What is it?

The Producer Offset, part of the new Australian Screen Production Incentive, is a financial incentive offered to producers of Australian film and television projects of various formats. 

To be eligible, feature films must have a bona fide Australian cinema release. Documentaries, series, telemovies, and short form animation may be for exhibition for media other than for cinema release, such as television.

The Producer Offset will take the form of a refundable tax offset and will be enacted by Division 376 of the Income Tax Assessment Act 1997.

 

How is eligibility determined?

The offset will apply to all Qualifying Australian Production Expenditure (QAPE) on eligible projects incurred on or after 1 July 2007. “Incurred” refers to when services are provided or goods acquired, regardless of when contractual arrangements were entered into, or when payment for those goods or services was made.

An applicant must be an Australian company, or a non-resident company with a permanent establishment in Australia and an Australian Business Number (ABN). The company must be the company responsible for making all the arrangements for the making of the film.

A project must be assessed and certified by the new Australian Screen Authority, as a ‘qualifying Australian film’.

The certification process is in two stages – optional provisional and final.

 

Final certificate

The final certificate, required to obtain an offset, is issued following completion of the production. It will be issued by the Australian Screen Authority and will include a statement of the production’s QAPE, based on an assessment of the production’s audited accounts.

When a final certificate is issued, the applicant will claim the Producer Offset in their tax return for the financial year in which the production was completed.

 

Qualifying Australian film

An application for the Producer Offset must show evidence that the film has a sufficient level of Significant Australian Content (SAC) in order to be eligible for the Offset.

The test to determine whether a film has SAC will be based on those previously used for determining 10BA eligibility, except that sources of financing and ownership of copyright will no longer be a specific factor used in assessment. We at Talking Big Productions are confident our film meets the Significant Australian Content requirements.

Official co-productions will automatically be considered qualifying Australian films.

 

	Minimum levels of QAPE	Offset
Feature films	$1 million total spend	40 per cent
Documentaries (30 commercial minutes minimum)	Average spend of $250 000 per hour, no minimum total spend	20 per cent
Television series – long form and mini series (30 commercial minutes minimum per episode, and minimum of two and maximum of 65 episodes total)	$1 million total spend and average spend of $500 000 per hour	20 per cent
Telemovies	$1 million total spend, and average spend of $800 000 per hour	20 per cent
Short form animation (15 minutes minimum)	$250 000 total spend and averages spend of $250 000 per quarter hour	20 per cent

 

For the purposes of official co-productions meeting the expenditure thresholds only, expenditure incurred in the co-producing country will automatically be considered QAPE. Blue type- denotes the offset available to ‘Salt Rain’

 

How is QAPE defined for the purposes of the Producer Offset?

A film’s QAPE is the expenditure incurred or reasonably attributable to actually making the film, up to the point that it is ready to be distributed, broadcast or exhibited to the general public, and:

            • expenditure made on goods or services provided in Australia will be QAPE; and

            • expenditure that is made overseas during principal photography for goods or services provided by Australian residents will also be QAPE where the use of the overseas location is reasonably necessitated by the subject matter of the film.

QAPE on ‘above the line’ costs will be capped at 20 per cent of the production’s ‘total expenditure’ (i.e. budget). Above the line costs are the costs expended on development, and remuneration and fringes for producers, the principal director and key cast.

The above information is courtesy of the Department of Communications, Information Technology and the Arts.