Filming In Australia: State Based Incentives and Rebates
(Credit: Australian Film Commission)

State Based Incentives and Rebates

Many states offer support and financial assistance in addition to the various federal rebates and incentives. The assistance comes in the form of payroll tax rebates or exemptions, cast and crew wage rebates, location attraction cash grants and the provision of free or subsidised public service resources. The range of assistance and qualification criteria varies from state to state and more complete details on the incentives may be obtained from each of the state film offices.

Taxes and Other Obligations in Australia

Goods And Services Tax (GST)
The GST is a 10 per cent tax on most goods, services and rights connected with Australia. Much like VAT it is designed as a tax on the private end user or consumer and not as a tax to be imposed on businesses.

An entity can register and claim back the GST paid by it on the acquisitions it makes in connection with their business activities. Nearly all the costs incurred by a film production will have a GST component (wages and salaries of employees do not attract the GST).

It is recommended that an offshore producer planning to undertake production activity in Australia, ensure that the appropriate structure is in place to enable it to reclaim this tax. Unlike the VAT, monthly claims can be made to minimise the cashflow exposure within the production cycle to virtually nil, as the Australian Tax Office undertakes to refund net GST paid within 14 days of lodging its Business Activity Statement (BAS).

Generally if undertaking production in Australia, either one of the following scenarios will ensure that the GST rebate on the production expenses can be refunded:
• the offshore producer engages an established Australian production services/facilitation company which will incur all the expenses of production and claim back the GST on those expenses; or
• the offshore producer establishes their own Australian company through which all production expenses will be incurred, obtains an Australian Business Number (ABN) and registration for GST in order to claim the refunds.

Whichever option is chosen the funds received by the Australian company from the offshore entity will be considered payment for some combination of goods, services and/or rights. These transactions can be GST free with consideration of the following:
• if it is services, an issue to be considered is whether the off-shore producer will be present or represented in Australia during production which may cause transaction to lose its GST free status;
• if rights are being provided solely for use outside Australia the transaction may be GST free. If the rights are for worldwide usage including Australia the Australian company supplying the rights may have to charge the non-resident GST on part of this transaction; and
• if it is goods there is a requirement that they are exported within 60 days of payment.

The non-resident can claim back any GST charged by registering. If it is found to be necessary for the offshore company to register for GST, the Australian company can act as its agent for GST purposes to fulfil its obligations with little difficulty to either party.

It is important that a contract is prepared to cover the transactions that will take place so that GST does not become a cost for the production and define the relationship between the offshore producer and the Australian company.

International Transfer Pricing Note
If an offshore entity establishes its own Australian subsidiary company to produce the project, regulations require that there is a fee charged for the services and/or rights provided of an equitable market value. This should be contained in the production contract between the two entities. The subsidiary will be taxed at the flat corporate rate of 30 per cent on its taxable income. The Australian company will also usually require at least one Australian resident to be appointed as a company director. Non residents can also be appointed as directors of the company.

Audit Requirement
If an offshore entity establishes its own subsidiary company there may be a statutory audit requirement. This can be avoided if recognised sufficiently early in the process and an application is made to waive the obligation.

Bringing Foreign Cast And Crew To Work In Australia
Australia has entered into international taxation agreements with a number of countries around the world that prescribe the appropriate treatment applicable for foreign personnel working in Australia on productions.

Cast
Income derived by entertainers (i.e. on screen performers) for services performed in Australia will be subject to income tax in Australia, regardless of the contracting entity and the length of stay. Under some agreements income tax is paid in Australia only if the value of these services in Australia reaches a certain level i.e. US$10,000 in the agreement with the USA.

Performers engaged through a loan-out corporation will pay tax at the flat rate of 30 per cent. Non-resident individuals will be taxed at the graduated rates in the table below.

In order to minimise this tax exposure for a production’s cast members, it is important to discuss a reasonable bifurcation of the contract at an early stage of the negotiation process to allocate the appropriate value to the services performed in Australia. However, the impact of bifurcation on Qualifying Australian Expenditure (QAE) for the purpose of the 12.5 per cent refundable tax offset may need to be considered if applicable.

It is also recommended that the actor be advised to engage a local tax accountant to lodge their Australian tax return so that the available deductions can be optimised.

Crew
In most of the international agreements, income derived in Australia by foreign off-screen crew employed as independent professional contractors, will face no income tax liabilities in Australia provided they do not have a fixed base or permanent establishment available to them in Australia and they do not spend more than 183 days present in Australia in the financial year.

If either of the above conditions are not satisfied, the contractor may be subject to income tax in Australia.

Non-Resident Individual Tax Rates (AUD)

Taxable Income Gross Tax Payable
0-$20,000 - 29%
$20,001–$50,000 - $5,800 + 30% of excess over $20,000
$50,001–$60,000 - $14,800 + 42% of excess over $50,000
$60,001 and over - $19,000 + 47% of excess over $60,000

GST Requirements For Cast And Crew
Cast and Crew performing services in Australia as an independent professional contractor or via their loan-out corporation may have GST obligations, however it can usually be arranged in their contracts for the Australian production company to take care of these requirements on their behalf.

Employers Responsibilities For Australian Employees
In Australia there are responsibilities to withhold tax, pay superannuation (pension contribution), payroll tax and workers compensation (insurances) on any Australian crew and cast employed by the production. Some of these elements vary by state. It is important to allow for these fringes in your budgets and to fulfil the liabilities when in production. These liabilities are accomplished most easily through an Australian entity, service or payroll company.

Links:

Official websites

Australian Film Commission

Websites

International Movie Makers Market (Mediaman is a syndicate)

Articles

Filming In Australia: Federal Incentives, by Jane Corden

TV production boon - 13th May 2004

Movie makers and movie stars - What makes a star?

Interviews

Richard Bradley - Richard Bradley Productions

Profiles

Property and Investment Guide

Mediaman

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