Location and PDV offsets brochure
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Incentives for large-budget screen production in Australia
Film and Television Production in Australia—Australian Screen Production Incentive
Australia is a popular world-class location for film and television production with spectacularly diverse locations, well respected and sought-after crews and exceptional creative talent. The Australian film industry benefits from internationally recognised technical facilities, OscarTM winning post, digital and visual effects production services, highly economical cost of production, and an established, collaborative network of film agencies committed to assisting producers.
The Australian Government’s Australian Screen Production Incentive provides an attractive financial incentive to encourage large budget film and television productions to locate to Australia.
For information and assistance with filming and locations in Australia, visit Ausfilm at ausfilm.com.
What is the Australian Screen Production Incentive?
The Australian Screen Production Incentive provides generous tax incentives for film, television and other screen production in Australia. The incentive is available in three streams:
- Producer Offset, a 40 per cent rebate on the qualifying spend of feature films and a 20 per cent rebate for other qualifying media. To access the Producer Offset projects must have ‘Significant Australian Content’ as determined by Screen Australia.
- Location Offset, a 15 per cent rebate on the Australian spend of large-budget film and television productions.
- Post Digital and Visual (PDV) Offset, a 15 per cent rebate on the qualifying post, digital and visual effects production expenditure of large budget productions.
The Producer Offset is administered by Screen Australia and further information is available at www.screenaustralia.gov.au/producer_offset.
The Location and PDV Offsets are administered by the Australian Government Department of the Environment, Water, Heritage and the Arts (the Department). This brochure provides information on how the Offsets operate and further information is available from www.arts.gov.au/locationoffset.
The three offsets are mutually exclusive.
What is the Location Offset?
The Location Offset replaces the Refundable Film Tax Offset (which has operated since 2001) and provides a 15 per cent rebate for film and television productions which spend at least A$15 million in qualifying Australian production expenditure in Australia and which commence production on or after 8 May 2007. For productions which commenced earlier a 12.5 per cent rebate is available.
What is qualifying Australian production expenditure?
Qualifying Australian production expenditure (QAPE) is made up of costs eligible for the Location Offset, and is expenditure incurred in making a film, from pre-production to the point it is ready to be distributed, broadcast or exhibited to the general public, that is reasonably attributable to:
- goods and services provided in Australia
- the use of land located in Australia
- the use of goods located in Australia at the time they are used in making the film.
There are a number of specific inclusions and exclusions to this definition, which are detailed in the guidelines for the Location and PDV Offsets.
What is the PDV Offset?
The PDV Offset provides a 15 per cent rebate on all ‘qualifying PDV expenditure’, which is broadly expenditure on post, digital and visual effects production (PDV) work undertaken in Australia. It is available to productions which do not necessarily shoot in Australia, but do wish to take advantage of our world-class PDV sector. To be eligible a production must commence PDV work in Australia on or after 1 July 2007 and spend a minimum of A$5 million in qualifying PDV expenditure in Australia.
What is qualifying PDV expenditure?
Only expenditure on PDV work undertaken in Australia is relevant to the PDV Offset. Qualifying PDV expenditure is defined as expenditure that would otherwise be QAPE and is expenditure on or in relation to:
- post production
- digital production
- visual effects.
This includes expenditure on VFX, 2D and 3D animation, audio post, editing, green-screen photography and miniatures undertaken in Australia. More detailed information on qualifying PDV expenditure is set out in the guidelines for the Location and PDV Offsets.
The guidelines for the Location and PDV Offsets include a detailed explanation of this and other factors affecting eligibility and are available at www.arts.gov.au/locationoffset.
Who can apply for the Location and PDV Offsets?
The production company responsible for a film’s QAPE is eligible to apply for the Location or PDV Offset if it is:
- an Australian resident company, or
- a non-Australian resident company with a permanent establishment in Australia and an Australian Business Number.
The Offsets are provided to an eligible production company through the company’s tax return. The amount is first applied against any Australian Government income tax and other tax liabilities the production company might have incurred. Any excess is refunded.
What are the key eligibility criteria?
Commencement
The Location Offset is available to film and television productions that commence principal photography, or in the case of predominantly animated productions that commence production of the visual image, on or after 8 May 2007.
The PDV Offset is available to film and television productions that commence PDV work in Australia on or after 1 July 2007.
Levels of expenditure
Location Offset
The key criterion to access the Location Offset is a minimum level of QAPE of A$15 million on the production. Once this is satisfied, there are two further categories of expenditure to qualify for the Location Offset:
- where the film’s QAPE is at least A$15 million and less than A$50 million, the production company is required to spend at least 70 per cent of the film’s total (worldwide) production expenditure on QAPE, or
- where a company has spent A$50 million or more of QAPE, it will qualify regardless of the total amount of production expenditure involved.
In addition, an eligible television series must also average at least A$1 million of QAPE per hour of the series. For example, a series of 22 x 40 minute episodes (14.67 hours) with QAPE of A$18 million will qualify:
A$18m ÷ 14.67 hours = A$1.23 million QAPE per hour.
PDV Offset
An eligible production must spend at least A$5 million in qualifying PDV expenditure in Australia to qualify for the PDV Offset.
Formats
The formats eligible for the Location and PDV Offsets are feature films (including those shot direct-to-video or DVD), telemovies, mini-series and television series (including reality TV).
Please note that for television series seeking the Location Offset, there are required timeframes for completion:
- Where a television series is predominantly an animation, production of the visual image must be completed within a period of 36 months (excluding any pilot).
- Where a television series is not predominantly an animation, principal photography for the series must be completed within 12 months (excluding any pilot).
Accessing the Location and PDV Offsets—how do they work?
Production companies will need to apply to the Department for a certificate of eligibility from the Minister for the Environment, Heritage and the Arts.
Applications will be considered by an advisory board of industry representatives and a senior Departmental official to determine if the eligibility criteria for certification have been met.
Certification guarantees the film’s eligibility to access either the Location or PDV Offset. Following certification, the production company will need to claim the Location or PDV Offset in its income tax return for the year of income in which the film or PDV work in Australia was completed.
The Location or PDV Offset rebate will be applied against any of the production company’s Australian Government tax liabilities. Any excess remaining will be refunded but will not constitute assessable income for income tax purposes.
Legislation
Division 376 of the Income Tax Assessment Act 1997 establishes the Australian Screen Production Incentive and its component parts: the Location Offset, the PDV Offset and the Producer Offset.
How to find out more
Comprehensive guidelines that you will need to examine before making an application and application forms are available from www.arts.gov.au/locationoffset.
Please contact the Location and PDV Offsets Team at the Department for further information:
Phone: +61 2 6275 9645
Fax: +61 2 6275 9659
Email: filmenquiries@environment.gov.au
Web: www.arts.gov.au/locationoffset
For information about taxation aspects and obligations of companies commencing business in Australia, registering for an Australian Business Number, filing business activity statements and annual income tax returns, you can consult the Australian Taxation Office website at www.ato.gov.au.
Alternatively, you can contact the Australian Taxation Office’s contact officer by phone: +61 2 9374 1555.
For information about filming and locations in Australia, consult Ausfilm at ausfilm.com.
The information contained in this brochure has been drawn from Division 376 of the Income Tax Assessment Act 1997. If there is any variance in this brochure from the legislation, the legislation has priority.
Authorised and published by the Australian Government Department of the Environment, Water, Heritage and the Arts,
GPO Box 787, Canberra ACT 2601
