Filming Expenses

While “The Matrix” pitted humans against machines in a war for the future of the planet, the sequel has been all about a battle between the filmmakers and the Australian government over tax breaks. At stake is a disputed tax incentive that could be worth up to $30 million for the two films shooting back to back, which is roughly Keanu Reeves’s upfront salary for the pair. Warner Bros., which is partnering again with Village Roadshow Pictures (VRP) on two sequels, would not comment, though studio sources acknowledge that a dispute has been ongoing, with a lot of money at stake.

The sequels are booked to shoot at the Fox Studios in Sydney starting in September, but that was done with the full expectation that the production could take advantage of 10B of the Tax Act, which is frequently used to entice big budget films to shoot Down Under. It’s a complicated arrangement that entices locals to front production money for massive write-offs, saving the film’s financier all kinds of interest charges. The government has tightened the loopholes on the grounds that the local investors aren’t risking their funds, since in recent cases they are either aligned with the studio or are guaranteed recoupment. The stalemate is considered serious enough that the filmmakers have had to at least explore the remote prospect of shooting the sequels in Canada.

WB and VRP were counting on that discount to help them bring in the sequels at an affordable level. People close to the film said they hope to spend $215 million for the pair, though other rumored estimates are higher. That number would require financial discipline, given that “The Matrix” has become WB’s most valuable film franchise, and that Larry and Andy Wachowski will understandably be looking to top the cutting-edge effects employed in the first film, which cost an estimated $80 million.

Fortunately for the studio and VRP, the Aussie issue can take its time to unfold, since the film will begin production pre-strike in Oakland. Filming in Australia won’t happen until after the actors strike is averted.

-via Variety