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 The World of Film in Australia - on the Internet Updated Tuesday July 28, 2020 

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After months of investigation the Australian Tax Office advised the Screen Producers Association of Australia last week that it would not make any changes to the timing of the acquittal requirements of the Producer Offset. This means that the production industry is still locked into the costs of interest payments on the loans to cashflow the offset until the year following the completion of the film or program. Is the ATO now ruining Government policy?

“Effectively the ATO has said no to providing necessary relief from this cost impost. This will distort production schedules, as some producers will ensure completion of the film or program in the last quarter of the financial year. This in turn may lead to bunching, which will place pressure on resources and lead to inflationary pressures on budgets. The ATO has argued it requires political intervention and legislative amendments to the Tax Act. They should have told us this eight months ago when this review was called,” said Geoff Brown, Executive Director of SPAA.

The issue of acquittal has been known to the industry since the Producer Offset legislation was finalised. It has been discussed widely in industry forums and at government briefings on the Producer Offset. This is connected to the issue of cashflowing the offset, which is plaguing this new funding mechanism, threatening to water down its potential benefits and reducing the likelihood of producers building real businesses.

"We were told to be patient"

‘We were told to be patient, that efforts were under way to address the issue and that legislative changes would be unnecessary, a cleaner neater way was to be found. I am frustrated and disappointed. A year has passed and the bureaucracy can’t or won’t handle it.

"One of the reasons given is that producers might misrepresent their production end dates. Anyone who works in our business knows and understands the scrutiny involved in the Producer Offset acquittal process. Knowing this, they also know the risks identified by the ATO are non-existent. The ATO have been unhelpful and their comments loaded. Here we go again with the ATO’s bias towards the film industry. I doubt any policy support for the industry from government can be truly effective whilst the responsibility for financial acquittal remains with the ATO.

”The New Zealand government, in announcing their own Producer Offset scheme was to function as a rebate outside the tax system, has demonstrated there is another way.” Brown said.

“There are other issues surrounding the Producer Offset that need to be addressed to ensure its effectiveness. Adjustments are to be expected given the policy was rushed through ahead of the last federal election. However, if the Producer Offset is to work the government must sideline the ATO completely and look at the NZ rebate model. At the very least, and in the interim, the government must amend Section 376 of the Tax Act to allow producers to acquit the Producer Offset in a timely and responsible manner.”

"without sufficient consultation to pre-empt such problems"

Why is it that Government policy is formulated and operated without sufficient consultation to pre-empt such problems, which are unforseen by the policy makers?

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Andrew L. Urban

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