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Australia relaxes rules for producer offset tax rebates

More offshore films will be eligible to claim the 15% location rebate available for using Australia as a production destination from July 1.

More offshore films will be eligible to claim the 15% location rebate available for using Australia as a production destination from July 1.

Driven by a significant fall in offshore production activity due to the strong Australian dollar, the Federal Government announced changes yesterday as part of the handing down of its annual budget.

Currently offshore films spending more than A$15m on production in Australia can claim back 15%  providing that expenditure represents at least 70%  of the total budget of the film.

The exception to this 70% rule were films that spent more than A$50m in Australia but yesterday the rule was scrapped altogether.

The intention behind the original nature of this long-standing financial incentive was to encourage the US studios and others to make as much of the film in Australia as possible and it has been very successful at attracting blockbusters; the hope now is that more films, including those using multiple international locations, will utilise Australia even if they spend less.

A film still has to spend $15m to qualify at all and the rebate remains 15% of expenditure in Australia.

The second important change is that films now only have to spend A$500,000 rather than. A$5m to qualify forthe post, digital and visual effects (PDV) offset, which is also worth 15% of Australian expenditure.

It was put in place much more recently compared to the location offset — and is available for films irrespective of where they we’re filmed — but has only been utilised once because of the A$5m threshold.

The government is currently conducting a review of the industry and these early policy changes have been applauded.

Big spending offshore films have always been important to the survival of service companies, and also for upskilling crew and they have, quite simply, dried up.  

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