Supplementary Explanatory Memorandum
(Circulated by authority of the Assistant Treasurer, Minister for Housing and Minister for Homelessness, Social and Community Housing, the Hon Michael Sukkar MP)Chapter 1 - Parliamentary Amendment to Schedule 1 to the Treasury Laws Amendment (2021 Measures No. 5) Bill 2021
Outline of chapter
1.1 The Parliamentary Amendment to Schedule 1 to the Bill amends Division 376 of the ITAA 1997 to set the copyright cap at 50 per cent for documentaries for two years from 1 July 2021. The cap for documentaries reverts to the general 30 per cent copyright cap presently proposed in the Bill thereafter. The amendment provides the sector with an appropriate adjustment period for the proposed copyright change. This is consistent with the Senate Environment and Communication Committee's recommendation.
1.2 All legislative references in this chapter are to the Income Tax Assessment Act 1997 unless otherwise stated.
Context of amendment
1.3 The Bill introduces reforms to the ASPI, the Government's primary mechanism for supporting screen content production in Australia, delivered through the ITAA 1997.
1.4 Item 14 of Schedule 1 to the Bill introduces a 30 per cent cap for expenditure incurred in acquiring copyright that can be counted towards qualifying Australian production expenditure in relation to all three film tax offsets. The purpose of this change was to encourage the creation of new content and stories.
1.5 The Bill was referred to the Senate Environment and Communications Committee which delivered its report on 31 August 2021. The Committee heard that documentaries can disproportionately rely on copyright expenditure in order to access archival material.
1.6 As such, Recommendation 2 to the report was that the Government should set the copyright cap for documentaries at 50 per cent for two years from 1 July 2021 and then reduce it to 30 per cent thereafter if an 18 month review of the ASPI reforms does not identify a significant impact on the sector.
1.7 The Government notes that, in order to be consistent with what is allowable in legislation, the amendment cannot be drafted contingent on the outcome of a review.
1.8 This Parliamentary Amendment is consistent with Recommendation 2 and enables the documentary sector time to adjust to the copyright change.
Detailed explanation of amendment
1.9 This amendment amends item 14 of Schedule 1 to the Bill to specify that, for the 2021-22 or 2022-23 income year, a 50 per cent copyright cap applies to documentaries and a 30 per cent copyright cap applies to films other than documentaries. For a later income year, a 30 per cent copyright cap applies to all films. [Amendment 1, section 376-150(3)]
1.10 The term 'documentary' is defined by section 376-25. In broad terms, a film is a documentary if the film is a creative treatment of actuality, having regard to the relevant matters and exclusions set out in the section.
Application and transitional provisions
1.11 This Parliamentary Amendment applies at the same time as Schedule 1 to the Bill applies.