Federal Government Tax Incentives
INCENTIVE UPDATE AS AT 1ST SEPT 2012
The Federal Government offers a number of incentive programs for screen production attraction. They are – the 16.5% Location Offset, the 30% Post, Digital and VFX (PDV) Offset and the Producer Offset.
Offers a 16.5% return on Australian Qualifying Production Expenditure (QAPE). This offset is aimed at Offshore Productions, or Productions that cannot qualify with Significant Australian Content. The Offset is available upon application and final certification by the Department of The Arts. The Certificate is then filed with the Australian Entity’s tax return and the percentage is refundable less any tax due. The minimum Australian spend to qualify is AU$15,000,000. The requirement to prove 70% of total production spend in Australia for productions between AU$15,000,000 and AU$50,000,000 has been removed. This spend can include overseas goods and services to the extent that they are used in the making of the film in Australia. This spend also includes GST, which though refundable and not considered production expenditure, does qualify for the 16.5%. For more information please visit www.arts.gov.au
Post Digital and VFX Offset (PDV)
Offers a 30% return of QAPE to Productions that may not shoot in Australia, but choose to do all or some of their post production in Australia. This offset is contingent on final certification from the Department of the Arts and that certificate being filed with the Australian entity’s tax return. Again the amount is an offset against any outstanding tax owed. It is important to note that setting up an Australian entity to handle this offset is advised, as if the post house handles the offset itself, only the direct costs can be considered QAPE. The profit margin for that company that would be on charged to a SPV cannot be applied. The minimum qualifying spend to apply for this offset has been reduced to AU$500,000. GST can also be claimed. For more information please visit www.arts.gov.au
As with the two incentives above, this offset is a tax based refund of 40% for Feature Films and 20% for television or direct to DVD releases. This offset is aimed at productions that can qualify as “Australian”. The key elements of proving this are, to pass the Significant Australian Content (SAC) test and to meet the threshold for spend in Australia. Some of the SAC requirements that are taken into account when assessing a production for this offset are:.
- The subject matter of the film
- Place where the film is made
- Nationalities and places of residence of the key creative personnel and other persons who take part in the making of the film
- Where the copyright is held
The minimum spend requirement for a feature film is AU$500,000. The minimum spend for television varies depending on format. For more information please contact www.screenaustralia.gov.au
While provisional certification is not imperative, it is recommended in the case of this offset, to make sure that the relevant Government body considers your film will pass the SAC tests. The final certificate must be lodged in the financial year in which the picture is completed. It is also important to note in the case of feature films, that at the provisional stage, if theatrical distribution deal is in place at the time of granting the provisional, the 40% will apply regardless if the film makes it to the theatres or not. If a theatrical distribution deal is not in place, you may get provisional, but unless you can prove theatrical distribution on lodging the final application the offset will be reduced to 20%.
- Please note none of these offsets can be applied for until the film is completed, which by definition means ready for release.
- Also note, only one offset can be applied for per production.
For further information please contact
Lynn Paetz - Production Financial Consultant
Prep Shoot Post
C/- Village Roadshow Studios
Oxenford QLD 4210
Tel: (61) 7 5585 9670
Fax: (61) 7 5573 3698