In Australia: Federal Incentives, by Jane Corden
Australian Film Commission & Moneypenny Services)
Federal Tax Incentives for Film Investment
CONSIDERATIONS FOR PRODUCTION IN AUSTRALIA
following information has been provided by Jane Corden
of Moneypenny Services.
Tax Incentives for Film Investment
well as providing direct support for the industry,
The Federal Government encourages private investment
through tax incentives under the 10BA and 10B of the
Income Tax Assessment Act 1936. In addition, the Federal
Government has introduced a refundable tax offset
for film production in Australia that provides another
financial incentive for the producers of large budget
films to locate in Australia.
percent Federal Tax Rebate
The 12.5 per cent refundable tax offset may represent
between a 9 per cent and 12.5 per cent cash subsidy
on the total budget depending on the extent to which
a production shoots and spends money in Australia.
cash rebate is calculated as 12.5 per cent of a productions
Qualifying Australian Expenditure (QAE) which is defined
as production expenditure reasonably attributable
to goods, services and property provided/used in Australia.
order for a production to qualify for the rebate,
it must spend at least A$15 million (approx. US$7.5
million) on QAE. Further to this minimum requirement
there will be two categories of eligibility:
if the value of QAE is between A$15 million to A$50
million, this will be required to represent a minimum
of 70 per cent of the Total Production Expenditure
to qualify; or
if the value of QAE is greater than A$50 million,
the production will qualify regardless of the percentage
it represents against Total Production Expenditure.
definition of Total Production Expenditure provides
the base against which the 70 per cent activity test
will be assessed where QAE is between A$15 million
and A$50 million. There are a number of costs that
are excluded from the total budget for the purposes
of calculating this activity test:
General Business overheads
Publicity and Promotion
of these items are further defined in the legislation,
but if any of items 25 are incurred in Australia
the costs may be factored back into the Total Production
Costs. The production may also nominate one person
whose remuneration is to be disregarded if it advantages
the percentage calculation.
application for the rebate must be made by an Australian
resident company or a foreign entity with a permanent
establishment in Australia and an Australian Business
Number (ABN) and will be paid directly to the applicant.
The application is submitted with a tax return in
the year that the film is completed. A provisional
certificate may be obtained from the Minister of the
expenditure should be arranged by the single entity
claiming the tax offset.
A company is not entitled to a tax offset if a provisional
or final certificate for the film has been issued
under 10BA (whether or not the certificate is still
Division 10BA aims to provide support for equity investment
in Australian film and television projects via accelerated
tax write-offs. To be eligible, a project must be
certified by the Department of Communications and
the Arts (DCITA) as a qualifying Australian film.
Australian resident investors and corporations who
are owners of first copyright of a film may deduct
100 per cent of the capital cost of the qualifying
film against their active income in the financial
year the investment is made. The project needs to
be completed and first used for exploitation within
two years from the end of the financial year in which
the investment was made. It is important to note that,
unlike the UK, there is no limit imposed on a qualifying
projects budget for the investors to utilise
the full 100 per cent write off in the first year.
certified as 10BA compliant are also eligible to apply
for direct investment from the federal government
funding body, the Australian Film Finance Corporation
Division 10B also provides support via accelerated
tax write-offs for equity investment in film and television
projects that are assessed as wholly or substantially
made in Australia and allows a wider range of projects
to qualify than that provided for under 10BA. However,
investors must write off the capital costs over two
years, beginning in the financial year in which the
project is first exploited or used for income producing
purposes. There is no limit imposed on a qualifying
projects budget for the investors to utilise
the full tax write-offs over the two applicable years.
Projects certified under the provisions of Division
10B are not eligible to apply for funding from the
FFC, unlike 10BA certified projects.
that access the tax privileged benefits of Division
10BA and Division 10B, cannot also access the 12.5
per cent federal cash rebate outlined above.
The Film Licensed Investment Company (FLIC) scheme
was introduced in 1998 and carried a 100 per cent
tax concession over the financial years 1998/99 and
1999/2000. Two successful FLIC licensees were appointed
in April 1999 Content Capital Ltd and Macquarie
Film Corporation Ltd. Each could raise up to $20 million
confessional capital over two financial year.
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