The post, digital and visual effects (PDV) tax offset
The PDV tax offset applies to the production of PDV for a film that commences on or after 1 July 2007. It is designed to attract post-production, digital and visual effects production to Australia, no matter where the film is shot.
The PDV tax offset is available to a company in respect of a film when the following conditions are met:
- The Minister for the Arts has issued to the company a final certificate for the film in relation to the PDV tax offset.
- The company claims the PDV tax offset in its income tax return for the income year in which the company ceased incurring QAPE related to PDV production for the film.
- The company is either an Australian resident or a foreign resident with a permanent establishment in Australia and an ABN.
The PDV tax offset is 30% of the company’s total QAPE that relates to PDV production for the film which is, broadly, expenditure on PDV production work undertaken in Australia. However, if the PDV production commenced before 1 July 2011, the PDV tax offset is 15% of the company’s total QAPE that relates to PDV production for the film.
The issue by the Minister for the Arts of a final certificate to a company for a film in relation to the PDV tax offset is the central requirement for the company’s entitlement to the PDV tax offset in respect of the film.
An application to the Minister for the Arts for such a final certificate is considered by the Film Certification Advisory Board, comprising industry representatives and a senior official from the Office for the Arts, which advises the Minister on whether to issue a final certificate.
Broadly, the Minister for the Arts must be satisfied that:
- the film is of an eligible format and genre
- the company’s total QAPE related to PDV production for the film is at least $500,000 (or $5 million if PDV production in Australia commenced before 1 July 2010)
- the company has either carried out, or made the arrangements for carrying out, all the activities in Australia necessary for the PDV production for the film.
PDV production for a film is:
- the creation of audio or visual elements (other than principal photography, pick-ups or the creation of physical elements such as sets, props or costumes) for the film
- the manipulation of audio or visual elements (other than pick-ups or physical elements such as sets, props or costumes) for the film
- activities that are necessarily related to the activities mentioned above.
This includes expenditure on VFX, 2D and 3D animation, audio post editing, green-screen photography and miniatures undertaken in Australia. For a more extensive list of activities and further details of the application process for certification, guidelines and eligibility criteria, see arts.gov.au arts.gov.au
The company’s total QAPE related to PDV production for the film is determined as part of the final certification process for the PDV tax offset and that information along with a copy of the final certificate is provided to us to enable us to verify claims and process payment of the PDV tax offset.
Last modified: 26 May 2016QC 48086