Australia to Lower Taxes on Film Production

No word yet on whether the new tax breaks will help the ‘Matrix’ production in this article by DON GROVES of Variety: The government is offering new incentives to woo runaway film production following the Australian Tax Office’s controversial decision not to allow local investors in “Moulin Rouge” to claim tax breaks.

Tuesday, Sydney time, arts Ministers Richard Alston and Peter McGauran unveiled Canadian-style tax rebates for big-budget films lensed Down Under.

The rebate will be fixed at 12.5% of qualifying Australian expenditure on films. Pics with an investment from Australian taxpayers of $ A15 million to $ A50 million ($ 7.8 million to $ 26 million) must spend 70% of their total budget in the territory to qualify. Films above $ 26 million won’t have to meet that requirement.

Alston said the tax offset will allow Australia to compete with Canada, the U.K. and Ireland, which all benefit from U.S. runaway productions. It will also be available to bigger-budget Australian films.

“The new incentive will be delivered through a direct payment to producers in the form of a refundable tax offset paid through the tax system,” Alston said. “The government is committed to implementing the new tax incentive as quickly as possible. It will help build on the impressive level of offshore production already taking place in Australia.”

Foreign pics still in

Tax breaks will continue to be available to foreign pics under the controversial 10B division of the Tax Act, which gives local investors a 100% tax break on their dollars, but a film can’t get both rebates.

Any film now in production will be able to apply for the new rebate.

But it is still uncertain whether “Scooby-Doo,” which recently wrapped Down Under, or the upcoming “Matrix” sequels will be eligible for the 10B provision in light of the ATO’s crackdown on film tax schemes.

The government, which is facing an election before the end of the year, is also offering carrots to shore up support for the local film and TV industry. The Arts Ministers announced a boost of $ 48.2 million for Oz films and TV drama over the next five years.

The Film Finance Corp. has repeatedly said its annual budget has declined by 50% since it was created in 1988, due to government cutbacks and fund freezes, while the cost of making pics in Oz has jumped by more than 100% since the early 1990s.

To defuse that criticism, Alston and McGauran revealed a package of measures including an additional $ 3.9 million for the FFC in 2002-03, rising to $ 5.4 million the following year, to be invested in children’s and adult TV dramas.

The Australian Film Commission will get an extra $ 1.5 million in 2002-03 and $ 2.6 million the following year, plus a new injection of $ 1.1 million over three years to seed broadband content and applications.

Pubcaster SBS’ production venture SBS Independent is being extended through 2005-06, and it will get extra funds to bring its subsidy to $ 4.4 million per annum, indexed for inflation.

There will also be extra funding for docu producer Film Australia, the Australian Film, Television and Radio School and AusFILM, the industry body that is a one-stop-shop for foreign producers.