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QAPE (qualifying Australian production expenditure)

QAPE is a subset of production expenditure. It has a dual role for the purposes of the Producer Offset:

  • It is the basis for determining whether the minimum expenditure thresholds have been met, and
  • It provides the basis of the Producer Offset itself, as the amount of the refund is a fixed percentage (30% or 40%) of QAPE on a certified project.

QAPE is defined by section 376-145 of the ITAA as the company’s production expenditure that is incurred for, or is reasonably attributable to:

  • Goods and services provided in Australia
  • The use of land located in Australia, and
  • The use of goods that are located in Australia at the time they are used in the making of the project.

You should note that because QAPE is for services provided in Australia, where a company contracts an Australian firm to provide production services and that firm subcontracts to a non-Australian firm or undertakes some of the service outside of Australia, the proportion of the expenditure that is undertaken outside Australia is non-QAPE.

Note that if QAPE is incurred under an arrangement or transaction is not at ‘arm’s length’, we are required under the ITAA to determine the QAPE attributable to that arrangement or transaction to be the arm’s length amount.