Producer Offset, QAPE, PDV changes and production timelines

Producer Offset, QAPE, PDV changes and production timelines

Should the Producer Offset changes move your production timelines?

At the end of September, the Australian Government announced changes to Australia’s screen production incentives. The changes will affect the Producer Offset and the PDV (Post, Digital and Visual Effects) Offset and the Location Offset.

The changes come into effect on 1 July 2021. 

These changes are already forcing people to consider their project timelines. It’s important to understand all the changes and how the timing of your production might affect your bottom line.

A quick refresher

The Producer Offset is a refundable tax offset (rebate) for money spent in Australia or by Australian companies to make Australian films, television and other qualifying projects.

The offset (rebate) that you’re eligible for is determined by your Qualifying Australian Production Expenditure (QAPE).

You can learn more about the Producer Offset and the application process in our blog How do I apply for the Producer Offset?. Please note that all figures in that blog are based on the current system and will change from 1 July 2021.

 

What’s changing?

The changes will affect,

  • the offset (percentage) that different projects are eligible for
  • the QAPE thresholds for all projects
  • and if / how much you can claim against certain types of spending.

Get the Australian Government’s Fact Sheet on the changes to read the full detail.

There will be long term impacts on the industry, but the immediate issue is how changes will affect projects currently under development. 

 

The big questions

With changes coming into effect on 30 June 2021, the biggest question is when should I start principal photography?

A change of one day either side of 30 June 2021 will be the difference between being considered under the old scheme or the new scheme.

TV versus film

The rationale for the main changes is that, in an era of streaming services like Netflix, Stan and Disney+, it doesn’t make sense to differentiate between TV and film.

This is why the rebate available for film projects is dropping, and the rebate for TV is rising. From 1 July 2021 they’ll be the same at 30%.

Without looking at any other figures, it would make sense for film projects to start principal photography before the changes come in, while TV might hold off until the changes come into effect.

For TV producers thinking about moving their timelines up, do remember that all the changes need to be considered equally. While the extra 10% rebate is good news for TV production, overheads will no longer be an eligible expenditure. Consider this when running the numbers.

Will you qualify?

One of the biggest changes are the changes to the minimum QAPE threshold.

Right now, the threshold for feature film is $500,000. That will increase to $1 million. 

This will severely impact many small and independent films. If you’re planning a smaller film that will not meet the new threshold, it will be vital to start principal photography before the changes come into effect to qualify for the Producer Offset.

Going overseas?

From 1 July 2021, we’ll lose the ‘Gallipoli clause’. This is the clause that allows some of the costs incurred outside of Australia to be included in QAPE.

If you are planning to film parts of your film or television production overseas, it may be worth getting over there before the change. This will be easiest for those shooting documentaries.

Obviously, there are other challenges associated with travelling for productions right now. This might be difficult, but could make a huge financial difference overall.

Documentary film and television

There are solid reasons for all documentary makers to get their skates on and get moving before the changes come into effect.

Since the scheme was originally introduced, non-feature documentary has not had a cap on Above The Line (ATL) QAPE. From 1 July 2021, a 20% cap will come into effect for non-feature documentary.

There is also a change to the amount of copyright you’ll be able to claim under the new scheme. Right now, if you’re using archival and other copyright materials you can claim the full cost. From 1 July 2021 this will be capped at 30% of total production expenditure. This will heavily impact documentary makers who rely on archival materials. If this is you, really consider ensuring that your production is considered as part of the current scheme.

Post production

It is also important to note that there are changes to the PDV Offset, which will impact film and television projects currently in pre-production or production. 

Right now, the minimum PDV-QAPE (amount you’re spending in post production) is $500,000. From 1 July 2021, that will change to $1 million. If you’re not going to hit that threshold, it would be a good idea to start your post production before 1 July 2021 so that you qualify for the offset.

Get help

There is a lot here to consider, based on the type of production, it’s size, and what is possible in the current environment. If you would like to discuss your project and the potential impacts of these changes, please book a free consult.

 

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.

Recommended Posts

Start typing and press Enter to search