There are three principal Australian Government incentives to support screen production in Australia:
Each of the three offsets is a refundable tax offset which entitles an eligible applicant to receive a tax refund where the amount of the offset claimed exceeds the applicant’s income tax and other tax liabilities. A project is only entitled to one of the offsets – they cannot be combined.Australia has entered into co-production treaties with the United Kingdom, Canada, Italy, Ireland, Israel, Germany, South Africa, Singapore and China, and has entered into memoranda of understanding (MOUs) with France and New Zealand. Australia has also entered into a co-production arrangement with Korea.Film and television projects which are approved as official international co-productions under a treaty or MOU qualify as local content for the purpose of free-to-air television quotas, and the qualifying Australian production expenditure on the co-production will be eligible for the Producer Offset. The Australian Government screen agency Screen Australia administers the Producer Offset and Australia’s international co-production arrangements. The Location Offset and the PDV Offset are administered by the Ministry for the Arts, Attorney General’s Department (Department).Screen productions may also be eligible for investment by Screen Australia and/or incentives or other support from Australian State and Territory Government screen agencies (which can be combined with the offsets). 。
The Producer Offset is a 40% offset on the ‘qualifying Australian production expenditure’ (QAPE) (see below) incurred on a feature film and a 20% offset on the QAPE incurred on other types of film and television projects. The Producer Offset is only available for film and television projects with ‘significant Australian content’ (see below).Eligible applicants - who may apply for the Producer Offset?The Producer Offset is available to a company in relation to a film or television project where the following conditions are met:the company is either: (i) an Australian company; or (ii) a foreign company with an Australian permanent residency and an Australian Business Number;
the offset is claimed by the company in its income tax return for the income year in which the project was completed (i.e. in a state ready to be distributed, broadcast or exhibited to the general public); and
a final certificate has been issued for the project by Screen Australia.
Only one company may claim the Producer Offset in relation to a project. The company that is eligible to claim the Producer Offset is the one that carried out, or made the arrangements for the carrying out of, all the activities that were necessary for the ‘making of the project’. However, in the case of an official international co-production, the Australian co-producer need only satisfy this requirement in respect of its own activities and not the activities of its foreign co-production partner.Eligible projects - what types of projects qualify for the Producer Offset?1. Project must satisfy format requirements
For a project to be eligible for the Producer Offset it must be produced for exhibition to the public in cinemas or by way of television broadcasting or distribution to the public as a video recording.Feature films (which may be theatrical animations or documentaries) may be eligible to receive an offset of 40% of the QAPE. Programs other than feature films, e.g. single episode telemovies and direct-to- DVD, internet or mobile films, series, seasons of series and short-form animations may be eligible to receive an offset of 20% of the QAPE.Each type of project must also satisfy certain duration requirements (e.g. at least 60 minutes for a feature film to be screened in commercial cinemas).The Producer Offset is not available for other types of projects such as reality, discussion, quiz, panel and variety programs, and news and current affairs programs.2. Project must have ‘significant Australian content’ or be an official international co-productionFor a project to be eligible for the Producer Offset it must have ‘significant Australian content’ (SAC), unless it is an official international co-production between an Australian co-producer and a co-producer(s) from another country (or countries) with which Australia has entered into a co-production treaty or MOU (in which case the project is considered to meet the SAC test).In determining whether a project has SAC, Screen Australia must have regard to the following: the subject matter of the project; the place where the project was made; the nationalities and places of residence of the persons who took part in the making of the project; details of the ‘production expenditure’ (see below) incurred in respect of the project; and other matters that Screen Australia considers to be relevant. Screen Australia will consider all relevant factors on a case-by-case basis and no single factor is determinative.3. Project must meet minimum QAPE thresholdFor a project to be eligible for the Producer Offset it must spend above a specified minimum amount of QAPE. For example, the minimum QAPE threshold for a feature film is AUD$500,000. Other thresholds apply to other types of formats. In the case of official international co-productions, expenditure in the foreign co-producing country (or countries) may be counted towards the minimum QAPE threshold for the project as if it were QAPE, although such expenditure will not qualify as QAPE (or, accordingly, for the Producer Offset).QAPE is the ‘production expenditure’ (see below) for a project incurred for, or reasonably attributable to:goods and services that are provided in Australia;
the use of land or goods located in Australia in making the project; and
other specified expenditure,
however, there are specific inclusions and exclusions.‘Production expenditure’ is expenditure incurred in, or reasonably attributable to, the ‘making of a project’ up to completion, and may be revenue or capital in nature. ‘Production expenditure’ also includes certain expenditure incurred after the project’s completion but prior to the end of the income year in which the project is completed.There is a cap of 20% of a project’s total ‘production expenditure’ for ‘above the line’ costs (i.e. costs relating to development and remuneration for the principal director, the producers, the producers’ unit and the principal cast) that can be claimed as QAPE for the Producer Offset (except for non-feature documentaries).For a project to be eligible for the Producer Offset as a documentary, Screen Australia must be satisfied that the project is a documentary as defined in the relevant legislation, being a creative treatment of actuality other than an infotainment program, lifestyle program or magazine program. The legislation further requires that Screen Australia must consider the extent and purpose of any contrived situation featured in the project and the extent to which the project has an over-arching narrative structure when determining whether the project is considered to be a documentary.How to obtain the Producer OffsetTo obtain the Producer Offset for a project an eligible applicant must obtain a final certificate from Screen Australia by submitting an application to Screen Australia.A company may speak to Screen Australia about the Producer Offset and/or apply for a provisional certificate as to whether the project qualifies under the SAC test and/or is likely to meet the minimum QAPE threshold and the estimated QAPE for the project.Please be looking forward to the Part II - Location Offset and PDV Offset and Part III - Official International Co-Productions.
Ian Robertson, National Managing Parner
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