What is the producer tax offset?
Before we dive in, a quick refresher. A tax offset normally reduces the amount of tax you actually pay. A refundable tax offset can actually generate a tax refund where no tax has been paid.
The Producer Tax Offset – sometimes referred to as just the Producer Offset – is a refundable tax offset for money spent in Australia or by Australian companies to make Australian films.
Simple enough, right?
Well, like all things tax related there is a bit more to it.
What is QAPE?
QAPE stands for Qualifying Australian Production Expenditure. Basically, it’s the money spent in Australia on the production, so will include most of the items in Screen Australia’s A-Z budget.
That might be
- Goods and services provided in Australia
- The use of locations in Australia, and
- The use of goods that are located in Australia at the time they are used in the making of the project
QAPE is the main expense used in determining your Producer Offset.
If you’re making an Australian film, you could be eligible for an offset of:
- 40% of your QAPE for feature films with Australian Distribution
- 30% of your QAPE for television series, documentaries, animation series and online content
The main thing here is ensuring that the money can be “reasonably attributed” to the “making of the film.” That means it could be for any stage of the production, including pre and post production work. That said, it doesn’t involve any work done in financing the project, preparing sizzle reels, marketing (with some exceptions), distribution or promotion.
Basically, it’s about bringing the moving image to people’s screens – nothing more and nothing less.
How do I apply?
First, you have to ensure that you are eligible.
You can get started with a Provisional Certificate. This is a certificate issued by Screen Australia before you start production that confirms your eligibility up front. Often investors or lenders will need this to manage the risk of investing in your project. That said, you do not have to receive a Provisional Certificate to receive the Producer Offset. It can be considered “pre-approval” for the Offset.
Regardless of whether you have a Provisional Certificate, to be paid the Producer Offset, you must be issued with a Final Certificate by Screen Australia. With the Final Certificate, you then put in a tax return for the company, and the tax rebate is paid as part of the tax return.
Screen Australia is there to confirm that:
- You’ve made a film
- It is an Australian film
- It was made by an Australian company
And other similar factors.
Requirements to obtain a final certificate for your Producer Offset include:
- Your film is complete! That means it is ready to deliver to a distributor or sales agent.
- Your project has Significant Australian Content.
- You haven’t accessed any other Australian Government incentives or support – like through Screen Australia’s Producer Equity Program.
- Your project has been completed in the income year of the relevant tax return.
- Your project has been completed in an eligible format (some formats, such as reality television, advertising, news and current affairs and computer games are not eligible for the offset)
- You (the production company) is an Australian resident or a foreign resident with a permanent base in Australia and an ABN.
Screen Australia will formally determine your QAPE as part of issuing the certificate.
So it’s not a matter of getting the certificate and then doing the financial stuff. The accounting work is fully embedded in the process of calling your film “done”.
Screen Australia will provide their determination of your final QAPE and your final certificate to the Australian Tax Office (ATO) and you will apply for the Producer Offset through your tax return.
The ATO will calculate your offset based on the information provided by Screen Australia.
They’ll then apply the offset to your tax return.
What do I need to consider for my current or next production?
Because QAPE covers your entire production, one of the biggest factors that come into play in applying for the Producer Offset is time.
It’s never too early to prepare.
When your film is completed (in a year, two years, three, or more) the last thing you’ll want to start thinking about is where you put those receipts during pre-production.
We always advise that you get advice as early as possible. We can put you on the right track to ensure that the final process is as smooth as possible.
It is a lot more work to sit down and try and do all the accounting at the end of a production, than it is to do the accounting as the production shoots.
But, by the same token.
It’s not too late.
If you’re reading this because your production is drawing to a close, and you’re wondering what to do next, help is at hand. We have assisted with over seventy Producer Offset claims, and many of these we have assisted where the accounting was prepared after the film was released.
This is a specialist area of the Australian taxation system, so make sure that you take advice from someone who has done it before.
If you’re interested in finding out more, or starting with some general taxation advice for producers, please get in touch.
A note on this article
Information provided by the Above the Line Accounting on this website is general in nature and does not take into consideration your personal financial situation. It is for educational purposes only and does not constitute formal financial advice.