Eligibility: Eligible entity
- The Income Tax Assessment Act 1997 (ITAA) specifies that, in order to be eligible for the Producer Offset, a company must either be:
- an Australian resident company (the ATO's interpretation of residency when the company is not incorporated in Australia is outlined in Taxation Ruling TR 2004/15), or
- a foreign resident company with an ABN that is operating through a permanent establishment in Australia (Taxation Ruling TR 2002/5 provides the ATO’s interpretation of ‘permanent establishment’).
You must meet this criterion at the time of application and also when the tax return is submitted and the Producer Offset paid by the ATO. This requirement means that partnerships and sole traders are ineligible for the Producer Offset.
Further, under tax law, when a legislative provision refers to an entity, it means that the entity must be acting in that capacity, and not in any other capacity. This means, for example, that a company which is acting in the capacity of a trustee of a trust is ineligible for the Producer Offset (ITAA sections 960-100(1) and (4)).
The applicant for the Producer Offset must be the company that either carried out, or made the arrangements for the carrying out of, all the activities that were necessary for the making of the film.
In an official co-production, the signature of the co-producers’ agreement is considered to fulfil the requirement for carrying out all the activities for the making of the film in relation to the co-production partner’s activities.
In most cases, the proper applicant company is the company that incurs the expenditure, which is often a special purpose vehicle (SPV) incorporated to make and complete the project. Note that the use of an SPV is not a requirement, and ongoing companies may be eligible.
There is no requirement that a provisional certificate and final certificate for the same project must be held by the same entity. For example, a production company (often the producer’s company), which intends to set up an SPV to make the film, may apply for and obtain a provisional certificate prior to incorporation of the SPV. The final certificate would then be applied for by the SPV (under the ‘take-over’ provisions in section 376-180 of the ITAA; also, see At a Glance at ‘Copyright acquisition and licensing’).