A Hollywood producer would save significant amounts of money shooting a big budget film in Australia compared to Canada, according to a report published this week.
The report, which was produced by Sydney's best-known film accountancy firm for the Australian Government, concludes that a Hollywood producer would save 7.5% if he or she chose Sydney over Vancouver as the location for a US$24m runaway production.
Australia's cost advantage rises as the film's budget rises, providing the film qualifies for the 12.5% "refundable tax offset", which has been in place for nearly two years and applies to productions budgeted over US$9.7m (A$15m).
The report acknowledges Canada's rebates are commonly thought to be higher and suggests that this is an automatic response on the basis of a straight percentage comparison.
However, Canada's rebates are labour based, whereas Australia's tax offset does not just apply to labour. Rather, it covers goods, services, facilities and most other expenditure within the country.
"The Australian refundable tax offset could be marketed as a rebate that will deliver a higher net result to US runaway productions both in dollar value and in the percentage it can represent of the budget," Moneypenny Business and Taxation Services advises.
The study factors in all the key financial considerations including travel costs, labour rates, fringe benefits and working conditions, and currency exchange rates. The rates used for the calculation was 65 Australian and 73 Canadian cents to the US$1 and it is noted that the Australian dollar has appreciated by 14% over the last 12 months and the Canadian dollar by 12.3%.
The report includes price comparisons between the two countries before and after the rebates are applied, and charts that indicate how currency fluctuations affect costs.