Feature films with significant New Zealand content got a big boost in the country's 2008 budget today with the government pledging to give back 40 per cent of what is spent in NZ on production from July 1 this year.

Expenditure must exceed $3.93m (NZ$5m) to qualify for the new Screen Production Incentive Fund (SPIF) and a cap of $4.7m (NZ$6m) applies to the grant. This means that as a film's budget climbs higher than $11.79m (NZ$15m) the grant gets progressively less as a percentage of the total budget, ie the grant for a $23.59m (NZ$30m) film would be 20 per cent.

Films must be produced for a NZ cinematic release and the local expenditure must be at least 50 per cent of the budget. A points-based content test, much like the UK's cultural test, will apply but it is possible to qualify without identifiable NZ setting, characters or other cultural elements. In these cases, however, there must be considerable NZ creative input or the underlying material must be NZ, and Kiwis must play an important role during production.

NZ films spending more than $11.79m (NZ$15m), including those made by the country's most famous filmmaker, Peter Jackson, have been accessing the 15 per cent Large Budget Screen Production Grant (LBSPG), which is also available to foreign films. This grant will remain attractive to local producers once budgets reach $31.46m (NZ$40m) because of the cap on the new SPIF.

Like the LBSPG, SPIF will be administered by the NZFC with qualifying expenditure verified by the Inland Revenue Department. SPIF's aim is to create more medium and large scale films for the benefit of audiences, to encourage the industry to develop closer connections within the marketplace and with private financiers, and to support NZ talent, stories and infrastructure.

A total of $42.27m (NZ$53.8m) over four years has been allocated to the New Zealand Film Commission (NZFC) for the fund, including $21.84m (NZ$27.8m) in new funding and $20.43m (NZ$26m) in existing NZFC funding.

The NZFC will continue to directly fund films, particularly low-budget films and those that help develop new talent or particularly meet cultural objectives. It can co-invest with SPIF but only in cases of 'exceptional production merit'. The maximum proportion of government funding in any one film is 75 per cent.

Feedback is being sought from industry on the small print surrounding the operation of the new grant, including the criteria used to determine significant NZ content. A 20 per cent grant for television has also been introduced.

Australia introduced a similar initiative last year but with a $1m minimum spend and no cap on payments to individual films. Unlike NZ's grant, an Australian producer's general tax position will affect how much of the 40 per cent they get back.

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