EDITORIAL – 27/11/2008: GOVERNMENT FUNDING POLICY RUINED BY TAXMAN?
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 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
Why is it that Government policy is formulated and operated without
sufficient consultation to pre-empt such problems, which are unforseen by the
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Andrew L. Urban
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