INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-45 - RULES FOR PARTICULAR INDUSTRIES AND OCCUPATIONS  

Division 376 - Films generally (tax offsets for Australian production expenditure)  

Subdivision 376-C - Production expenditure and qualifying Australian production expenditure  

Qualifying Australian production expenditure - special rules for the producer offset

SECTION 376-170   Qualifying Australian production expenditure - special rules for the producer offset  

Expenditure that is qualifying Australian production expenditure

376-170(1)  
For the purposes of subsections 376-65(6) and (7) , expenditure on a * film incurred in a foreign country is qualifying Australian production expenditure of a company on the film if:


(a) the expenditure is incurred by the company claiming the offset, or by another entity that is involved in the * making of the film; and


(b) the expenditure would be qualifying Australian production expenditure if it had been incurred for, or reasonably attributable to:


(i) goods and services provided in Australia; or

(ii) the use of land located in Australia; or

(iii) the use of goods that are located in Australia at the time they are used in the * making of the film; and


(c) the film is made under an * arrangement entered into between the Commonwealth or an authority of the Commonwealth and the foreign country or an authority of the foreign country.

Note:

This means that such expenditure is taken into account for the purposes of determining whether to issue a certificate for the producer offset to the company under section 376-65 . It is not taken into account in working out the amount of the producer offset to which the company is entitled.

376-170(2)  


For the purposes of the producer offset, the following expenditure of a company is also qualifying Australian production expenditure of the company on a * film:


Special Australian expenditure - producer offset
Item Type of expenditure
1 Australian business overheads
general business overheads of the company that:
(a) are not incurred in, or in relation to, the * making of the * film; and
(b) are not reasonably attributable to:
  (i) the use of equipment or other facilities for; or
  (ii) activities undertaken in;
    the making of the film;
to the extent to which they:
(c) are incurred for, or are reasonably attributable to:
  (i) goods and services provided in Australia; or
  (ii) the use of land located in Australia; or
  (iii) the use of goods that are located in Australia at the time they are used in the making
    of the film; and
(d) represent a reasonable apportionment of those overheads between the making of the film and the other activities undertaken by the company
This item has effect subject to subsection (3).
2 Travel to Australia and other countries
expenditure of the company in relation to an individual ' s travel:
(a) to Australia, to undertake activities in relation to the * making of the * film; and
(b) to or within any other country, to undertake activities in relation to the making of the film, if the remuneration paid to the individual for those activities would be * qualifying Australian production expenditure of the company under item 4 of this table.
3 Expenditure incurred in freighting goods within and between countries
expenditure incurred in freighting goods within and between countries, to the extent that the goods will be used in the * making of the * film.
4 Expenditure incurred in other countries
expenditure incurred outside Australia:
(a) for the remuneration of an Australian resident, or the purchase of goods or services from companies or * permanent establishments that have an * ABN; and
(b) during the period in which principal photography for the film takes place outside Australia
if the subject matter of the film reasonably requires the location in which the expenditure is incurred to be used for principal photography.
5 Other expenditure
expenditure incurred in Australia in respect of any of the following:
(a) obtaining an independent opinion of the amount of a film ' s *qualifying Australian production expenditure required for use in relation to the financing of the film;
(b) offset carbon emissions created during the making of the film.
6 Expenditure incurred in producing Australian copyright promotional material
expenditure incurred in Australia in the income year of the *completion of the *film or an earlier year in respect of any of the following:
(a) producing material for publicising or otherwise promoting the film where the copyright in the material is held or partially held by a company that is an Australian resident;
(b) unit publicist fees.
7 Expenditure incurred in delivering or distributing the film
expenditure incurred by the applicant company in delivering or distributing the film prior to the end of the income year in which the *film is complete to the extent to which it is incurred for, or reasonably attributable to, any of the following:
(a) acquiring Australian classification certificates;
(b) sound mix mastering licenses;
(c) re-versioning the film in Australia;
(d) freight services provided by a company in Australia for delivery of contracted deliverables in relation to the film;
(e) storing the film in a film vault in Australia.

376-170(3)  
General business overheads of the company are covered by item 1 of the table in subsection (2) only to the extent to which they do not exceed the lesser of:


(a) 5 % of the total of all the company ' s * total film expenditure on the * film; and


(b) $ 500,000.

376-170(3A)  
Expenditure incurred for the purchase of services is not covered by item 4 of the table in subsection (2) if the services are, to any extent, performed by an individual who is not an Australian resident.

Expenditure that is not qualifying Australian production expenditure

376-170(4)  
For the purposes of the producer offset, the following expenditure of a company is not qualifying Australian production expenditure of a company on a * film:


(a) expenditure on the film that is paid for with * development assistance received from any of the following bodies:


(i) (Repealed by No 41 of 2011)

(ii) Film Australia Limited;

(iii) the Australian Film Commission;

(iv) the Australian Film, Television and Radio School;

(v) Screen Australia;
unless the amount or value of the assistance has been repaid;


(b) subject to subsection (4A), the following expenditure:


(i) * development expenditure on the film;

(ii) remuneration provided to the principal director, producers and principal cast associated with the film;
to the extent that such expenditure comprises greater than 20 % of the company ' s * total film expenditure on the film;


(c) for a series or a season of a series - expenditure on an episode beyond the episode in which the 65th commercial hour of the series is reached.

376-170(4A)  


Paragraph (4)(b) does not apply to a *film that is a * documentary.

376-170(5)  


In applying paragraph (4)(c), episodes completed before 1 July 2011 count towards the limit in that paragraph.

376-170(6)  
Total film expenditure on a film means:


(a) expenditure covered by sections 376-125 , 376-130 , 376-150 and 376-170 ; and


(b) expenditure mentioned in column 2 of the table in section 376-135 , to the extent that it is not covered by paragraph (a).


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