spent in Australia. Films where more than $50 million is spent in Australia will qualify automatically, the Treasurer said, no matter what this figure represents as a proportion of the total budget.

The new tax incentive will also apply to telemovies and mini-series which fulfil the spending criteria and are agreed upon by a panel of industry and government officials, and Mr Costello confirmed that films already in production in Australia can apply to receive the tax break. However, productions benefitting from the offset will not be eligible to receive any other tax assistance.

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